Interested in starting a MSP

Every week there is at least two posts about someone looking to start an MSP. I suggest the mods pin a mega thread with this topic. Here is some …

Interested in starting a MSP

Every week there is at least two posts about someone looking to start an MSP.

I suggest the mods pin a mega thread with this topic. Here is some content to get that kicked off.

First Steps - Market Analysis

You are interested in starting a MSP. Your job sucks, your boss sucks, or you are tired of doing work for someone else.

You want to jump to researching RMM tools and getting into the nitty gritty of building out your tech stack. But hold on there friendo, there's a lot to be done before you get to shopping for tech tools.

Your first step isn't determining your tech stack, it's trying to understand if there is an unmet need in your geographic area for a new MSP.

Determining Opportunity Space

You need to understand the total available scope of your market, the competitive landscape, and create determine your key differentiators.

Here is a link to the 2019 (most recent published) list of companies by sector, size, and state: URL.html Download the spreadsheet, remove the top two rows, and add filters on your columns. Narrow results to your state. Narrow results to company sizes you want to target. Generally speaking: Companies with over 199 employees can afford to hire an in house IT team, it would be an extraordinary sales effort to displace an internal team as a startup and then you would really need an inside connection. So you can remove Enterprise Size over 200 Companies with under 5 people are rarely going to sign up for the expense of IT, they will happily use break fix or walkup counter services like Geek Squad. These companies are seriously cost averse. So you can remove Enterprise Size under 5. And really to be conservative, under 9. Now sort by Firms largest to smallest. These are the verticals with the largest opportunity space. Now start picking out industries that you feel you can build an offering toward and eliminating industries that have small opportunity spaces. Think about your previous experience and where you have something unique or deep skills to offer. For example: Retail is usually cost averse, has long hours (after 5pm, weekends, bars can go until 2am, etc. ), needs immediate response times when something goes down, has support of the point of sale system 24x7, usually has very few back office computers to support, and generally runs support out of one HQ. We don't work with retail spaces for this reason. Every time we are approached by a store or restaurant or bar, we disqualify them almost immediately due to their support needs not lining up with our services and their tendency to be upset with any costs and resist modernization if there is a cost tied to it. Real estate is a high touch market with off hours. These folks tend to be tech light, cost adverse, and make emotionally drive decisions. You could maybe build a niche in this industry if you were prepared to be low cost and high touch. Professional services includes accounting, lawyers, and also IT companies. This is a good opportunity space! But you have to account for IT companies making up a part of these numbers. I would discount the numbers in this space by 20% to account for IT and tech companies that can do their own support. Construction, logging, agriculture, mining, and arts are low opportunity spaces. There may be a high employee count, but most of these employees aren't sitting in front of a computer. They are working a line, swinging a hammer, performing, etc. You need computers to support to build an MSP. Health care, manufacturing, social services, banking, and utilities are all highly regulated and have very specific niche support needs. You need to really understand what you are doing with these types of clients. These are opportunity spaces to build a niche if you have experience working in regulated or highly specialized spaces and can bring that experience to help these types of companies. You should now have a narrowed down list of your opportunity space for your state. Now narrow it down to your metro area. Google population of %STATE% where %STATE% is your actual state. Google population of %CITY% where %CITY% is your city. Now divide the city population count by the state population count. That's the percentage of the state wide opportunity space available to you. In your spreadsheet, multiply this number by the Firm total. I generally assume the government reporting is off by a factor of about 20%. To be on the conservative side, I then take 20% off my total numbers. That is an estimated number of companies that MAY need MSP services. I did this exercise for Birmingham, AL and came up with a total of 680 companies with a total of 5,614 employees. That's a fairly generous middle of the road estimate for the opportunity space in that city.

Assessing the Competitive Landscape

Awesome! Now you know your market space opportunity. You thought were done here right? But wait... you aren't the only game in town!

Let's talk about competitors. Those are the folks you are competing with to win the opportunity to support these businesses. Make no mistake, this is a competition.

Based on a quick Internet search and the listings on some review sites get a rough count of the competitors located in that metro area. Look at and

Keeping with the Birmingham, AL example I found a minimum of 24 MSPs located in that metro area. Add one to this count to represent you as a new entry into this market.

You take your Firm total and divide that by the number of MSPs + 1 for you. Assuming you crush your marketing and sales and work up to an equal share of all the available business, this is your likely opportunity space if you keep at it and grind it out for the first 3-5 years.

In Birmingham, AL that would be 27 potential companies with a total of 225 employees (computer end points).

That's your most optimistic look at a greenfield opportunity space.

Creating a Value Proposition

Now look at your competitors.

How many have mostly 5 star reviews?

How many have really polished websites?

How many have clear and well articulated value propositions?

Is there a marketspace they don't have covered?

Is there a way you can differentiate against these companies? (hint: I'm a good tech isn't a point of differentiation)

Is there a way you can skew value to offer a better value proposition to your target client?

If you can't get to this point and come up with your target market, opportunity space, and a way to thoroughly answer these questions you might just want to keep your current job, look for a better job and an organization who operates in a way that is consistent with your values or that just pays more or has better benefits.

Next Steps

If you can answer all these questions, then let's move onto step #2.

.... Depending on the response from the sub, folks can add that content in here, I can do a follow up post, or we can let this post die. I'm interested to see how this goes over and what feedback comes out of it.