Is the MSP Business Right for You? A Comprehensive Checklist for Success

During a recent Club VMSA event, I gained valuable insights into the world of MSPs (Managed Service Providers), revealing that a significant number of vendors within this industry choose to remain inactive. It continues to astound me that senior business development managers and even staffing company owners often pursue MSP programs despite knowing their potential for failure. Many of them end up ceasing their support for MSP/client partnerships, often shortly after initiation.

These individuals should have refrained from committing to these programs altogether. Commitment to an MSP program necessitates a thorough understanding of providing resources, comprehension of financial risks, clear definitions of success in terms of consultants on billing, revenue, and gross margin, as well as having the essential infrastructure in place.

Here’s a quick checklist to help you determine if the MSP business is right for you:

1. Do you possess relevant experience aligned with the program’s categories? How long have you been supporting these categories, and do you maintain a database of resources? What is your proactive recruiting model/process?
2. Are you prepared to work with markups lower than those in your direct retail business? Can you handle waiting for payments, which may take 45-90 days, without disrupting your service?
3. Is your internal cost/expense structure (sales/recruiters, on-boarding, etc.) designed to succeed in lower-margin business?
4. Have you set realistic expectations for success, such as establishing your 6, 12, 18, and 24-month goals?
5. Is your infrastructure, particularly your team, adequately prepared to support an MSP business? Do they possess the necessary experience in this domain?
6. Have you established Key Performance Indicators (KPIs) for each program?
7. Have you implemented a weekly measurement and reporting structure?
   
   

The MSP business is not a suitable fit for everyone. It is an intensely competitive field that demands a significant amount of energy, commitment, both in terms of personnel and finances, and unwavering team dedication. On the flip side, it can also yield substantial rewards and profitability.