How to Start an MSP Business in 7 Easy Steps - A Complete Guide
Are you in the server provider industry, or considering starting a managed service provider (MSP) business? If so, now is the time to leap. In this article, we'll cover it all - from the basics, to what an MSP is, to the essential steps for starting an MSP business. Plus, we'll share key insights on how to grow, add value, and stay competitive. Let's dive in!
What is an MSP?
An MSP or managed service provider is a company that remotely manages a client's IT infrastructure and end-user systems. Typically, the service includes network and infrastructure management, security, and monitoring, primarily within the IT sector. Nearly 90% of small and medium-sized businesses (SMBs) either use or consider an MSP, and demand continues to grow.
This demand is driven by concerns about cybersecurity and the need for efficient remote work solutions. While the industry can be challenging, it offers significant growth opportunities.
No matter what type or scale of MSP you plan to build, following the correct process and implementing key best practices can help ensure the success of this business.
How to start an MSP business in 7 simple steps
Now that you understand what an MSP is and the prospects it has, let's break down the process of getting started. Whether you're new to the industry or want to perfect your approach, these seven simple steps will help you build a strong foundation for a successful business.
Define the product or service specialities and niche
The first step in starting an MSP business is to determine the specialisation of your services and choose a market niche. Trying to offer everything at once can be overwhelming and difficult to manage, so it's better to focus on specific IT solutions that align with your skills and market demands.
Starting with a clear focus allows you to evaluate your services more effectively and evolve gradually as you refine your offering.
As per the latest market trends, common MSP business services include:
Cybersecurity
Cloud computing management
Network monitoring
Data backup
Next is targeting a niche–for example, if you choose specialised services in cybersecurity, research which industries rely heavily on these services, such as the financial or legal sectors.
Targeting a specific niche helps you position your business strategically, making your MSP business more valuable and allowing you to build a stronger reputation in your chosen market, as well as business growth.
Construct the offerings
Understanding the fundamentals of business, especially in the IT industry, is important, but knowing the exact services you want to offer is just as crucial as careful planning. The market is vast, so pricing your services competitively, ensuring both profitability for your business and value for clients, is key. Start by identifying key aspects such as:
What services will you provide?
Clearly define your MSP offerings and how they benefit clients.Which industries will you target?
Industry-specific needs influence both service structure and pricing.What locations will you serve?
Geography can impact customer demand and business operations.Will you offer bundled services?
Creating service packages tailored to client needs can add value and improve sales.
Asking these types of questions helps you build a strong foundation for your MSP business. From here, you can refine your potential customer base, target clients, and tailor your approach further.
Write a detailed customer profile for your MSP
One of the biggest mistakes new MSPs make is trying to serve everyone. While it might seem like a good idea to cast a wide net, the reality is that being too broad can make it difficult to market your services, price them effectively, and provide the level of expertise clients expect.
To avoid this, you need a clear customer profile - a detailed breakdown of your ideal client. Here's how to define it:
Are you targeting small businesses, mid-sized companies, or large enterprises?
Some industries, like healthcare and finance, require more compliance-heavy IT solutions, while others, like startups, may prioritise affordability and scalability.What problems are your potential clients facing? Do they struggle with cybersecurity threats, outdated infrastructure, or poor IT support?
Understanding how they allocate funds for IT services will help you position your pricing appropriately.
Knowing their preferences helps in crafting service packages that align with their operational needs.
By mapping out these details, you'll be able to tailor your messaging, pricing, and service packages to attract the ideal customers, rather than wasting time on leads that aren't a good fit.
Adopt MSP vendor partners
No MSP can operate successfully without strong vendor partnerships. Your ability to provide top-tier IT services depends on the quality of the software, hardware, and tools you use. Choosing the right vendor is one of the most important business decisions you’ll make.
The last thing you want is to build your business on an unreliable solution. Thoroughly research the vendor, read reviews, and check industry ratings.
Can their tools grow with your business? Your MSP business may start small, but as you grow, your vendor’s solutions will need to scale.
Make sure your vendor meets industry security standards. This is especially important for clients in regulated industries like healthcare, legal, and finance.
Choose a vendor that offers strong customer support, documentation, and training. If issues arise, you need a responsive team that can help resolve them quickly.
Some of the most common vendor partnerships for MSPs include cloud service providers (such as Microsoft Azure or AWS), cybersecurity firms, Remote Monitoring & Management (RMM) software providers, and Professional Services Automation (PSA) tools.
Strong vendor-MSP relationships ensure that you provide reliable, efficient, and scalable solutions to your clients while keeping your operations running smoothly.
Optimise your MSP with the right tools
Technology is at the heart of every MSP’s business, and choosing the right tools will determine your efficiency, scalability, and profitability. Managing multiple clients, tracking IT assets, and providing remote support requires automation and integration to avoid overwhelming your team.
The essential tools every successful MSP business to consider include:
Remote Monitoring & Management (RMM) Software includes NinjaRMM, ConnectWise Automate, and Datto RMM.
Professional Services Automation (PSA) Tools. Examples include Autotask PSA and Syncro.
Cybersecurity Solutions (like Bitdefender, Sophos, or Cisco Umbrella) are essential.
Backup & Disaster Recovery (BDR) Solutions (like Veeam, Acronis, or Datto) ensure business continuity.
Integrating the right tools into your MSP allows you to automate tasks, improve response times, and efficiently manage multiple clients without adding unnecessary overhead.
If you’re looking for a tool to streamline billing and invoicing in your MSP business, Upmind helps automate invoicing, manage client subscriptions, and ensure accurate billing, so you can focus on growing your business. Try our free plan today and see if it’s a good fit for your MSP.
Check out more about complete MSP business solution.
Prepare a comprehensive pricing model
One of the biggest challenges for MSPs is establishing the right pricing model, one that ensures profitability while remaining attractive to potential clients. The price is too high, and small businesses may walk away. The price is too low, you risk undervaluing your service or losing money. Here’s how to build a structured, profitable pricing model:
Choose a pricing structure
The recommendation for the pricing structure would be:
-Per device pricing
-Per user pricing
-Tiered pricing
-Flat rate / Inclusive pricingCalculate Your Costs
Make sure your pricing includes software licenses, labour costs, operational costs, and profit margins. You should also account for scalability and future growth.Be Transparent
Your clients should clearly understand what is included in each package. Set realistic expectations through a Service Level Agreement (SLA) to define response times, included services, and additional charges for additional work.
Work for the betterment of your MSP
Running MSP services isn’t just about setting them up, it’s about continually improving and adapting to stay relevant in a rapidly changing industry. You need to focus on long-term sustainability, not just short-term profits.
Invest in Ongoing Training
Certifications like CompTIA, Microsoft, and Cisco can boost your credibility.Collect & Implement Customer Feedback
Check in with clients regularly to understand what’s working and what needs improvement.Automate & Optimise Processes
Use AI-driven analytics, automation tools, and workflow optimisation to streamline your operations. The more efficiently you operate, the better service you can provide.Plan for Growth
Whether it’s hiring additional staff, expanding into new markets, or diversifying your service offerings, having a scalable business model will ensure long-term success.
The MSP business is not a "set-it-and-forget-it" model; it requires constant learning, adaptation, and innovation. The more effort you put into improving your customer service and experience, the stronger your business will be.
How to become a high-value managed service provider
At this point, you’ve laid the foundation for your MSP business, but to truly stand out in the market, you need to go beyond the basics. Becoming a high-value MSP means it’s not just about managing your IT infrastructure; it’s about becoming a trusted partner to your clients.
To get there, you need to refine your internal processes, train your team, build strong relationships, and plan for unexpected challenges. Let’s go over the key steps to taking your MSP to the next level.
Prepare documentation
Without a well-documented system, you risk inefficiency, miscommunication, and potential service failures. Start by documenting the following:
Standard Operating Procedures (SOPs)
Detailed instructions on how to handle common tasks like onboarding new clients, managing security incidents, and responding to technical issues.Client IT infrastructure
Keep complete records of each client’s IT environment, including network configurations, security settings, and access credentials (stored securely, of course).Service Level Agreements (SLAs)
Clearly outline the scope of your services, expected response times, and resolution procedures. This helps manage client expectations and protects you from scope overreach.Disaster recovery & backup plans
In the event of a system failure, having documented recovery steps ensures a quick response and minimal downtime.
Good documentation isn’t just about keeping records; it also streamlines workflows, reduces errors, and improves service consistency, making your MSP more reliable and professional.
Train the team's skills
Your MSP is only as strong as the team behind it. While technical expertise is essential, ongoing training ensures that your team stays ahead of industry trends, emerging threats, and new technologies.
You can encourage your staff to pursue industry-recognised certifications like CompTIA Security+, Microsoft Azure, AWS Certified Solutions Architect, or Cisco CCNA. Not only that:
Because MSPs work closely with clients, strong communication, problem-solving, and customer service skills are just as important as technical knowledge.
Run security training sessions where employees simulate phishing attacks, ransomware scenarios, and network breaches to improve their response times.
While some team members may focus on networking, others should specialise in cybersecurity, cloud solutions, or compliance.
A well-rounded team ensures that your MSP can handle a variety of challenges. A well-trained team increases efficiency, reduces risk, and improves customer satisfaction.
Engage with vendors, peers and customers
Building relationships is just as important as building infrastructure and retaining existing clients. High-value MSPs don’t operate in silos, they actively engage with MSP industry peers, vendor partners, and customers to strengthen their businesses.
You can reach out such as vendor relationships, industry networks, and customer engagement. The more you engage, collaborate, and learn from others, the stronger and more valuable your MSP will be.
Prepare for the hidden costs
Starting an MSP isn’t just about the upfront investment; there are hidden costs that can surprise you if you’re not prepared. Anticipating these costs and setting aside an emergency fund ensures that your business remains stable even in the face of unexpected situations.
Common hidden costs include:
Licensing & compliance costs: As your business grows, you may need additional software licenses or legal advice for regulatory requirements.
Employee training & certification: Keeping your team certified requires ongoing investment.
Unexpected security breaches: Cyberattacks can result in financial and reputational damage, especially if you don’t have adequate security measures in place.
Customer support & downtime costs: If a client experiences extended downtime due to technical failures, you may be subject to fines based on your SLA.
Take protective measures
With cyber threats constantly evolving, security is one of the most important aspects of running a high-value MSP. Clients rely on you to protect their data, and even the slightest security lapse can damage your reputation and put your business at risk.
To strengthen your security posture, consider implementing Multi-Factor Authentication (MFA), adopting a Zero Trust security model, and conducting regular security audits to identify vulnerabilities before they become serious threats.
Most importantly, a secure backup and disaster recovery plan is essential to ensure client data can be quickly restored in the event of a system failure. By taking proactive security measures, your MSP can prevent costly breaches, build client trust, and position itself as a reliable, high-value provider.
Tips to start an MSP business
Starting an MSP isn’t just about offering IT support, it’s about building a sustainable, scalable business. While most guides focus on pricing models, automation tools, and vendor partnerships, here are three less-talked-about but important tips that can set you apart:
Be selective about clients from the start
One of the biggest mistakes new MSPs make is taking on every client just to generate revenue. However, not every business is a good fit for you.
Define your ideal client profile based on industry, company size, and willingness to adopt modern IT solutions. A smaller base of quality clients is better than a large number of high-maintenance, low-paying clients.
Standardise everything early
Many new MSPs customise services for each client, assuming it will add value. However, this can quickly lead to operational chaos.
The key is to standardise your technology stack, security policies, onboarding processes, and service delivery. Use the same RMM, PSA, and security tools across all clients. This reduces complexity, increases efficiency, and enables scalability without overwhelming your team.
Build an exit strategy before you even start
Most people don’t think about how they’re going to exit their business before they even launch it, but they should. Have structured documentation, recurring revenue streams, and strong operational processes in place from the start. This makes your business more attractive to potential buyers or investors down the road.
Frequently asked questions on starting an MSP
Is an MSP a good business to start?
Yes, especially as companies continue to outsource IT management to improve efficiency and security. The demand for managed services is growing, making it a scalable and future-proof business model as long as you choose the right niche and provide high-value services.
Is an MSP a profitable business?
Absolutely. MSPs operate on a recurring revenue model, meaning they generate steady monthly income through service contracts. Profitability depends on efficient operations, strategic pricing, and targeting the right clients, but a well-run MSP can achieve strong margins.
How do MSPs make money?
MSPs primarily make money through monthly or annual service contracts, offering network management, cybersecurity, cloud services, and IT support. Additional revenue streams can come from project-based work, consulting, and reselling software or hardware solutions.
How do MSPs get clients?
Client acquisition for MSPs often occurs through referrals, digital marketing, industry networking, and partnerships. Many MSPs have found success by targeting specific industries (such as healthcare or finance) and positioning themselves as specialists in those sectors.
What are the benefits of an MSP?
For businesses, MSPs provide proactive IT management, enhanced security, reduced downtime, and cost savings compared to in-house IT teams. For MSP owners, this business model offers scalability, recurring revenue, and high demand in growing markets.
Final words on how to start an MSP
Starting an MSP business requires strategic planning, a clear niche, and a focus on long-term growth. From defining your service offerings and choosing the right tools to optimise pricing and securing clients, every step plays a crucial role in your success.
The managed service provider industry is competitive, but those who focus on specialisation, efficiency, and customer trust stand out and thrive. By implementing standardised processes, strong security measures, and proactive client engagement, you can build an MSP that not only survives but scales profitably.
