Without exception, when asked about advice they would give to someone thinking of starting an MSP, industry veterans responded with a similar version of: “Don’t do it.”
They’re joking, but they agree that starting an MSP business today means entering a more competitive and complex field than ever before. Now, success requires more than technical expertise. You need a deep understanding of business fundamentals, a commitment to security, and a competitive value proposition. If you’re up for the challenge, consider these hard-earned insights on what it takes to thrive in today’s landscape.
The Complexity of Starting an MSP
Allen Edwards
It’s important to understand that complexity has increased dramatically, said Allen Edwards, the founder of MSP Hire, who began his IT career in 1994.
“Everything’s cloud-based now, and security is a top priority. It’s no longer just about delivering IT services; it’s about managing a complex web of subscriptions, portals, and competing systems,” Edwards said.
The business side has also become more demanding, said Eric Long, president of TeraCloud, and a 35-year channel pro. “Managing a business today is far more complicated than just sending out invoices and collecting checks,” Long said. “You need to be prepared for the complexities of cybersecurity, compliance, and the legal liabilities that come with them.”
The 5 Biggest Challenges to Starting a New MSP
- Increased complexity: Technology is changing fast and MSP operations are more complicated than ever.
- Saturated market: SMBs have a million options; how do you convince them you’re the right choice?
- High financial toll: If you can’t make capital investments, you’re going to struggle.
- Getting noticed: Referral business can happen slowly. Can you market and sell effectively?
- Developing core business skills: You need to build process, hire carefully, select the right technology, spend wisely, and a whole lot more.
Add to that an intensely competitive environment, said Bob Coppedge, owner of Simplex-IT, whose career spans back to the late 1970s. “We’re not just competing against alternative solutions anymore; we’re competing against each other in a saturated market.” In response, MSPs must differentiate themselves through the value they provide, rather than the services they offer, Coppedge noted.
Come With Capital
Bob Coppedge
Another issue is that without sufficient capital, new MSPs may find themselves struggling to keep the lights on before they can even get the doors open. The old strategy of bootstrapping may no longer be sufficient, said Edwards, who has self-funded multiple businesses.
Added Coppedge: “If I were starting an MSP now, I’d bring more capital to the table. The upfront costs — especially in security and compliance — are significant, and you need financial resources to cover them before your first client even signs on.”
Long echoed this sentiment, emphasizing the importance of financial planning. “You need to have cash reserves to carry you through the first six months to a year. It’s not just about launching the business. It’s about sustaining it until you have a steady revenue stream,” he advised.
Serious Sales and Marketing
In addition to needing more money than expected, new MSPs should also begin marketing earlier than they might think. Edwards believes in finding your first client before launching the business. “I always test the market first. If you can’t secure that first client, you’re not ready to start the business,” he said.
Choosing a specialization — whether it’s cybersecurity, compliance, or an industry vertical — can help set new MSPs apart from the competition. And the industry has shifted to value-based competition, Coppedge said, so focus your messaging on that. “It’s not enough to say you offer IT services. You need to articulate the specific value you bring to your clients,’’ he said. This includes addressing questions like “What makes you different?” and “What problems do you solve that others can’t?”
The goal is to create a scalable, profitable, and eventually sellable company. Not a “lifestyle business” that eats away your free time and barely pays the bills.
Love To Learn, Learn To Delegate
Eric Long
Continuous learning and effective delegation are two skills all three channel pros said are vital in an industry that evolves as rapidly as IT. Long suggested aspiring MSP owners gain business experience before striking out on their own, working for an established MSP first, if possible. The pros also recommended taking formal business courses and joining general or IT-focused peer groups.
“Being a great technician isn’t enough,” shared Coppedge. “You need to understand cash flow, business processes, and human resources. Too many MSPs get caught up in the technical side and neglect the business side, which is a recipe for failure.”
“You need to stay on top of industry trends and constantly update your skills,” Edwards advised. “At the same time, you have to know when to delegate, but do so wisely. Don’t just hand off tasks — make sure you understand enough to manage and hold your team accountable.” Hire fast and fire fast, he added.
All told, careful preparation is the key to creating a successful new MSP. Winging it won’t work anymore, even if it did just a few years ago. But with money, marketing, technical chops, and business fundamentals nailed down, it’s still a great industry for the right person.
Featured image: iStock
