Starting an MSP from Scratch

I create content about starting an MSP from scratch on the regular. This one goes deeper. If I launched tomorrow with zero clients and zero revenue, these are the eight moves I’d actually make. Not theory. Practitioner stuff based on years of watching what works and what doesn’t.

Why Most MSPs Struggle Early

Most MSPs that hit financial trouble early didn’t fail because they were bad at technology. They failed because they priced themselves into a hole on day one and never recovered. Or they spent time and money on the wrong things. Or they got busy with tech work and didn’t take time to run the actual business. This was me way back in the early 2000’s when I was trying to run my own shop. Get busy, forget to prospect, wonder where the work was, repeat…

The difference between an MSP that scales and one that plateaus usually isn’t talent. It’s structure. And structure starts on day one.

If I was starting an MSP this is what I would do

Move 1: Get my pricing put together

Every MSP owner underprices at the start. The question is whether you underprice by a little or by a lot.

I generally base all of my service pricing off of an hourly rate (this includes Managed Services, we’ll get there in a moment). If you’re in the US your hourly rate should be at least in the $150 (or higher) range. I’m probably starting closer to $175 for basic hourly stuff if I were starting again. Let me say this again: $150 is the absolute FLOOR for what you should be charging in the US.

I’d use that rate for break-fix / time and materials work, I’d use that as the basis for project work, and I’d also base my managed services rate on that as well. Since I’d be starting from scratch I’d assume about 0.75 hours of work per endpoint/user. So, if my hourly rate was $175 in my market I’d charge $131.25 for the service side of things in my fully managed offering.

Then I’d look at the stack. Tools like the xDR solution, email security, DNS filtering, your RMM, and the other tools that every machine gets. I’m marking my stack up 100 percent which generates a 50% margin. This part is straightforward.

I’d add that marked up number from the stack to the $131.25 together and see how that lands. Then I’d round it up to the nearest reasonable amount, and that becomes my pricing.

For example: If stack costs are $12 per endpoint I’d charge $24. Then I’d add that to the service ($24 + $131.25) which is $155.25. I’d round it up to $160 and move on. We’ll come back to pricing a little later in this post.

Price higher than feels comfortable. I mean it. When your gut tells you you’re being aggressive, that’s the right signal. You can always come down.

Move 2: Build a website in an afternoon

The second move is building a website, and I’m doing it in an afternoon. It just needs to answer three questions:

1. Who do I help?
2. How do I help them?
3. Who am I?

If you answer those three questions and make it SUPER OBVIOUS AND EASY for visitors to reach out to you that’s pretty much it for this v1.0 of your website.

What I would do is to sit down with Claude and Claude Design. I’d work with Claude first to get the content down. A quick prompt or two to help put together the overall content and verbiage, and then jump over to Claude Design to get it looking good enough. I’d also want to do some sort of blog to help with SEO, but that’s a long game so a blog post once a week or every other week is fine to start. You won’t rank for anything in month one. By month eight or nine, posts start showing up in search. Also, at this stage, do NOT spend money on ads.

Move 3: Network relentlessly

My personal network is my first sales engine. I’m calling friends, emailing former colleagues, reaching out to people I know in other industries. Making sure everybody and their brother knows I’m open for business and looking for clients. These conversations teach you what problems are actually out there before you ever pitch anything. This is also where your first clients usually come from.

I’m also going to find some networking groups. Local chambers of commerce or other networking groups like BNI or local groups in your vicinity are solid places to start. The key here is to make sure that the group(s) you join have clients that you want to do business represented. I talk a LOT more about this in this blog post if you want to dig in here. If you have a specific vertical you want to work with don’t forget about finding vertical aligned meet-ups and conferences. Those can be a goldmine for finding leads.

There’s a book that I like as a concept called “Never Eat Alone” which is sort of what I’d be doing here. As often as possible, I’d want to have a lunch, coffee, or even go for a walk with someone that I can build a relationship with.

Move 4: Start landing clients

It’s time to start generating revenue. Early on, most dollars are good dollars. Go after whoever will sign. Build confidence. Get references. Figure out what works in a sales conversation. The goal is to get to three to five clients quickly so you can move to the next phase. That said, one piece of advice is to have a no a**holes rule where you stay away from jerks as much as possible. In order for me to take on a jerk client there’d have to be a lot of upside in terms of revenue or growth.

Move 5: Automate the noise

Once you’ve got a few clients, automate the noise. Tools like Pia and Immy.bot handle would be on my list. Basic stuff gets routed and prioritized without you touching it with an auto dispatch tool, and auto provisioning and configuring computers would save a ton of time. You’re not trying to build a fully staffed network operations center. You’re trying to avoid handling every single incoming ticket yourself. For the first six to twelve months you’re doing most of the technical work personally. That’s fine and expected. But automation keeps you from burning out on the volume. If your margin allows it, layer in a virtual assistant to keep tickets moving forward. Cheap labor guided by automation and clear direction beats you drowning in Tier One work every time.

Move 6: Hiring a tech

When it’s time to grow the team, my first technicnal hire is a Tier Two, not a Tier One. A Tier Two can handle pretty much all of the normal tickets and projects. They don’t need a ton of hand holding, and won’t ask you a ton of questions. They make you more productive. Your job as the owner is to shift your focus towards sales and account management. You know, more strategic stuff. You’re not meant to be a technician forever. Hiring a Tier Two is what actually frees you up to sell, and selling is what grows the business.

Move 7: Start defining your Target Client Profile

Once you’ve got a few solid clients and some runway, its time start defining your Target Client Profile. Healthcare, legal, accounting, manufacturing, whatever makes sense for you and your background. Something with recurring problems you can get really good at solving. This focus makes you predictable, repeatable, and eventually much more valuable than a generalist doing everything. But early on you can’t afford to be picky. Starting to focus is smart, but you’re still taking on most new clients. Revenue first, vertical second.

Move 8: Watch your margins

After signing a few clients it’s time to audit your pricing and profitability. Make sure they’re actually making you money. Review the time spent on your accounts. Look at your margins. If you underpriced to land them, you’ve got roughly a six-month window to adjust before that pricing becomes your permanent baseline. Then you’re stuck servicing unprofitable accounts while trying to win better-priced new ones. Raise your prices. Not drastically. But enough to hit your margin targets. Most MSPs regret not doing this earlier. Don’t be most MSPs.

Price first. Build fast. Network hard. Land clients. Automate the work. Hire smart. Niche down. Protect your margins.

Eight moves. None of them are complicated. All of them matter.

The difference between an MSP that scales and one that stays stuck usually isn’t what you do. It’s what you do first, and what you refuse to compromise on when things get busy.

If you want to go deeper on pricing specifically, I’ve got a full video on that over on my YouTube Channel. And if you’re already past the startup phase but feel like your margins aren’t where they should be, the audit in step eight is where I’d start.