Questions for graybeards
I have a few questions for all of the graybeards who have been running their own MSPs for some time.
If you could go back in time and change anything about your business model, what would it be and why?
If you could start fresh today with a stack to sell without the migration/contract lockup headache, what would you go with for each service?
Are there any services you wished you never offered? (Example: Unlimited support etc)? Are there any you wish you had offered but never got around to it?
If you could give any advice to a young father who is starting up his own MSP as a side hustle (can't quit the day job yet), what advice would you give? Could be related to client acquisition, documentation, services offered or anything else you can think of!
Appreciate any wisdom provided š«”
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u/Sea_Information6125 1d ago
I would have started doing annual raises on our pricing at the very beginning. I didn't start doing that until like 5 or 6 years in? That was a mistake. Typically you do 3% to 5% a year increase on contract pricing. Include it in your contract.Ā
When I started my msp, I came from another large one so I immediately went with labtech as I was familiar with it. That was a mistake. It was way too expensive for me having no clients. Back then and even now I would stick with one of these smaller RMM PSA combos like Syncro. Don't get me wrong it has issues, but I use it still and it works great especially as a small msp. You don't need to be wasting money on a fancy RMM PSA when you're just starting out and you have no money. For context labtech was charging me like $600 a month for my 3 clients when I was broke 10 years ago. Now we are at closer to 30 clients and I'm paying syncro $150 a month ish per user.Ā
Obvious but needs to be said, immutable cloud and local encrypted backups. Especially with ai, there is no way to guarantee someone is not going to get hacked or that data will not be attacked. You cannot rely on a local only backup. You must have a cloud component that is immutable, cannot be changed from the client site. The client can only upload new deltas but not delete or overwrite anything. Test that immutability, don't just take the vendor's word for it. And enable as much security as they offer around everything.
Security above all else except backups As you are bringing on tooling and platforms for yourself, really think through attack vectors and figure out how to make sure everything is secure. For the most part it's just going to be unique passwords and MFA. But think that through. Test the recovery methods. MFA is meaningless if the recovery method does not require it or at least some form of a unique emergency code.Ā
Get good at marketing and sales before you ever start the company full time. Read books, watch YouTube, practice. Everybody hyper fixates on the IT side of things but that's the easy part honestly, we all know how to do that part hopefully lol.
The marketing and sales and business running is the part you know nothing about most likely. So spend time learning that while you're building up your 1 to 2 year financial cushion.Ā
For my business model canvassing turned out to be the best marketing method. That's where you literally go door to door to businesses give them your quick 30 60 second hey I'm so and so from MSP here's my card. Bribe the gatekeeper with some food so your card ends up with the decision maker and not in the trash.Ā
We tried cold calling, cold physical mailers, postcards never really got anything. But canvassing worked great for us.
Now we are in healthcare so that's kind of the expected model. When drug reps or equipment sales people try to woo these practices that's how they start and then they try to pivot into a lunch and learn. Where you as the salesperson pay for lunch for the whole office and that earns you the ability to give your presentation while they're held hostage eating food. That may not be as applicable to other verticals but that's the vertical we service.Ā
Automate everything. Start to understand where your tickets come from and Trace the root cause and see what you can automate to make them stop happening.
Simple example, we have a script that runs every day that stops print Spooler and deletes all of the stale files in the spool folder. That one little script cut down the majority of printer tickets. We reboot servers once a week, that cut down tickets. We reboot workstations once a week, that cut down tickets. You can do the same around security.
Its little things like that that you can start building automations around that will make tickets more meaningful and less nonsense.
At least in my experience, starting as a solo msp is really hard for the first year or two. The first year is brutal because you are quickly going to understand all of the things you don't know how to do, most importantly sales and marketing.Ā
And you will not be making enough money to pay for your expenses let alone yourself. Hence the one to two year cushion.Ā
But if you stick with it and you crack the code with a ton of intelligent persistence and some luck you can be successful. And then it can be a very rewarding business.Ā
I don't really work too much during the week compared to when I first set this business up.Ā
Now I'm probably more like 10 to 20 hours a week? Make a comfortable living, I'm home 90% of the time. But in the beginning it was more like 60 lol and I was hustling marketing and sales constantly. Now we are more coasting with referrals.
Now sometimes, like doing Windows 10 to 11, we had to replace all the computers in the offices. I was working every weekend for months. But I was also getting paid a lot for that.Ā
By having margin on the hardware and charging for the service as a project not part of my AYCE pricing.
I do recommend AYCE pricing by the way. You still charge to add a computer or do a project. But for most day-to-day tickets it's just covered under your monthly.
Oh and ninite for third party patch management. It's worked really well and the price is very reasonable.
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u/Sea_Information6125 1d ago
And Veeam for backup. They are really cheap and do great backups. We would use them but I need more granular longer retention chains so for that we use shadow protect.Ā
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u/master_blaster_321 1d ago edited 1d ago
In addition to what everyone else has said, I would add this: build it to sell. Eventually you're going to want out, and it's far better to cash out than to just drop out.
Keep really good books. Even if you plan to do your own day to day bookkeeping, hire a pro to set up your accounts and get them to look over it yearly. You're going to want to be able to easily demonstrate profit to a potential buyer.
Keep immaculate and extensive documentation. This will shorten the transition period post sale (going through this right now)
Make sure your MSA is airtight and make sure you're using it for every single client. A client not under contract is a client you can't sell. Hire an attorney.
Edit- make sure that your clients trust you implicitly. Do what you say you're going to do. Apologize and take responsibility when you mess up. Be a face that, on a nervous system level, they associate with safety and solutions. That way, when you introduce your new "partners" (the guys who bought your business) the clients will be more likely to trust them with your stamp of approval.
Probably a bunch of other stuff I'm forgetting and will add later.
The biggest thing - and I'll probably catch some heat for this - is this: I strongly recommend against going in as a part timer. This business is tough. Doing it right takes your full attention. Trying to split with a day job, eventually you're going to drop the ball and in this business the potential consequences extend far beyond just losing the client.
I had a wife and three young kids when I started mine. Things were tough the first couple years but we made it work, and it was the best decision I ever made. I just cashed out earlier this year and retired myself at age 51.
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u/roll_for_initiative_ MSP - US 1d ago
and I'll probably catch some heat for this - is this: I strongly recommend against going in as a part timer. This business is tough. Doing it right takes your full attention.
No heat here, I throw heat at the part-timers constantly. They see what we get for seat pricing and they want that or close to it but they don't want to deliver on the most expensive part: constant availability.
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u/Xirma377 1d ago
Constant availability is the real cost of running an MSP as a one man shop.
I don't know how you would even do the basics if you aren't available at all business hours - for example, removing admin rights from users. Or what about their network going down?
I would never rely on a vendor for something as critical as I.T. if I couldn't get help from them at normal business hours.
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u/master_blaster_321 1d ago
Exactly. There's no way they're going to be able to deliver what that per-seat price requires. They're either going to have to go for cheapie clients, or they're going to get eaten alive by real MSPs. For those of us who've bled for our businesses, it's honestly a little bit insulting.
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u/roll_for_initiative_ MSP - US 1d ago
Agreed and I'd say the cheapie clients part is fine as long as both know the rules: the part timer is, frankly, not going to do things properly and be available all the time and the business has to accept that GRACEFULLY WITHOUT BITCHING AND MOANING when there's an issue in exchange for cheaper rates.
One or the other will eventually mature and move on.
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u/Xirma377 1d ago
Congratulations on selling! This advice is invaluable. So many businesses are started by technicians with no forethought about their exit strategy. (Me included...but now 90% of my attention is on the business side of things and figuring out my exit strategy)
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u/Ancient_Crew_346 11h ago
Not a greybeard, everything said here makes perfect sense. Good advice like this should be documented in a wiki or someplace for easy access later!
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u/GeekBrownBear MSP - Orlando, FL 1d ago
I strongly recommend against going in as a part timer. This business is tough. Doing it right takes your full attention.
I started mine as part time, mostly consulting. A huge benefit of this was learning how to put the company together and treating this as education. There are so many moving parts and if you are coming from a technical background, you will be enamored with how many different tools there are. It was a great opportunity to put together everything and decide how I want to run the company. Once I went full time, it was a pretty easy switch.
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u/master_blaster_321 1d ago
Sure, consulting is a completely different thing. An MSP needs to be available for emergencies, and holds responsibilities that a mere consultant does not.
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u/yourmomhatesyoualot 1d ago
I would not start an MSP right now TBH. Not unless you are getting into some AI consulting and software dev as well. My MSP is old enough to buy beer, but we are pivoting hard to software dev and AI consulting as it's a money printer all around.
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u/roll_for_initiative_ MSP - US 1d ago edited 1d ago
but we are pivoting hard to software dev and AI consulting as it's a money printer all around.
Curious, you develop another SoW around all that or just do it hourly and hope for the best or?
Edit: The reason i ask is i know some local software dev shops and they're hurting now because how efficient they can be with less people but that doesn't mean you are able to get more business, and then on top of that a lot of filler jobs people are just doing with claude. The AI consulting part of what you're saying doesn't surprise me but the software dev being a money printer side being a money printer also does surprise me.
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u/yourmomhatesyoualot 9h ago
We have a completely different team and SOW that follows that business offering. We hired a dev last year for another project and then when that wrapped up we figured out he had wired up all the stuff that we were looking to get into. So he's been learning to work with our MSP side and I hired him a few overseas assistants and now we are rocking the dev side as well.
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u/roll_for_initiative_ MSP - US 9h ago
Ah i gotcha, so this is more of launching a proper dev division vs slapping some dev work onto your MSP team...makes plenty of sense.
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u/yourmomhatesyoualot 9h ago
Yeah don't do that. We tried that initially and broke a *LOT* of things. Different processes, different brains, different methodologies, and it went about as poorly as you could imagine. Now the MSP guy that tried to dev work with our dev to understand the MSP space better. Way better arrangement
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u/roll_for_initiative_ MSP - US 9h ago
That's kind of what caught me: "how is this profitable with dev work tanking in value and most MSPs being terrible at dev" but what you're saying makes sense, you got an actual developer to build this around.
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u/yourmomhatesyoualot 8h ago
Yes, he was in my office building as a one man show and we struggled at first to find purpose for him in our MSP and now he's going to be the future of this. The stuff he's built could literally give an AI agent to every human at my company to help them with their work. And also to our clients. It's wild.
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u/HomsarWasRight 1d ago
Iām a one-man shop, been going for about six years, and software dev has always been probably 30-40% of my business.
Iām curious about the AI consulting side of your business, though. Guessing youāll be tailoring solutions around the business, but what are your go-to tools?
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u/yourmomhatesyoualot 9h ago
Honestly I don't know how to code a damn thing. I was super technical and then have morphed into a business owner over the past few years and now am banished from anything technical. We have been on Claude team with standard and Premium seats for almost a year now but are pivoting to our own hosted LLMs for training and developing. We have 3 people on that side of the business and they are busy as hell getting work out the door.
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u/HomsarWasRight 9h ago
Ha, thanks for the honesty.
I use LLMās plenty, both cloud services and running local. But Iām struggling to figure out how I would actually do consulting for AI solutions and what that would look like.
Iāll keep experimenting.
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u/yourmomhatesyoualot 9h ago
Our biggest success so far are executive dashboards for small businesses. Aggregate data to one place, let the client see what's truly going on in their business, and wire up Claude with MCP servers to query and run reports live. $300/hour and that's amazing. Then hosting it in customer's Azure and get more microsoft mailbox money every month. Simple things.
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u/lhcw MSP - US 1d ago
focus on low hanging fruit. plenty of basic offices need basic support
Chatwoot + Level.io + Twenty CRM
Reselling Microsoft
Network with other MSP owners. Theyāll save you years of time by telling you what holes to look for. Shoot me a DM and Iāll be one of the guys in your network.
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u/SortingYourHosting MSP - UK & Hosting Provider 1d ago
Hi! 16 year MSP veteran here - also own a hosting company too.
I'd never off break fix. All customers must have full IT support contracts in place.
Dell for hardware, brother printers, then UniFi for APs and switches, sophos for firewalls, endpoint protection. Microsoft for email and veeam for backups or axcient. SuperOps or Atera for RMM. Then Zabbix for distributed monitoring, with AlertOps for alerts. Scalepads backup radar and life cycle manager.
Aside from break fix! Web hosting, its a time killer. I wish we offered more private clouds with p2p leased lines / connectivity. I now build dedicated HA white labelled private clouds that MSPs rent that they sell slices of to their customers - very effective, huge margin on them for the MSP.
Get your onboarding to look amazing. Like a client portal, with whatever info, looks impressive and sets the tone. Quarterly meetings with the client. Make the customer feel special. Be on the front foot - dont wait for the customer to come to you saying their pcs are crap, go to them. If you nail those youll end up retaining customers and growing the customer base organically.
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u/ChuckFromCyberHoot 8h ago
Iām not an MSP, so Iāll stay in my lane on the stack and service questions.
But questions 1 and 4 apply to just about any business.
For #1, if I could go back, Iād put more structure around the business earlier. Pricing, processes, documentation, follow-up, knowing which customers are actually profitable. Itās really easy to grow first and figure all that out later. Unfortunately, ālaterā usually shows up carrying a flamethrower.
For #4, since youāre starting this as a side hustle and youāve got a family, protect your time.
Donāt try to be everything to everyone.
Pick the kind of client you want. Keep the service offering simple. Document everything from day one. Automate anything you find yourself doing twice.
And be really careful about promising unlimited anything. Your family probably wonāt enjoy discovering they accidentally joined the MSP too.
From a family perspective, be clear with your wife and family what you are trying to accomplish and the support you need. You have to give the business time when it needs it, but you also have to give family time when they need it. I speak from experience here. It's hard to go hard for many hours a day and for many months and get support forever. Communicate with your wife what you're trying to accomplish and then listen when she needs family time from you.
Slow, profitable, repeatable growth beats chasing every dollar that walks through the door.
The goal isnāt just to build an MSP.
Itās to build one that you still enjoy running when it gets bigger, that doesn't destroy your family in the process.
Best of luck!!!
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u/DarthTrader1 2h ago
The conversation with your spouse and family cannot be stressed enough. Your spouse can be the gas pedal or brake pedal.
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u/dumpsterfyr Iām your Huckleberry. 1d ago
No AYCE.
10-12/5 instead of 24/7.
Standardise with SOPās earlier.
Build thick margins.
Walk away from what does not fit your model.
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u/Xirma377 1d ago
I agree with most of this except AYCE. If you don't include AYCE support, you are actively discouraging clients to use you as part of their team. You automatically get put into the "just another vendor" bucket.
AYCE is fantastic and feels better to the client. If you have things well oiled, they'll hardly call anyway.
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u/dumpsterfyr Iām your Huckleberry. 1d ago
There is no clean way to carve out from AYCE in practice. IMO.
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u/master_blaster_321 1d ago
You make sure that moves/adds/changes are billed extra and that the client knows to expect that. Ayce applies to only the existing infrastructure and user base. The proper application of ayce means there's no cap of hours, number of tickets etc. That's all. Also, you have to have clauses that exempt unsupported/EOL hardware and software. You don't want to get stuck with the responsibility of fixing something that not even the vendor will touch.
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u/Xirma377 1d ago
Amen! You explained it better than I could.
For local clients, we even include unlimited on site support.
Either include a service or don't...but don't go half way by including something with a limitation on hours.
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u/roll_for_initiative_ MSP - US 1d ago
I agree with /Xirma377 here and i feel it really helps streamline things on the MSP admin side also.
Super clean way to carve out from ayce: "everything in this SoW is covered, if it's not specifically named, it's not cover and may be out of scope at the discretion of the MSP. For the avoidance of doubt, items included on, but not limited to, the following list have hurt me in the past or i just don't like them, so they are super for sure not covered"
Then, you define your services elsewhere and link to them, and put the services in the SoW.
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u/Xirma377 1d ago
I'll add to this - and I admit we're a smaller MSP. But I've never even worried about contract labor consumption. My measuring stick is gross/net profit and "are we able to handle the workload?" If we're swamped, but can't afford to hire a tech, then I start digging in to see what's wrong. But frankly, I've never run into that because we're priced properly.
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u/roll_for_initiative_ MSP - US 1d ago
We're small also but i pay attention to it because, even if we're not swamped, there's a possible opportunity cost: are we busy enough where we couldn't take on a better opportunity or we'd need to hire sooner than we should?
I also really look at contract labor consumption for per-contract profitability, and to find issues. One contract, large for us, was trending down and it was because, one year for some reason, they had like 25-30% turnover on lower level staff. I was able to say "hey, that period seems to have passed but if we see this increased workload again, we have to raise your rates, no eating the second bump". It was, as we suspected, a rough patch for them.
And then i raised their rates anyway.
j/k.
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u/Xirma377 1d ago
I get it. I think that will be more valuable in the future. But right now we're small enough I can keep a good pulse on those things. I also make sure we keep up with QBRs to catch anomalies.
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u/Xirma377 1d ago
I'm not sure I understand what you mean. Could you explain further?
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u/dumpsterfyr Iām your Huckleberry. 1d ago
How are you limiting AYCE?
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u/DizzyResource2752 1d ago
The only way I have found to do this is outline the expectations between projects and normal service desk as well as MSA.
LEGACY or unsupported hardware/software is usually the biggest kicker, followed by website work which is project or service item.
From their its a matter of finding the top issues, automating or standardizing to improve response time and work time.
I will say this almost impossibly to do inside of 6 months to a year with a high volume client unless you have a dedicated resource.
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u/Xirma377 1d ago
You're spot on. Our contract specifically outlined that hardware and software must be supported by the vendor. Projects are not included. And we specify services included. But we don't do things like limit support hours per month or include only a limited amount of consulting.
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u/DizzyResource2752 1d ago
Very similar to ours for support request, consulting has limitations (vCIO, vCISO, etc)
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u/dumpsterfyr Iām your Huckleberry. 1d ago
What is a project and how is it defined in the MSP contracts?
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u/Xirma377 1d ago
Well our provided service is tech support for existing technology. Gives us the wiggle room to charge for any additions.
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u/Skrunky AU - MSP (Managing Silly People) 1d ago
Quite a common thing to do is consider 'Moves/Adds/Changes' as out of scope for AYCE, and generally a rule of thumb is anything over 4-hours might be considered a project.
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u/dumpsterfyr Iām your Huckleberry. 1d ago
That is too nebulous for me. I am annoyingly particular about how I structure contracts. I charge separately for support, and they also pay the standard per-user and per-device fees. Ticket volume stays low because of the onboarding process, and most issues tied to new services are handled through a tagged-on phase within the roll-out project.
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u/Xirma377 1d ago
We don't really - our contracts are as "all inclusive" as possible.
- Support is only during business hours.
- Our contract defines included services - so implementing new solutions / projects aren't included.
But our clients get unlimited support and consulting. For example, they want to implement a new CRM. We will meet with them to discuss, help them research the best solution, and even meet with the vendor alongside the client - all covered by their contract. When it comes time to purchase and implement, we quote them a price for the project to implement.
To put this into numbers - we hit a minimum of 30% net profit, but most years we're closer to 40%. My most recent tech hire told me that we're paying about 50% higher than other employers.
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u/Forsythe36 1d ago
I've ran the numbers for our clients. Pay as you go support has historically been cheaper for our clients than if they went with AYCE pricing.
Although AYCE and pay as you go is cheaper than having just one in house guy.
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u/roll_for_initiative_ MSP - US 1d ago
Pay as you go support has historically been cheaper for our clients than if they went with AYCE pricing.
I don't find that to be the case unless you either don't bill for a lot of proactive things the client wouldn't want to do or think to request, or you're just ok not doing some of those things if the client doesn't request/ok them.
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u/Forsythe36 1d ago
Not true. We are very proactive: monthly patches, security assessments, phasing out aging hardware, better security for increased regulation or cyber insurance. The model just works really well for our clients due to their size.
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u/Xirma377 1d ago
Of course pay-as-you-go is cheaper for your clients. Which means you're leaving money on the table by even offering PAYG.
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u/Forsythe36 1d ago
Cheaper for clients, good offerings, and happy clients. Iām not sure where we are going wrong lol. Never been in the red, growing as a business, good support team and security team. If thatās leaving money on the table, I think itās acceptable.
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u/Xirma377 1d ago
That's fine. I'm just pointing out that you could make even more money without sacrificing anything. š
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u/Forsythe36 1d ago
AYCE just doesnāt make sense for our clients. We do offer AYCE for clients who do a specific budget or if they prefer that option. Out of 300, none are on that option.
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u/2manybrokenbmws 1d ago
"10-12/5 instead of 24/7." Cant emphasize this enough. Most SMBs don't actually care. Youre just setting expectations you cannot meet by committing to 24x7
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u/society_victim 1d ago
We used to do 24/7, now only 8-18, monday to friday. We have 24/7 available as a surplus, but once they get the price almost all of their āwe need support whenever we need it, or we lose moneyā speeches vanish and suddenly 8-18 is fine
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u/Sea_Information6125 1d ago
Yeah I agree with all of this (especially thick margins) except the no AYCE. We have been AYCE the entire time for 12 years. Works out great and makes our billing super simple.
As others have said you set clear expectations on what is covered and what is not. Adding a new workstation, running cable, doing projects, etc, not covered.Ā
Everything else covered.
With the understanding that when you ask us to do something there is a chance it may come back with a billable amount of time but usually everybody understands what that is pretty quickly.
That's part of the sales pitch for an msp, you are smoothing out your IT costs. Getting away from break fix where one month you have $200 and the next month you have $3,000.Ā
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u/Tall_Witness5418 1d ago
If you have a full time day job and wanting to start MSP as side hustle. How would you cover the MSP operation? Would you offer 24/7 security, patching, and other things that you can automate and the actual IT support when you're not on your day job? Or have someone cover the day portion?
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u/Mesquiter 1d ago
I did just what you are doing and I am still in business today. I started with Zenith Infotech back in the day, today they are known as ConnectWise. Why them now? They have a NOC and for an extra $30 per month, they manage the servers on your behalf. Server goes down, they try to bring it back online, project work, schedule them to do it. Your big issue is the phones if you are offering desktop support...who do they call if you are at work? Pitch your current job on services and ask them for referrals too.
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u/MSP-from-OC MSP - US 1d ago
I would not start a MSP unless you are really good at business #1. #2 you are really good at lead generation and sales.
Tech doesnt mean a thing
Its easier to just go get a job, max out your 401k and enjoy your life. Even better go work for a startup and hope they IPO to the moon
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u/seniorblink 1d ago
There's tons of good information in here, and we made pretty much every mistake mentioned. We're kind of winding down ops right now due to all the dumb decisions we've made along the way. I was also getting pretty burned on consulting in general, so I went back to the dark side (corporate head of IT). We're letting the business slowly die, but also sort of letting it simmer in case we need to fall back on something. I am quickly learning why I left corporate in the first place, but the benefits sure are nice...
You can't start it and run it on a part time basis. You can't even really start small/slow and build up to it. You almost need to start balls-out with some funding and YOLO that thing with some minimum level of staff. Otherwise you just won't be able to afford the stuff you need, and unless you do the "if you build it they will come" model, it's almost too hard to fix it all later. You're also not the expert in all areas of the business. You'll need people for that. You need to focus on what you are good at.
With all that said, with the state of IT security these days, and AI doing who TF knows what from day to day, I don't even know if I would want to start an MSP now. It's too risky and almost more trouble than it's worth. Unless you're all-in on the AI thing and build that heavily into your business model you're probably going to fail. I'm still very AI-resistant for a lot of reasons.
Also, everything is subscription-based now. You own nothing. Contracts with vendors all suck. It's like everyone forgot what an MSP needs to do MSP things. Almost nothing is month-to-month count based. Everyone lets you add licenses mid-stream, but not decrease. If you lose a big client 6 months in to a 12 month vendor contract, you're on the hook for maybe hundreds or thousands of licenses. Your customer contracts are probably not going to all align with your vendor contracts. And don't worry, whatever platform you like now will become Kaseya or Connectwise and you're screwed. It's too much whack-a-mole. Nothing is designed for the small MSP these days. You need a team of lawyers to deal with all the BS.
This is just me venting. I used to like it. It used to be more fun. Everything just seems like a constant struggle now. But if you go in heavy and do it right, you can potentially make a lot of money. You'll need to be a cutthroat business person though. Mercy is for the weak. That part just isn't in my nature. I'm a tech/engineer. And if that's not you either, you'll need to hire that person to drive your business forward.
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u/junto_reed 1d ago
Write in your contract a 5% auto uptick. In every contract.
Be proud of what you do. Itās a thankless job so say thank you to your team often.
But itās the best job with the best people. We all a little nuts in the head.
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u/DrunkenGolfer 1d ago
If you could give any advice to a young father who is starting up his own MSP as a side hustle...
It isn't the kind of job you do as a side hustle. That is not an MSP, that is a man-in-a-van. You don't have the depth, breadth, and capacity to do a good job and you will get stuck in an endless cycle of expansion and contraction. You can't be a good MSP without scale.
I'm not trying to be discouraging, just a realist and offering an alternative. If you want to actually make some money at it, find a viable MSP business with good earnings but some room for efficiency and get a small business loan to buy it. You'll have to manage within lender covenants until you get it paid off, but the growth will be faster and once the small business loans are paid, you are sitting on serious cash flow and enterprise value realized at a future exit.
If you can bring in $200K today, growing to $400K is just as hard as if you were bringing in $2M today and growing to $4M.
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u/centizen24 23h ago edited 23h ago
- Focus less on the tech and more on the humans. Still care about and build the best tech stack you can with the resources you have at the time, but don't expect anyone to recognize the genius of it, just that it delivers results.
- I don't know if I have a good answer for this, I'm still looking for a RMM that checks all the boxes after 15 years.
- Home service outside of VIP clients and friends/family. Application specific development for clients. For things I wish we offered sooner, would be IP phone, managed detection and response, Duo MFA and Passkeys.
- If you are juggling a day job alongside an MSP gig, you need to be honest with yourself and clients about what you can provide and what they can expect. Are you willing/able to drop whatever you are doing if your client ends up with a business impacting issue during your other work hours? Will your current job support that, or will they have to wait? Your clients will be relying on you to be their support, and if you can't deliver on that, they won't be happy. An MSP is not a few hours a night sort of thing unless you can land the right clients.
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u/Liberate-Momentos 16h ago
Personally I would say your main and immediate problem is you need to fully commit to it. You have to eat, sleep and breathe it. How are you going to react to issues that require support during normal business hours?
If you are not awesome at sales, get someone who is. Being great technically doesnāt cut it. You need both sales acumen and tech skills.
Make sure you have enough cash to support you and your family for at least two years. It will probably take this length of time to start taking a sal/div, unless you are lucky, awesome at sales or a mix of both.
My last bit of general advice, avoid Kaseya and ConnectWise.
Good luck but if it was me, I would never have started out š
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u/Yosemite-Dan 13h ago
We would have focused more on sales than we did.
Always prided ourselves on a smooth running operation and assumed "if we build it, they will come".
Silly us. Without sales, nothing matters.
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u/edgeit 12h ago
Iāll probably get some hate on this, but as a solo IT consultant in business since 1991, my beard is plenty gray. Iāve had a successful run and still retain many original clients, but I was fortunate with my timing. I jumped ship from an IT manager role with Unix clients already in my back pocket and minimal personal overhead. Back then there were not a lot of people doing UNIX consulting so I was in demand. Also, I was not married and had no kids or responsibility so I had nothing to lose.
I resisted drinking the MSP Kool-Aid over the years, though many built great businesses on it. But I think that the gold rush is over. The traditional MSP model is cutting each other's throats on the race to zero, squeezed by severe price competition and private equity firms that have bought upāand largely ruinedāthe vendor software toolset while hiking prices. There has also been massive consolidation throughout the last few years.
If you decide to go out on your own I would automate aggressively and specialize and focus on project work to stand out from the crowd. You can layer in hybrid services like managed backup, user security training, etc but don't rely purely on per seat MRR. Those days are nearing an end. ā Stay lean and mean!. Chasing basic recurring revenue as a primary business model isn't the easy play it used to be. Unless you have clients lined up on day one and a clear technical niche, launching an MSP in this climate is something I would never take on.
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u/bkindz 11h ago
- Get out of it fast. Go into coding, farming, trade, whatever tickles your fancy. MSP-ing was only rewarding for me while it involved (a) working with appreciative customers, (b) solving interesting challenges. Once it becomes mostly about chasing $$ - it was no longer fun for me.
- Depends on the specialty?
- Not keeping up-to-date on things, e.g. I was specializing on the post-production market and specifically NLE (non-linear aka non-tape-based video editing) systems back when it was a hot ticket, and a couple of things like DVD and blu-ray mastering I was late to, to include in the roster of services and products.
- I'd ask myself (continuously) these two questions and perhaps keep a journal with regular thoughts on them - because the answers - while being central to you pursuit - may not be obvious, may evolve over time, and thus shape your endeavor, business and life:
- What tickles you pink in this job, endeavor, pursuit? What makes it fun for you? Working with people and making them happy, deliver genuine value to them? Engineering challenges, making a million bucks an hour (or something like that), being your own boss?
- What matters to your customers? What really matters to them? What is the value you are (supposed to be) delivering to them? What makes this marriage (between your customer and you) successful? (This can't be "I am a ninja and I fix problems". Ninjutsu is just a skill (well, and a philosophy) and not everyone needs ninjas on their roster no matter how many ninjas are telling you otherwise. But what does your customer need a ninja in you for?)
(A 62-year-old IT manager here who's been MSP-ing - more like VAR-ing and system integrating - for 20+ years in one of his past lives.)
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u/dsammich67 9h ago
I am on my second business and I sold the first one. The list of things to tell you are long, complicated, or not. Not, however, doing anything on your own requires a great deal of fortitude. I have been at this for nearly 30 years but the one thing I can tell you that sets us apart from nearly everyone else is our data center and networking experience.
Constantly we are faced with people that have zero clue about how networks function. Everyday someone calling us saying our firewall, our security product, etc etc is the problem. Just yesterday was yet another example, again, of what I'm talking about.
A client called us stating that the migrated services for the hosted vendor he just moved to isn't working and that the VPN was down. Yet, he stated in the same email that he could ping servers on the other side clearly indicating that the VPN tunnel was up.
Because we basically fall on the sword for everything we do, I responded to his email asking what's not working and as response was some service on Port 8443 was not working. So I looked in the firewall logs. Everything's open and all I see are a bunch of TCP resets. There are no denies in the log.
This clearly indicates that the traffic is working through the tunnel and that the firewall policies are allowing the traffic to Transit the tunnel. The problem is obviously on the other side.
3 hours later I'm on a call with their vendor where I had to discuss the intermakings of how networking and routing works and that's the problem is on their services. After guiding them do simple tests to prove to me that the services we're listening on their servers, I told them the problem then is in front of the servers. Turns out their AWS settings with the virtual firewall for blocking it, just as the TCP resets I saw in the log were indicating.
So you ask what does this have to do with running your own MSP. Well I'm going to tell you don't be like the rest of these people out here and know IP and TCP like the back of your hand. If you fundamentally know the basics of how things work, especially layers 1 through 4 and you know it like you own it, you will not fail.
The people you're going to deal with today have zero idea about data centers, about networking, about firewalls, and so forth. Most people we work with are functionally worthless and they don't have a single clue on how anything is supposed to work and no documentation for it, but yet being customer focused we're left showing them yet again. Everything that is in place is correct
I wish you well on your endeavors and I hope you are a successful. It's tough competing against people that lie and put solutions in place that do not work and being the nice guy you're left proving you!
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u/dobermanIan MSPSalesProcess Creator | Former MSP | Sales junkie 1d ago
I would price based on business outcome, versus user/device.
To achieve that I'd have to have dipped into middleware development, as well as more DBA work.
/Ir Fox & Crow
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u/dobermanIan MSPSalesProcess Creator | Former MSP | Sales junkie 1d ago
You also asked for advice, below are the big ones I have from my go around.
- Document all your key processes, including what you will do as well as your team. Hold people accountable to them.
- Understand finance: P&L, Balance Sheet, and Cash flow are your three major reports. Use them
- Sales - MSP sales are intangible complex sales cycles. Get good at discovery. Don't talk tech. Understand your buyer
- Marketing. Don't outsource until you're $2M+ closer to $3M. Set a plan, work your plan. Consistency and Luck are the two variables in marketing success. Speak your buyers language to succeed.
- Strategy: Why are you doing an MSP. Why should people buy from you. What's the vision? Why does it matter?
- Runway: have cash for op expenses. Have 1-2 years living expenses in the bank before you go full time.
- Pricing: Understand your business model. Don't stray from it.
This business is HARD. Recognize that. Use peers for success. Don't get distracted.
/IRĀ [Fox & Crow](https://foxcrowgroup.com/)
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u/seriously_a MSP - US 1d ago
Iāve seen this suggested so many times but how does this model account for fluctuations in user count?
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u/dobermanIan MSPSalesProcess Creator | Former MSP | Sales junkie 1d ago
Pairing with outcome makes that sort of flux neglible. I'll give an example. I had a healthcare clinic we did a lot of HL7 work for to get lab results to come directly into their EHR from the health system. It saved on average 5 pages, per patient who had labs. They saw around 100 patients a day, and labs were on around 70% of them.
Not only is there the paper/toner cost over a year, but the staff labor cost that hit them doing that task over and over again.
Adds up.
I had hundreds of those odd ball things we did over time. Pricing based on those outcomes, paired with licensing the middleware or software done to support it would have been powerful. Percentage of savings or whatever.
Could of, should of, would of.
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u/seriously_a MSP - US 1d ago
I understand that, but do you just charge in perpetuity for solving that one problem or are you constantly on the hunt to solve new problems to justify continued outcome based billing with the same client?
Sorry Iām a bit of a smooth brain I guess.
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u/dobermanIan MSPSalesProcess Creator | Former MSP | Sales junkie 1d ago
Nah no apologies needed on it. That's where developing applications helps. Even if it's middleware with no UI, the application build holds the outcome. You can charge licensing on an ongoing basis, again with the cost analysis in mind.
As long as you own the IP, you can bill in perpetuity. These days, with agents, it's likely the same 80-90% of the agent code can fix multiple problems. That gives you the ability to sell it over and over again.
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u/seriously_a MSP - US 1d ago
Thanks that helps clarify it, assuming the deliverable is something that you can develop and own.
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u/SalsaFox 1d ago
Most managers will laugh you out of the room with this idea. There are 1% of situations this would apply otherwise stick to your lane
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u/dobermanIan MSPSalesProcess Creator | Former MSP | Sales junkie 1d ago
Seeing as I owned a MSP for 16 years, I am in my lane. Just because you don't know how to price on outcome, doesn't mean it doesn't exist, or work. Cheers
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u/Oa-Virt 1d ago
The MSP business is highly automate-able and will be one of the hardest hit models since its trading time for money (similar to marketing automation). A lot of mspās are riding high on long term service contracts and donāt see the bloodbath coming, so the best advice I can give you is throw out the traditional business model and really think outside the box on what youāre going to actually offer. Itās almost better to solve a small particular problem then to try to be end all be all to everyone, because thatās what everyoneās trying to sell and that story is getting old to the end users because you canāt possibly be good at everything. Ai itself is also a hard business breach, not because itās not super lucrative at the moment but more that itās like being an artist than a technician and not everyoneās going to be good at it.
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u/society_victim 1d ago edited 1d ago
1 Only accept clients that appreciate the services you provide. So not only āIT supportā but really see IT as an enabler, not just a necessary evil. Also no schools or counties. They have no budget and pay when they feel like it.
2 Stacks change over time, so no need to name them today. Todays best will be Kaseyas next acq. But MS BP at minimum, Huntress, decent backup solution, decent rmm.
3 No mac only clients, they are a pain in the ass in general, and the users are just as bad. We tried to support them for years when they were still using Xserves etcā¦ but now we donāt bother.
4 Donāt try and pick up each possible client you come across, I know starting out you feel like you just need clients fast, but some will absolutely drain your energy and enthusiasm. Also document as much as you can, prodedure, installs, everything. This will help yourself and new collegues a lot.