MSP Business
5 things you should know before becoming an MSP
5 August, 2013
Whether you’re starting from scratch or looking for ways to grow your existing business, it always pays to be prepared - but it can be difficult to know where to start when there are so many things to consider.
To help you on your way to becoming an MSP (Managed Service Provider), here are five things you should consider when getting started:
1. Understand Your Model
The first and most important thing you need to know before becoming an MSP is what exactly your MSP model will look like.
There needs to be an element of planning as with all businesses. You need to know what services and devices you are actually going to manage for your clients, especially if you are starting from scratch – it can be difficult to manage all devices from day one!
Similarly if you are already running a break fix model, you need to know what services if any from your current offering you are going to include in your new approach – you don’t want to risk losing all of your existing clients by making too many drastic changes.
Think about your client base and the services you are currently offering them, it could be best to begin with a hybrid MSP model – by providing just some services to start off with, perhaps server monitoring & management. That way you can show your existing clients the benefits of Managed Services as you make the transition. The GFI MAX Building Blocks material (free for all GFI MAX customers) provides step by step guides to getting started as an MSP. Just ask your account manager for more information (or sign up for a free trial).
2. Know Your Market
A good way to decide which services you should include in your MSP model is to know your market!
As we’ve already suggested, as an existing IT Support Company (running a break/fix model) looking to make the move to MSP you will need to start by considering your current client base. By looking at the areas where you are making the most money you can begin to understand which services could be worth continuing with as you make your transition. Similarly try assessing where the majority of your break/fix hours are spent – could these clients be ideal candidates to trial your new MSP approach? Consider asking your existing clients how they would feel about having a fixed price IT service contract rather than the current unknown break/fix fees per month.
Now it’s time to think about what others are doing within your market area. Look at who your main competitors are and what they are offering to their clients - is their service lacking in areas in which you could excel? Are they offering a service which you are not currently offering but could in the future? Once you fully understand your clients, competitors and prospective customers you can begin to build a robust strategy for your MSP.
3. Consider Your Pricing Strategy
A key consideration when building your MSP strategy has to be pricing; as chances are this will be the biggest difference to your service, at least it will be in the eyes of your customers!
Until now you have most probably been working on a Break/Fix pricing model within which your clients simply pay you an hourly rate to fix any problems with their IT services as and when they occur.
As an MSP you will need to start billing on a recurring basis, this is what makes an MSP model much easier to scale - enabling yourself to make predictions based on recurring revenues. However the way in which you decide to do this is entirely up to you.
Think about whether you should be billing per person? Or is per device more appropriate for the clients in your portfolio? Should you be offering a flat-fee rate? Or do you predict that the extra support required by your clients will be too great to make this a financially viable option? Most importantly how much will it cost to keep your new service running efficiently? – if you don’t know this you won’t be able to set your prices at a profitable rate.
Also consider the current health of your client’s IT system – perhaps there are things that need to be fixed before you move into a fixed price agreement. Be upfront with your clients about this – if they have been doing the minimum to maintain their systems and then you offer a fixed price model you could see your profit margins tumble. However, it might be worth taking a bit of a hit on the initial setup to secure the client on a recurring revenue stream.
4. Do You Have the Necessary Resources?
In order to accurately determine how you should price your MSP service you need to work out exactly how much it will cost to run, including whether or not you have all the appropriate resources in place. Here you need to consider everything from whether you have the right staff members to handle your new services to the tools and equipment you have at your disposal.
If you are a small company or a company of one looking to expand your business you might want to consider taking on some extra staff to help cope with the increase in clients and the services you will be offering them – otherwise you could easily find yourself spread too thin.
Make sure you really think about where you need the extra help before you make your decision to ensure you are making the most of this opportunity – do you need someone to help with the increase in admin, giving you more time to work with your clients? Or is more time to run your business what you actually need? In which case, hiring more support technicians may be the way to go.
5. Get the right tools for the job
When you are thinking about making the move to MSP getting the right tool for the job is vitally important. You need to be able to manage your new contracts efficiently to ensure you maintain your profit margins. There are a number of different RemoteManagement tools in the market to enable you to proactively monitor all of your clients from one place, saving both time and money. Of course this is an expense you will have to take into account when costing your service but with the GFI MAX RemoteManagement tool (get a 30-day free trial and find out for yourself ) you only pay for the services you use with no minimum fees, helping you tailor your offering to your clients in an affordable way.
Remember also that using a robust tool such as GFI MAX RemoteManagement will also help you minimize the extra IT support professionals you need to employ by making them work more efficiently and removing the peaks and troughs of the break/fix model. You can find and fix problems on your client’s IT systems before the client even knows about it – and with the built in monthly reporting you can show them all the work you’ve been doing to keep their IT systems in check!
In Summary
Taking the time to consider these key areas before making the move to MSP will help you plan for success! But to find out even more about how you can become a successful MSP check back at MAX-IQ as we bring you more in depth articles about running a MSP.
Don’t forget that MAX customers get access to the full Building Blocks material which will help you, step-by-step, to transition from break/fix to MSP so just get a free trial and get started!
Do you have any additional advice you can give to new MSPs and IT Support companies looking to make the move to MSP? Let us know with a comment below!
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