If you are thinking about starting a managed service provider business, you are right on target. The need has never been greater for such services and industry predictions suggest that, as tech continues to grow with greater complexity and more requirements, the need for managed service providers will be exponentially increased. As a startup, you’ll need the foundation every great business deserves, so we’re offering the following tips and strategies to help you get started.
The first step you’ll want to take is to assess your competitors. Perform a comprehensive search of competitors to determine who they are and what makes them a competitor to your business. Provide an overview of their businesses and list their strengths and weaknesses. Determine who their customers are and what kind of pricing is offered to them. Also, research any special offers or values they have that differentiate them from others. While asking these questions regarding your competitors, ask them also of your own business. This process will help define who your customers are and how you will overcome competitors in the offers of your own business.
Next, prepare your business plan. This is an overarching business plan for small business that, when broken into sections, details every important aspect of your business. It includes a mission statement and objectives, marketing strategies, a financial plan and forecast, an operational plan, and a detailed management team history for consideration. Each section builds on the other to form a complete statement.
The next step in starting a managed service provider business is to determine your marketing strategies. This is crucial for managed service providers because the search for these services is intense and the competition is high. One of the first questions you may ask of yourself is how you will provide a competitive advantage over all those competitors. Will you provide low-level, mid-level, or high-level services? How will you outperform your competitors and will you use packages of services as a discount leader? These questions will need to be asked and answered before your launch date is here.
Your marketing plan will be the catalyst for your managed service provider business to either create a strong business that offers long-term growth and success or one that doesn’t quite get off the ground. Your marketing plan must be as strong or stronger than your belief in your business. The four P’s of marketing include Product, Price, Place, and Promotion, which can be used to your advantage when considering the competition, your entry into the marketplace, the timing of your launch, and other viable factors.
Use your business plan template to document the operational plan of your managed service provider business. Include short-term processes, such as billing, answering emails and texts; answering calls, planning, providing IT services in a low, medium, or high format, billing customers, and maintaining crucial software, hardware, and security systems. Include long-term processes, as well, such as the dates when you expect to secure your XX contract, or when you hope to reach $XXXX in revenue. It can also be when you will start other locations based on this successful startup model, as well.
Describing the management team of your managed service provider business is important for lenders and investors to review, as your team must suggest experience and knowledge in their professional backgrounds. This is another key to obtaining funding if needed. You’ll need to highlight the backgrounds of key players, emphasizing those skills and experiences that will lead to a stable business. The key players should also have an exceptional understanding of IT equipment and services, software, applications, and other tech equipment or tech items, as the business is solely involved with the tech side of their customer’s operation.
When the business plan is complete and the steps to integrate each aspect of the business are included, it is time to secure funding for your startup. The funds can be for the startup alone or for the first five years of the life of the business. The decisions ahead will be made based on the strength of the business plan and your presentation to lenders and investors. If interested, a lender will offer a considerable amount of funding. You are not required to take the full amount; however, the expectation may be that you will. Loans come with complexities, as they must be repaid with interest on time and with other provisos included. Investors will not ask for repayment of the funding; however, they will often want a percentage of ownership of your business. Such representation in your business could require a 15-20% ownership transfer to accommodate the funding requests.
Having completed all of the above research, documentation, strategy-setting and planning, you are now ready to start your managed service provider business. Congratulations!
