Are you dabbling with the idea of starting a Managed Service Provider (MSP)?
You’re in the right direction!
The global Managed Service Providers (MSP) market will hit $970.86 billion by 2032, expanding at a Compound Annual Growth Rate of 12% — this means there’s enough money to be made in the MSP industry.
However, like any business, you must understand the associated startup costs before jumping in. You want to ensure your venture takes off on the right note to drive growth and development.
Luckily, I have broken the startup costs for an MSP to help you determine if you’re financially ready to take the plunge.
Note: This post focuses on the bare minimum costs to start an MSP.
Key Takeaways
Starting an MSP can be a lucrative venture, given the market projections.
The more you understand how much you need, the easier it is to launch successfully.
Your MSP is more likely to succeed if you have what you need from the get-go.
MSP Startup Cost? - A Quick Overview
The table below gives a bird’s eye view of how much you need to start an MSP Business.
Requirement | Cost |
Computer & a large screen | $1,000 to $2,000 |
Office 365/ Google Workspace | $99.99 to $216/year |
PSA Tools | $53/ month to $1,020/ year, depending on the tool of choice. |
CRM | $97/month (GoHighLevel startup plan) |
Employee (Salesperson for a start) | $15 to 20/hour |
Local Chamber of Commerce | $300 to $400/year |
Emergency Fund | May vary depending on your financial situation. |
Hardware and Software Requirements
Computer
Most of the startup capital will go towards buying a computer and essential software. While you’ll incur other costs, these two are crucial to get your MSP up and running.
A computer will be at the core of your daily operations, so you must purchase a machine to do the job efficiently.
Look for a computer that offers:
High Processing Power
MSPs often run resource-intensive applications such as professional service automation (PSA) tools, remote monitoring and management (RMM) software, and virtual machines.
A computer with a high-performance CPU ensures smooth multitasking and efficient execution of complex tasks.
Sufficient Random Access Memory (RAM)
Multitasking is a standard routine of MSP operations. You want a computer with enough RAM to allow you to:
To switch between applications seamlessly.
Work on multiple tasks simultaneously.
Handle large datasets without experiencing slowdowns or performance bottlenecks.
Fast Storage (SSD)
Quick access to data is critical for MSPs, especially when managing and troubleshooting client systems.
A Solid State Drive (SSD) provides faster read and write speeds than traditional Hard Disk Drives (HDDs). As a result, systems respond quicker, you can experience faster application loading times, as well as rapid data retrieval.
Multiple Monitor Support
A computer with multiple video outputs allows you to expand your workspace, monitor various systems at a go, and streamline workflows.
In addition, multiple screens are great for monitoring alerts, managing help desk tickets, and reviewing documentation.
While the specific computer you go for may vary depending on preference, I recommend a machine with the following specs:
RAM: 16GB to 32G:
CPU: Intel Core i7 or higher, AMD Ryzen 7 or higher
SSD: 512GB to 1TB
Budget: $1,000 to $2,000
Software
You'll need a collection of software for your MSP. However, here's what you'll require when launching your business.
Office 365
Besides access to applications like Outlook, Word, Excel, and PowerPoint, Office 365 has tools like Microsoft Teams for group communication, file sharing, and project collaboration.
In addition, there's every chance you're already familiar with Microsoft applications and tools, which makes it easy to incorporate Office 365 into your MSPs workflow.
Budget: $99.99 per year.
Google Workspace
Google Workspace offers robust tools like Google Meet, Drive, and Google Docs, making it an excellent Office 365 alternative to Google's collaboration environment.
Furthermore, Workspace has a user-friendly email solution, so you can consider it if you prefer Gmail to Microsoft Outlook.
Budget: $144 to $216 per user/year
PSA Software
Professional Services Automation (PSA) tools are necessary when launching an MSP.
The idea is to start with what you require and then add more software as your needs evolve.
PSA tools provide the following benefits to your new MSP:
Efficient Service Delivery
PSA software allows you to automate and streamline workflows.
That way, you can efficiently manage service requests, assign tasks, and track progress, resulting in quicker response times and improved service delivery.
Centralized Ticketing System
PSA tools provide a centralized ticketing system for managing client issues. As a result, you can keep all support requests in a single platform, reducing the risk of overlooking or missing critical tasks.
Project Management
When running project-based work, PSA software facilitates project planning and milestone tracking. Monitoring ensures you complete your projects on time and within budget.
Billing and Invoicing
You’ll want PSA software to help you automate billing by tracking billable hours, expenses, and other chargeable items. That way, you can save time and minimize the risk of errors in invoicing.
Data Analytics and Reporting
Your new MSP will require a PSA tool with reporting and analytics features, allowing you to assess performance, identify trends, and make data-backed decisions. Such software is essential for continuous improvement and strategic planning.
While there are many PSA solutions, my top recommendations for MSPs are:
ConnectWise: Starting $53/ concurrent tech
Atera: Starting $149 per month
Acronis: Starting $85 per year
Client Relationship Management (CRM) Software
CRM software enables you to maintain well-organized client profiles. That way, you can better understand your customer needs, track communication history, and provide personalized services.
I recommend GoHighLevel for CRM. The solution comes with a host of features to help you streamline tasks without leaving a hole in your wallet.
Budget: $97 per month for the starter plan.
Pro Tip: Consider an MSP Vendor Partnership to enable you to get the hardware and software at discounted prices. |
Operational Expenses
Other MSP startup costs besides essential hardware and software include:
Staffing
You don’t need a lot of employees when starting. While you may require a 9 to 5 employee to sit in your office, the primary focus for a new MSP is to win its first customers.
You’ll, therefore, want to consider hiring a salesperson to help you lock in deals, especially if you’re not a good marketer.
I’ve worked as an MSP salesperson for nearly a decade and helped one of my former employers go from $2 million to $6 million in annual revenue.
Based on this experience, one of the best ways to scale your MSP is to get the right sales and marketing team on your side. You can start with one salesperson and onboard more as your business grows.
Budget: $15 to $20 per hour/salesperson
Note: GrowthGenerators offers a free MSP masterclass to help you win customers and scale your business. |
Joining Your Local Chamber of Commerce
Joining your local Chamber of Commerce can help fast-track the growth and success of your MSP. Some reasons you’ll want to join a local Chamber of Commerce include:
Networking Opportunities: Chambers of Commerce provide a platform for MSP owners to network with other local businesses, creating valuable connections that can lead to partnerships, collaborations, and client referrals.
Visibility and Credibility: Being a member of the Chamber of Commerce increases the visibility of your MSP within the local community. The heightened visibility can enhance your MSP's credibility and reputation.
Access to Local Resources: Chambers often offer local businesses resources, information, and support. MSP owners can benefit from accessing relevant local data, market insights, and business resources.
Business Promotion: Most local Chambers of Commerce host events and offer sponsorship opportunities. MSP owners can showcase their services, gain exposure, and promote their brand through chamber-sponsored activities.
Discounts and Benefits: Chambers frequently negotiate deals and special offers with local businesses. MSP owners can take advantage of these member-exclusive benefits, saving on operational costs.
Joining a local Chamber of Commerce comes at a cost. However, considering the many benefits for MSP business owners, the fee is worth it.
Budget: Local Chamber of Commerce membership fees vary depending on your location, number of employees, and the size of your business. However, most Chambers charge $300 to $400 per year.
Emergency Fund
Setting aside an emergency fund to keep you going until your business stabilizes is advisable when starting an MSP.
The amount may vary depending on your financial situation. However, be sure to have money in the bank to last you at least three to six months of expenses as you look to win your first customers and grow your MSP.
Watch the video below for more insights on how much it costs to start an MSP.
You Can Start Your MSP Without Budget Strain
You don’t need to break the bank to start an MSP business. You only need to ensure that you’ve got the basics covered.
Then, look for clients and scale as you grow. When launching, you must get your pricing model and offering right. That way, you can meet and satisfy your client’s requirements adequately.
Speaking of launching your MSP, I’ve created an in-depth MSP Launch Pad, a 6-week boot to equip you with the skillset to start and manage your MSP business.
Sign up for the MSP LaunchPad today to learn from the experts.
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