Jim Lippie, a principal with MSP consulting firm Clarity Channel Advisors and an expert contributor to MSPmentor, shares three suggestions he'd apply if he were launching an MSP from scratch today.

1. Focus on recurring revenue and creating a service culture

In the past, MSPs started with reactive, break-fix work and then slowly moved their clients to more recurrent revenue plans. In this day and age, you don't need to go through that evolution. You should be targeting clients specifically for recurring revenue contracts. Spend every ounce of energy creating positive outcomes for clients and driving recurring revenue, in other words.

To that end, these are the services I would provide:

2. Hire selectively

In the past, when you had to put engineers onsite, they needed to be jacks-of-all-trades. They would have to solve server, infrastructure, network, and end-user support issues. In a remote scenario, you can specialize the services you offer over the cloud. This ultimately is going to drive more efficiency and margin into your business. As the market's becoming more competitive—and I think will become (even) more competitive in the future—it's important that MSPs operate as efficiently as possible with the primary goal of labor efficiency.

These are the positions I would prioritize:

As for other positions, I would consider outsourcing every function possible, including human resources, accounting and data center management.

3. Choose the right tools

These are all tools that you use to drive revenue. Your PSA tool, for example, should be an inexpensive ticketing system/CRM solution that integrates with every revenue-generating solution.

When you look at IT documentation, this should help drive labor efficiency because you can take specific run books on troubleshooting scenarios so help desk engineers don't have to be extraordinarily talented. They just have to follow a process that's prescribed in your IT documentation. 

Business intelligence is going to help you drive client retention, add more value to your client relationships and allow you to capture more revenue. If you have a recurrent relationship with a client (and) you're providing a cloud-managed solution to them, make a part of that solution a consulting business. Whether it's a business review once a month or once a quarter, you're in there talking to the client, consulting with them, helping them understand their business better from the technology perspective. 

That is going to make you more valuable to them as a partner and ultimately, that's what we want as an MSP. We want to be as valuable as we possibly can to the partner so that we can't be displaced in a highly competitive marketplace.

Editor’s note: Since publication, this article was edited to improve readability and clarity (no pun intended).

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