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Information Technology Business Plan

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Information Management Hawaii

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

By focusing on its strengths, its key customers, and the underlying values they need, Information Management Hawai’i, Inc. (IMH) will increase sales steadily in its first three years, while also maintaining the gross margin on sales, with a focus on cash management and working capital.

This business plan leads the way. It renews our vision and strategic focus: adding value to our target market segments, and reinforcing our ties with businesses in our local markets. It also provides the step-by-step plan for improving our sales, gross margin, and profitability.

This plan includes this summary, chapters on the company, products and services, market focus, action plans and forecasts, management team, and the financial plan.

1.1 Objectives

1. Achieve healthy earnings (EBIT) in the first year of operation.

2. Maintain a midrange gross margin throughout the entire operation.

3. Maintain just-in-time (JIT) inventory levels, or 11 turns per year.

4. Increase sales modestly but steadily in the second and third years.

1.2 Mission

To provide the Hawai’i business community with quality brand-name Information Technology business information solutions, reliable and professional Technical Support, and unparalleled Customer Service through the application of the principles of Kina`ole and heartfelt aloha, and to earn a fair profit for our employee-owners and stakeholders by embracing sound, ethical business practices.

1.3 Keys to Success

The keys to our success are:

• Customer Satisfaction Goals vs. Results

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Information Management Hawai’i, Inc., will sell and service digital office information systems for Hawai’i’s businesses, with a focus on the Neighbor Island business community. IMH will be formed as the result of the acquisition of three existing businesses: Maui Office Machines, Inc.; Electronics Hawai’i, Inc.; and, Kauai Office Equipment, Inc.

2.1 Company Ownership

IMH will be privately-held [C corporation] owned in majority by the IMH Employee Stock Ownership Trust. There are currently 15 employees, and all will own equal shares in the ESOT. New employees will be given the opportunity to become vested in the Employee Stock Ownership Plan (ESOP) after a suitable probationary period.

2.2 Start-up Summary

Our start-up costs will be $1M, which includes $450,000 for the acquisition of the Maui and Hilo operations of Servco Integrated Office Technology.

The remainder of the funds will be used for:

• Legal, Insurance, Rent & Misc: $125,000

The start-up funding will be financed by loans arranged through the Small Business Development Center, and by the Hawai’i Community Loan Fund, and the Small Business Administration as a guarantor. Start-up assumptions are shown in the following table and chart.

2.3 Company Locations and Facilities

We have two locations, one in Kahului, Maui and the other in Hilo, Hawai’i. The two offices are presently being leased by Servco Pacific, Inc., and we will rent from them on a month-to-month basis until we are able to relocate to more suitable facilities. On Kauai, we have a sub-contractor agreement with Kauai Office Equipment to handle installations and service.

Products and Services

IMH will acquire an existing operation whose primary business has been the sale and service of business appliances (copiers, facsimiles, printers, etc.) and has operated as a part of the office equipment industry. We will build from this base to transform the business into a value-added provider of the emerging services and technologies of the new Information Industry. Following the lead of Canon, USA and other manufacturers which we represent, we will approach the marketplace from a total systems solutions viewpoint.

This new paradigm will begin with an analysis of the client’s existing and planned business processes, and will provide total workflow solutions utilizing multifunctional imaging platforms and information distribution systems. These systems will be backed by professional and reliable technical service and proactive customer service. By forming strategic alliances with local Information Industry Value-Added Resellers, we will be able to offer turnkey Local Area Network (LAN) systems and the ability to retrofit existing LAN and peer-to-peer systems.

3.1 Sales Literature

Copies of our product and sales literature are attached as appendices. Of course, one of our first tasks will be to change the message of our literature to make sure we are selling the company, rather than the product.

3.2 Product and Service Description

IMH will market and sell brand name business information distribution systems and hardware, technical service and support for these products, and the consumable supplies used by these systems. We will be a single-source provider for business information and imaging products and services.

After researching our various manufacturer’s offerings and evaluating our core competencies, we will focus our marketing and sales efforts around the digital products offered by Canon USA and eCopy, Inc. We will supplement this product line with Lexmark and Hewlett Packard printer products. As we continue to transition the company into the digital marketplace, we will form alliances with additional IT manufacturers and suppliers who can round out our product and services line.

Hardware product offerings will include:

• Hewlett Packard Printer products (laser)

Software offerings will include:

• Canon Image Platform (document distribution)

Service Products include:

• Sale of consumable products for all brand names (Canon, Ricoh, Xerox, HP, Lexmark)

Professional Services include:

• Network design and installation (sub-contracted)

3.3 Competitive Comparison

The only way we can hope to differentiate well is to define the vision of the company to be an information technology ally to our clients. We will not be able to compete in any effective way with the large mainland-based office equipment companies by selling boxes or products as appliances. We need to offer a real alliance to our local customers.

Unfortunately, we cannot sell the products at a higher price just because we offer services; the market has shown that it will not support that concept. We have to also sell the service and consumable supplies and charge for them separately. This monthly recurring revenue is the foundation of our financial stability.

3.4 Technology

New technology has changed almost everything about the traditional office equipment (copier) industry, and for all practical purposes it no longer exists. The new Information Industry has emerged because of the technology of convergence. The primary driver of convergence of different forms of information is technological change, specifically the rapid diffusion of digital technology into an ever-wider array of information businesses. Beyond digitization, dramatic changes in computing and telecommunications industries (mainly in faster microprocessors and increasing bandwidth) are also driving convergence.

IMH will make convergence the theme of its vision, planning, and marketing strategies. We will move into the new Information Industry’s technology with the aim of bringing the most efficient workflow solutions to our clients while providing value-added customer support and service, and earning a reasonable profit in the process.

3.5 Service and Support

Our strategy hinges on providing unparalleled service and support, which is critical to setting us apart from the competition. We need to differentiate on service and support in order to become true partners with our clients. Our service offers will include:

• Upgrade analysis : we will periodically assess our client’s business processes and requirements, and offer cost-effective upgrade solutions to meet changing needs.

3.6 Future Products and Services

Beginning at start up, we will explore and research new information technologies for inclusion in our product offerings. The products which we choose will be in line with our vision to transition the company from being an appliance seller, to being a provider of total information management solutions. These convergent information products will include:

• Media transport and reproduction (distribute and print)

3.7 Fulfillment

We have an established relationship with our manufacturers and suppliers, and will be able to take advantage of all discounts and promotions in order to keep our margins at roughly 49% throughout the operation. We will also implement and employ “just-in-time” inventory strategies for hardware, supplies, and service parts orders to further strengthen our margins.

As we continue to grow the business, we will evaluate other IT industry manufacturers and product lines to strengthen our offerings with a view primarily to quality and margin advantages.

Market Analysis Summary how to do a market analysis for your business plan.">

IMH will focus on local markets, including small offices and home offices (1-9 employees), medium to large businesses (10-99 employees), corporate Hawai’i (multiple locations or 100+ employees), and local government offices.

4.1 Market Segmentation

Our market segmentation scheme is fairly straightforward, and focuses on all Neighbor Island businesses. The information contained in our customer analysis table is taken directly from the 2000 US Census and government directories, and clearly shows that our largest market potential is the small office and home office (SOHO) segment. This segment is largely overlooked by most of our competitors because of its “low end” buying habits, and a reluctance to compete with the major retail chain box movers. We will target the SOHO market segment with value-added and affordable business solutions customized to its unique needs, and offer the same quality of service and support as are afforded the larger businesses.

The next largest market segment is medium to large businesses, and is the arena where we now focus most of our sales efforts. We will continue to target this segment, but with a different approach than our predecessors. The strategy used by former management has been to bring in selected products, and then attempt to find a buyer. This resulted in inventory overstock, and obsolescence. We will work with the medium to large businesses to determine their needs, and design customized solutions before ordering the required systems (JIT inventory strategy). This segment will remain an extremely important part of our marketing mix, and contains a large portion of our current clients. A majority of our systems upgrade opportunities and repeat business will come from this market segment initially.

Although the Corporate Hawai’i market segment is the smallest in numbers, it has the potential to provide a significant share of our revenues and growth (the 80/20 rule). We have a scattering of current clients in the Corporate Hawai’i segment, but we need to do a better job of penetrating this lucrative end of the market. We will accomplish this by offering professional services to include workflow and network design, MIS support, and other value-added support benefits such as “uptime guarantees.” We will develop long-term relationships within this segment, and earn their business.

The local government market segment is unique in that we act primarily as a “middle man” for our manufacturers due to GSA price schedules and other national government-only programs. This segment is fiercely competitive, very price-focused, and buying decisions are often influenced by “who you know,” as well as price. We are fortunate in that we have long-established relationships within the County and State government agencies, and have many loyal clients in this segment. We will increase our share of this market segment by offering the same value-added service and support benefits that we bring to our commercial clients.

4.2 Target Market Segment Strategy

Developing a market strategy is a departure from the way the company has been managed in the past. We will change the paradigm of being a product- and price-focused sales organization, to that of becoming a customer- and market-focused organization, with all departments sharing responsibility for customer satisfaction. We will accomplish this paradigm shift through the implementation of a balanced scorecard philosophy of management, with special attention to employee learning and growth.

As mentioned previously our market segmentation strategy is straightforward, and addresses all components of the Neighbor Island business community. Planning and implementing specific strategies for each of the four identified segments will be an on-going process, and we will consult with marketing specialists, and our manufacturers, to further refine these efforts as we develop our marketing plan.

4.2.1 Market Trends

That is the primary reason that IMH has chosen Canon USA as its preferred manufacturer. Canon has led the way in the industry with it’s digital technology innovations, and its ability to bring both the product and the concept to the marketplace. We will follow Canon’s lead and bring this efficient, productivity-enhancing technology to Neighbor Island businesses.

4.2.2 Market Growth

As computer prices continue to fall, unit sales increase. The published market research on sales of personal computers is astounding, as the United States market alone is absorbing more than 30 million units per year, and sales are growing at more than 20 percent per year. We could quote Dataquest, Infocorp, IDC, or others; it doesn’t matter, they all agree on high growth of CPU sales.

This rapid growth rate holds true for productivity systems which connect to the computers being sold. The stand-alone analog systems and appliances which abound in the business marketplace today, will be replaced by connected digital convergence systems in the coming months and years. IMH will position itself to be a value-added provider of this rapidly emerging technology for new businesses, while continuing to maintain and upgrade our current analog customer base.

4.2.3 Market Needs

All businesses have in common a need to be continuously productive, and they rely on their service providers and vendors to sustain their productivity. Effectively filling this need requires that the vendor bring to the table sound planning, quality products, reliable service, and a true partnership and support relationship.

Specific business needs include the ability to gather, compile, analyze, and distribute information in various media formats. This is where IMH’s strengths will be most beneficial to our clients, both big and small. Anyone can sell the “box” at an attractive price, but only a true value-added provider can offer the peace-of-mind that comes from a customer-focused approach to the relationship.

Primarily due to geographic isolation and smaller populations, the Neighbor Island business community has an additional common need of being able to rely on other locally-based vendors and suppliers for quick, reliable, customer service and support. Having to call someone on Oahu, or the mainland, to place a service call, or to order supplies, or get an answer to a simple billing question, is both an irritant and a hindrance to most Neighbor Island-based businesses. Our primary goal is to fill this need by bringing true pro-active, and total, customer service to the Neighbor Island business community, and to gain their confidence and loyalty. This will become one of our underlying strengths.

4.3 Service Business Analysis

IMH is a part of the Information Industry, and specializes in providing information management systems and technology for business processes. We envision that a converged information industry operating within the context of an advanced information infrastructure will be a huge boost for U.S. businesses. Several Washington think tanks estimate that it could spur more than $300 billion annually in new sales and increase worker productivity by 20 to 40 percent.

At the present time, an estimated two-thirds of all American jobs are information related, and that number will increase as the shift from manufacturing to service industries continues. The convergence of information industries will continue because the technological and business imperatives are compelling. If one company does not see the possibilities, another will.

4.3.1 Competition and Buying Patterns

Business decision makers and finance managers understand the concept and value of service and support, and are much more likely to pay for it when the offering is clearly stated.

There is no doubt that we compete more against the box pushers than against other service providers. We need to effectively compete against the idea that businesses should  buy information platforms as plug-in appliances that don’t need ongoing service, support, and training.

Our research and experience has indicated that our target market segments think about price, but would buy based on quality service if the offering were properly presented. They think about price because that is what is traditionally presented to them first. We have very good indications that many would rather pay 10-20% more for a relationship with a long-term vendor providing back-up and quality service and support. They end up in the box-pusher channels because they are not aware of the alternatives.

Availability is also very important. The business decision makers tend to want immediate, local solutions to problems.

4.3.2 Distributing a Service

Medium to large business segment buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales.

Unfortunately our SOHO target segment buyers may not expect to buy from us. Many of them turn immediately to the retail superstores (office equipment, office supplies, and electronics), the Web, and mail order to look for the best price, without realizing that there is a better option for them for only a little bit more. We will overcome this hurdle through innovative service offerings, and targeted marketing.

4.3.3 Main Competitors

In our higher-end targeted segments (medium to large businesses, corporate Hawai’i, and government offices), the primary competitors are Xerox and Lanier. The secondary “low end” competitors on the Neighbor Islands are Maui Office Machines and Business Equipment on Maui, and Electronics Hawai’i and Stationers on the Big Island. Our overall competitive strategy in these segments will be Canon’s superior technology, and superior value-added service and support.

In our SOHO target segment, the primary competitors are the superstores: Office Max, Office Depot, Sears, and to some extent Costco, Hopaco, and the Web. While these outlets can offer lower prices, they offer no (or very little) aftermarket service or support. That is our competitive advantage in this segment, and will differentiate us from these “box movers.”

4.3.4 Business Participants

The traditional office equipment (copier) industry has been dominated by only a few major manufacturers: Xerox, Canon, Oce, and Ricoh (and its OEM products – Lanier, Savin, and Gestetner); and then come the low-end players: Sharp, Toshiba, and Minolta. With the exception of Xerox, which maintains its own sales force, the other manufacturers distribute and sell mainly through authorized dealers.

The rapidly emerging Information Industry’s digital convergence products will most likely be dominated by the same participants as described above. While Xerox has been a past leader in the manufacture and sales of analog products, Canon has emerged as both an innovator, and the leader, in the new Information Industry with their ImageRunner digital products and Image Platform information distribution systems. Canon is also (and has been for many years) the front runner in color repro-graphic systems, and holds the most patents of any manufacturer in the industry.

Strategy and Implementation Summary

We must differentiate ourselves from the box pushers. We need to establish our business offering as a clear and viable alternative for our target markets, to the price oriented sales pitch to which they are accustomed.

• 30-day sales window – war with competition mainly on price.

The industry’s cheese has been moved. In order to shift to a more contemporary paradigm, our marketing and sales efforts will need:

• A new marketing concept – customer oriented, profit oriented, integrated efforts.

5.1 Competitive Edge

Our competitive edge is our positioning as a strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they should both stay with IMH, and refer us to other businesses. In close-knit communities like the Neighbor Islands, reputation is extremely important, and word-of-mouth advertising is invaluable.

5.2 Strategy Pyramid

Our main strategy will be placing emphasis on service and support, and our main tactics are networking expertise, systems training, and implementing a customer relationship management system (CRM) from e-automate. Our specific programs for networking include mailers and internal training. Specific programs for end user training include direct mail promotion, and on-site customer programs. Implementing the CRM software and training will be coordinated with the e-automate Corporation.

Our second strategy is emphasizing relationships. The tactics are marketing the company (instead of the products), more regular contacts with the customer, and increasing sales per customer. Programs for marketing the company include new sales literature, and direct mail. Programs for more regular contacts include call-backs after installation, direct mail, and sales management. Programs for increasing sales per customer include upgrade mailings and sales training.

5.3 Value Proposition

IMH offers its clients peace-of-mind by being a vendor who acts as a strategic ally, and delivers quality products backed by premium service and support, at a premium price.

5.4 Sales Strategy

We will sell the company and its ability to act as an ally. We will sell IMH, and the reputation of the industry-leading manufacturers it represents.

We will sell our service and support. The hardware is like the razor, and the support, service, software, and training, are the razor blades. We need to serve our customers with total solutions, and not just product features. The products are a means to arriving at end solutions.

The Yearly Total Sales chart summarizes our conservative sales forecast. We expect sales to increase from $3.1 million in the first year to more than $4 million in the third year of this plan.

5.4.1 Sales Forecast

The important elements of the sales forecast are shown in the following Chart, and Table 5.4.1. Non-hardware sales increase to almost $2 million total in the third year, or 47% of total sales.

5.5 Milestones

The following table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation. The most important programs are the sales and marketing programs listed in detail in the previous topics.

5.6 Marketing Strategy

The marketing strategy is the core of our main strategy:

• Develop specific programs for each target market segment:
• Government Offices – workflow/process surveys, uptime guarantees, GSA rates and incentives

5.6.1 Sales Programs

Specific sales programs will be included in our new Marketing Plan, and will be included in this Business Plan as they are finalized. In general however, our sales programs will be centered around conducting workflow and information distribution analyses, direct mail, and placing an emphasis on the benefits which IMH and its manufacturers will be able to offer its clients through “total care” service and support.

5.6.2 Positioning Statement

For businesses who want to be sure their information distribution systems are always working reliably, IMH is a vendor and trusted strategic ally who makes certain their systems work, their people are trained, and their down time is minimal. Unlike the product/price oriented vendors, it knows the customer and goes to their site when needed, and offers proactive support, service, training, and installation.

5.6.3 Pricing Strategy

We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge.

We cannot build the service and support revenue into the price of products. The market can’t bear the higher prices and the buyer feels ill-used when they see a similar product priced lower with the competition. Despite the logic behind this, the market doesn’t support this concept.

5.6.4 Promotion Strategy

We will employ the following general promotional strategies for the various market segments:

• SOHO: We will depend on periodic local newspaper advertising, to reach new buyers in this segment. We will also utilize direct mail and and the resources of the local Chambers of Commerce and other affinity groups to reach this segment. The message will emphasize service first, and “complete product and service packaging” as a secondary theme.
• Medium to Large Businesses: Direct face-to-face contact (direct sales) will continue to be our primary strategy for this market segment. Direct selling will be supplemented by periodic promotional direct mailings and personalized system upgrade opportunities.
• Corporate Hawai’i: This segment will be handled by direct contact and relationship building only. We will make personal presentations to the decision makers in this group, and stress our service and technical benefits and advantages.
• Government Offices: We will utilize a combination of direct mail and face-to-face promotional strategies with this segment, and the message will be the local service and technical advantages of IMH. We will produce an attractive RFQ/RFP response package to accompany our submissions.

5.6.5 Distribution Strategy

IMH is first and foremost a direct sales organization, meaning that we must present our services and products directly to the majority of our customers and clients. Having said that, for our planned penetration into the SOHO market, we will need to establish a presence as a Value-Added Reseller (VAR) for certain low-end product lines which don’t carry the margins necessary to sustain the costs of direct sales. We will plan our new locations accordingly.

5.6.6 Marketing Programs

As we work to complete this Business Plan, we are simultaneously working on our Marketing Plan. As you can see from the milestones table, we anticipate completion of our detailed Marketing Plan by 9/30/01, or one month from start-up. Because we are acquiring an on-going business, the shift to our vision of customer- and market-focused strategies will not happen overnight. We must plan this shift carefully, and implement it judiciously, so as not to disrupt our immediate operations. We have budgeted for, and will utilize, marketing advisors and consultants (including our manufacturers) in the design of our Marketing Plan.

5.7 Strategic Alliances

Our alliances with our manufacturers, and especially Canon USA, will be the most pivotal to our success. We will remain a Canon Authorized Dealer, and continue to enjoy all of the benefits of this long-standing relationship.

We will form alliances with other locally-based VARs and computer network providers to enable us to provide complete turnkey packages for our clients. These relationships will be included in our Marketing Plan.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Our management philosophy is simple and is an integral part of our values: doing right things right, the first time (Kina’ole).

IMH will be an employee-owned company and we all share the same vision of providing our clients (who in many cases are friends and neighbors) with the very best in customer service – period. We will encourage personal growth, creativity, and enable individual empowerment to achieve this goal. We will manage the business by setting achievable Balanced Scorecard goals, measuring them, and making mid-stream adjustments as necessary.

6.1 Organizational Structure

Our team includes 15 employees initially, and is organizationally flat. The departmental divisions are sales and marketing, service, and administration. Operational managers include:

• Systems Manager (two positions – Big Island and Maui): Oversees all service issues including service agreements, service call prioritization and response, carry-in service, customer support, and systems training and development. Will be assisted by Systems Engineers, and Systems Technicians.

6.2 Personnel Plan

The total head count moving over from Servco at the time of the acquisition will be 13. We are adding two former employees at startup to round out our team, for a total startup head count of 15.

There are an additional six positions shown as “vacant” in the Personnel plan. During each quarterly business plan review, we will assess the need to fund these positions to sustain our growth, and more evenly distribute the workload.

6.3 Management Team

Bill Harding, president and general manager:  XX years old, and has lived on Maui for 43 years. Joined SIOT in 1998 as Maui branch manager, and became general manager for Neighbor Island operations six months later. Prior management experience includes: BTA market manager of the Neighbor Islands for VoiceStream Wireless, Neighbor Island area sales manager for Central Security Systems, and radar project manager for Telcom International in Nigeria, West Africa. Bill has attended numerous management and sales training courses and seminars throughout his career.

Laurie Watson, secretary/treasurer and administrative manager: XX years old, and local Maui resident. Has been at the same location through three different owners prior to Servco’s acquisition of The Office Place in 1995, for a total of 15 years of local office equipment industry experience. Laurie has extensive knowledge of service procedures and dispatching, A/R and A/P procedures, inventory control and tracking, as well as an intimate knowledge of our customer base. Her experience and knowledge will be invaluable in recovering our customer base, and in growing the business.

Anne Tioganco, office manager (Hilo): XX years old, and local Hilo resident. Anne has also been with the company through all of the acquisitions, and has XX years experience in the office equipment industry. She will assist Laurie by handling the administrative and customer service tasks for our Hilo branch, and will be instrumental in our Big Island customer recovery efforts.

Earle Oshiro, systems manager (Big Island): XX years old, and local Hilo resident. Like Laurie and Anne above, Earle has been with the company through four different owners, and has XX years of local office equipment service management experience. Earle has also completed Canon’s “train the trainer” course, and will be a great asset in the on-going training and development of our systems engineers and technicians.

Joseph Alfonsi, systems manager (Maui): XX years old, and local Maui resident. Joe joined the Maui branch of SIOT in 1999 as field service manager, after transferring from the SIOT Honolulu branch. He has XX years of local office equipment industry service experience, and is familiar with both Canon and Ricoh products. Joe is an asset to the Maui team, and has outstanding customer service skills.

6.4 Management Team Gaps

We believe we have a good team for covering the main points of the business plan. Key members have the experience and knowledge to manage and grow the business, and are highly motivated by the employee-owner concept.

The obvious management gap is a plan to fill the general manager’s position at some point in the future, before the current GM reaches retirement age. As an employee-owned company, the preferred strategy will be to promote from within, and fill vacancies as they occur. As the company grows, we will seek out additional talent in all operational areas.

Financial Plan investor-ready personnel plan .">

Although we are treating the business as a start-up company, the financial plan is solidly based on past performance. We have taken actual SIOT P&L income and expenses from the past three years, and eliminated corporate overhead expenses such as warehouse and administrative costs, inventory penalties, and corporate nominal interest. We then projected income based on actual past performance, and factored back in the revenue base that was relocated to Honolulu over the past two years (mainly service and supplies).

We approached the financial planning from a conservative standpoint, and based those numbers on achievable gross margins. Also, our actual interest and tax rates will most likely be lower than the assumed rates due to our being structured as an employee-owned corporation (ESOT).

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in Table 7.1. As mentioned previously, we assumed interest and tax rates based on a “worst case” scenario, and these will be adjusted once we have finalized the initial funding and establish the ESOT. We have also assumed our personnel burden at 30% of payroll in order to allow for above-average benefits for our employees. As we shop around for benefits vendors, this assumption will be subject to revision as well.

Other key business assumptions are:

• We assume access to the start-up funding necessary to re-shape and re-build the company, and to provide adequate initial capitalization.

7.2 Key Financial Indicators

As shown in the Benchmarks chart below, our key financial indicators are:

• Inventory Turnover: We will maintain just-in-time inventory levels, or 11 turns per year. This will require accurate sales forecasting, and working closely with our manufacturers. We have already begun this process under SIOT, and the Neighbor Island inventory levels are well below previous years.

7.3 Break-even Analysis

For our break-even analysis, we assume running costs which include our full payroll, rent, and utilities, and an estimation of other running costs. Payroll alone, at present, is about $65,500 per month (including benefits and taxes).

We will monitor gross margins very closely, and maintain them at a midrange percentage by taking advantage of all promotions and discounts offered by our manufacturers. Canon USA has tentatively agreed to offer us “end column” pricing as a new dealer incentive.

The chart shows what we need to sell per month to break even, according to these assumptions. This is about 78% of our projected sales for our first year, and is well below what we have achieved annually over the past three years under more adverse operating conditions.

7.4 Projected Profit and Loss

Our Pro Forma Profit and Loss statement was constructed from a conservative point-of-view, and is based in large part on past performance. By strengthening our service position, and rebuilding our customer relationships, we will widen our customer base and increase sales.

Month-to-month assumptions for profit and loss are included in the appendix.

7.5 Projected Cash Flow

Because we are treating the new company as a start-up, the cash flow for FY2002 is somewhat exaggerated by the instant influx of new capital. Subsequent years however show a healthy growth in cash flow, mainly due to the short 60-month repayment of the start-up loan and increased sales.

7.6 Projected Balance Sheet

The Projected Balance Sheet is quite solid. We do not project any trouble meeting our debt obligations as long as we achieve our specific objectives.

7.7 Business Ratios

The following table shows our main business ratios, and is compared to national averages. Our SIC industry class is currently: Office equipment, nec – 5044.99.

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Are you considering starting your own managed IT services business? With the rapid growth of technology and the increasing reliance on IT systems, there has never been a better time to enter the industry. In fact, the managed IT services market in the US is projected to reach $282 billion by 2023, growing at a CAGR of 9.3% . To help you get started on the right foot, we have compiled a nine-step checklist on how to write a business plan for managed IT services. Let's dive in!

• Identify the target market and client base. Before you can start offering your services, it is essential to define your target market and identify potential clients. Consider factors such as industry, company size, and geographical location to ensure your marketing efforts are focused and effective.
• Conduct market research and analyze the competitive landscape. Understanding the market and your competitors is crucial to positioning your services and finding your unique selling points. Conduct thorough market research to gather insights about industry trends, customer preferences, and competitive advantages.
• Define the scope of services to be offered. Clearly define the services you will provide to your clients. Will you specialize in infrastructure management, cloud computing, cybersecurity, or a combination of services? Having a clear service offering will help you attract the right clients and set expectations.
• Determine the business structure and legal requirements. Decide on the legal structure of your business, such as sole proprietorship, partnership, or limited liability company (LLC). Additionally, research and comply with any licensing or certification requirements specific to the managed IT services industry.
• Create a detailed financial projection. Develop a comprehensive financial projection that includes revenue forecasts, operating expenses, and anticipated profitability. This will help you assess the feasibility of your business plan and secure funding if needed.
• Outline the marketing and sales strategy. Devise a marketing and sales strategy to promote your services and attract clients. Consider various channels such as digital marketing, networking events, and referrals to reach your target audience effectively.
• Develop a pricing model. Determine how you will price your services, whether it is a flat fee, hourly rate, or a combination of both. Consider factors such as market rates, value-added services, and profitability.
• Identify potential partnerships or collaborations. Explore opportunities for partnerships or collaborations with other businesses that complement your services. This can help expand your client base and provide additional value to your clients.
• Create a comprehensive operational plan. Outline the day-to-day operations of your managed IT services business, including staffing requirements, service delivery processes, and quality control measures. Having a well-defined operational plan will ensure smooth and efficient service delivery.

By following this nine-step checklist, you will be well on your way to writing a comprehensive business plan for your managed IT services business. Remember, careful planning and preparation are key to building a successful and profitable venture in this rapidly growing industry.

'Identify The Target Market And Client Base'

When starting a business in managed IT services, it is crucial to first identify your target market and client base . This step sets the foundation for your entire business plan and ensures that you are focusing your efforts on the right audience.

Begin by researching the IT needs and pain points of various industries or sectors. Consider which industries are more likely to require managed IT services and which ones can benefit the most from outsourcing their IT needs. By understanding the specific challenges faced by different industries, you can tailor your services to meet their unique requirements.

Here are some tips for identifying your target market and client base:

• Research existing IT service providers in your target market to gain insights into the types of clients they serve and the specific services they offer.
• Consider the size of the client companies you want to target. Do you want to work with small businesses, mid-sized companies, or large enterprises? Each has its own distinct needs and requirements.
• Assess the geographic location you plan to operate in. Are there specific regions or cities that have a higher demand for managed IT services? Understanding the local market can help you focus your marketing efforts.
• Identify any industry-specific certifications or expertise that may be required to serve certain types of clients. This will help you position your business as an expert in those industries.

Once you have identified your target market and client base, you can proceed to the next steps of your business plan, confident in knowing that your services are tailored to meet the specific needs of your chosen audience.

Conduct Market Research And Analyze The Competitive Landscape

In order to create a successful business plan for managed IT services, conducting thorough market research and analyzing the competitive landscape is essential. This step will provide invaluable insights into the current market trends, customer preferences, and the strategies adopted by competitors.

Start by gathering data on the target market, including demographics, industry trends, and the specific needs of potential clients. This will help in identifying the unique selling points and services that can differentiate your business from others in the market.

Analyze the competitive landscape by identifying existing competitors in the managed IT services industry. Take note of their strengths, weaknesses, pricing models, and the range of services they offer. This information will help in understanding the market dynamics and identifying opportunities for differentiation.

Market Research Tips:

• Use primary and secondary research methods to gather data, including surveys, interviews, and industry reports.
• Consider leveraging online platforms and social media channels to gain insights into customer preferences and feedback on existing managed IT service providers.
• Identify any gaps in the market that your business can fill, whether it's by offering specialized services or targeting an underserved niche.

By conducting comprehensive market research and analyzing the competitive landscape, you will be equipped with the necessary information to make informed decisions about your target market, services, and positioning. This will ultimately help you develop a strong business plan tailored to the needs and demands of the market.

Define The Scope Of Services To Be Offered

Defining the scope of services to be offered is a critical step in writing a business plan for managed IT services. It is important to determine exactly what services your company will provide to clients and what you will specialize in. This will help you differentiate yourself from competitors and establish your unique value proposition.

Start by identifying the specific IT services you are skilled in and the ones that align with your target market's needs. Consider whether you will offer services such as network management, cloud solutions, cybersecurity, data backup and recovery, or software implementation. Clearly outline each of these services to ensure that there is no ambiguity in what you will provide.

• Conduct thorough market research to identify the most in-demand IT services in your target market.
• Consider conducting a SWOT analysis to understand your company's strengths and weaknesses and match them with the services you plan to offer.
• Take into account the current trends and emerging technologies in the IT industry, as this may influence the scope of services you choose to provide.

Once you have defined the core IT services you will offer, it is essential to clearly articulate the boundaries of each service. This means identifying what is included and what is not included in each service package. For example, will your network management service include troubleshooting and maintenance, or only monitoring and reporting?

Determining the boundaries of each service will help manage client expectations and ensure that both parties are clear on what is being delivered. Additionally, it can assist in creating standardized service packages that can easily be communicated and priced to clients.

Finally, consider any additional value-added services you can offer alongside your core offerings. This could include providing 24/7 customer support, regular performance audits, or customized IT consulting. These additional services can help you differentiate your business and provide added value to your clients.

By defining the scope of services to be offered, you establish a solid foundation for your business plan and set the direction for your managed IT services company. This clarity will not only guide your operations but also enable you to effectively market and sell your services to potential clients.

Determine The Business Structure And Legal Requirements

When starting a managed IT services business, it is important to determine the most suitable business structure and understand the legal requirements involved. This step will ensure that your business is compliant with the necessary regulations and set up in a way that aligns with your goals and objectives.

First, decide on the business structure that best suits your needs. This could be a sole proprietorship, a partnership, a limited liability company (LLC), or a corporation. Each structure has its own advantages and disadvantages, so carefully consider factors such as liability protection, taxation, and management flexibility when making your decision.

• Consult with a business attorney or a tax professional to help you understand the implications of each business structure and determine which one is best for your specific situation.
• Consider the long-term goals and growth plans for your managed IT services business when selecting a business structure. It is easier to change the structure in the early stages than when the business has grown.

Next, familiarize yourself with the legal requirements for setting up a managed IT services business in your jurisdiction. This may include registering your business with the appropriate government agencies, obtaining necessary licenses or permits, and meeting any specific industry regulations.

Research the legal and compliance obligations related to data protection, privacy laws, and cybersecurity. Depending on the type of client data you handle and the services you offer, there may be additional requirements and regulations you need to adhere to.

• Consult with legal professionals who specialize in technology or business law to ensure that you are fully compliant with all applicable regulations.
• Keep up-to-date with industry standards and changes in regulations to ensure ongoing compliance.

Lastly, consider obtaining the necessary insurance coverage to protect your business and clients. Insurance policies such as professional liability insurance and cybersecurity insurance can help mitigate potential risks and provide added peace of mind.

By taking the time to determine the appropriate business structure and understand the legal requirements, you are setting a strong foundation for your managed IT services business. This will help ensure that your business operates smoothly, remains compliant, and can confidently serve your clients.

Create A Detailed Financial Projection.

When starting a managed IT services business, it is crucial to create a detailed financial projection to ensure the financial sustainability and growth of your business. A financial projection is a forecast of your expected income, expenses, and cash flow for a certain period of time, typically the first three to five years.

Creating a detailed financial projection involves several key steps:

• Estimate your revenue: Start by estimating your potential revenue sources, such as project-based fees, recurring monthly support fees, or hardware and software sales. Consider the pricing model you have developed and the expected demand for your services in the target market.
• Outline your expenses: Identify all the expenses your business will incur, such as employee salaries, office rent, utilities, marketing costs, and software licenses. Be thorough and realistic in estimating these expenses to ensure accuracy in your financial projection.
• Calculate your cash flow: Cash flow is crucial for any business, as it reflects the movement of money in and out of your business. Calculate your cash flow by subtracting your expenses from your revenue. This will give you a clear picture of how much working capital you will have available to cover your daily operations.
• Factor in growth and scalability: As a managed IT services provider, your goal is to grow your business over time. Consider how your revenue and expenses may change over the years as you acquire more clients and expand your services. This will help you understand the potential profitability and scalability of your business.
• Be conservative in your revenue estimates to account for any potential fluctuations in the market or unexpected challenges.
• Regularly review and update your financial projection as your business evolves. It is a dynamic document that should reflect the current state of your business.
• Consider seeking professional help from an accountant or financial advisor to ensure accuracy and reliability in your financial projection.

Creating a detailed financial projection requires careful analysis and planning. It provides you with valuable insights into the financial health and potential of your managed IT services business, allowing you to make informed decisions and strategies for success.

Outline The Marketing And Sales Strategy.

Developing a strong marketing and sales strategy is crucial for the success of your managed IT services business. It will help you attract potential clients and differentiate yourself from competitors. Here are key steps to outline your marketing and sales strategy:

• Identify your target audience: Determine the specific industries, businesses, or organizations that are most likely to need your managed IT services. Understanding your target market will help you tailor your marketing efforts and messaging.
• Define your value proposition: Clearly articulate the unique value and benefits your managed IT services can offer to potential clients. This could include cost savings, increased efficiency, enhanced security, or improved productivity. Your value proposition will be the foundation of your marketing messaging.
• Create a marketing plan: Develop a comprehensive plan that outlines your marketing activities and channels. This could include digital marketing strategies such as search engine optimization (SEO), social media marketing, content marketing, email campaigns, and website optimization. Additionally, consider traditional marketing tactics like attending industry events, networking, and advertising in relevant publications.
• Build a strong online presence: Establish a professional website that showcases your expertise, services, and success stories. Optimize your website for search engines so potential clients can easily find you. Utilize social media platforms to engage with your target audience and share valuable content related to your industry and services.
• Leverage case studies and testimonials: Collect and highlight case studies and testimonials from satisfied clients to demonstrate the value and impact of your managed IT services. These real-life examples will build credibility and trust with potential clients.
• Develop compelling sales materials: Create professional brochures, presentations, and sales collateral that effectively communicate your services, benefits, and competitive advantages. These materials should be visually appealing and easy to understand.
• Build relationships with strategic partners: Identify potential partners or collaborators in complementary industries, such as software development or cybersecurity. Establishing strategic partnerships can expand your reach, generate referrals, and enhance your credibility.
• Regularly review and update your marketing and sales strategy to adapt to changing market conditions and customer needs.
• Consider offering free consultations or assessments to potential clients as a way to showcase your expertise and build rapport.
• Continuously measure and analyze the effectiveness of your marketing efforts. Use analytics tools to track website traffic, engagement, and conversions. Adjust your strategies accordingly to optimize results.

Develop A Pricing Model

When developing a pricing model for your managed IT services, it is important to consider various factors that will impact your costs and profitability. Here are some key steps to help you develop an effective pricing model for your business:

• Consider your costs: Start by identifying all the costs associated with providing your IT services. This may include personnel salaries, software and hardware expenses, overhead costs, and any other ongoing expenses. It is crucial to have a clear understanding of your costs so that you can determine a pricing structure that allows you to cover these expenses and make a profit.
• Research the market: Conduct market research to understand the pricing landscape for similar IT services in your target market. This will give you an idea of the prices charged by your competitors and the value clients are willing to pay for such services. Use this information to guide your pricing strategy and ensure your rates are competitive.
• Define your value proposition: Determine what sets your managed IT services apart from your competitors. Consider the unique benefits and value you provide to clients, such as faster response times, 24/7 technical support, or expertise in a specific industry. This value proposition should be reflected in your pricing model.
• Consider packaging and tiers: Explore different pricing tiers or packages that cater to the varying needs and budgets of your clients. Create options that offer different levels of support, services, and response times, allowing clients to choose the package that best suits their requirements.
• Factor in profit margins: It is important to set your prices with a profit margin in mind. Consider the level of profitability you aim to achieve and ensure your pricing model allows for this. Keep in mind that your pricing should not only cover costs but also provide room for growth and investment in your business.

Tips for Developing a Pricing Model:

• Regularly review and adjust your pricing model as your business evolves and market conditions change.
• Consider offering discounts or promotions for new clients to attract and onboard them.
• Offer additional services or add-ons that clients can choose to enhance their package and increase revenue.
• Consider bundling services together to create value for clients and encourage them to purchase multiple services.
• Be transparent about your pricing structure and communicate the value clients will receive for their investment.

Developing a pricing model for your managed IT services requires careful consideration of costs, market research, and your unique value proposition. By taking these steps and considering the tips provided, you can create a pricing strategy that ensures profitability while meeting the needs and expectations of your clients.

Identify Potential Partnerships Or Collaborations

When it comes to running a successful managed IT services business, developing strategic partnerships and collaborations can be a game-changer. By partnering with other businesses or organizations in the IT industry, you can expand your service offerings, access new markets, and enhance the value you provide to your clients. Here are some important considerations when identifying potential partnerships or collaborations:

• Align with complementary services: Look for partners who offer services that complement your own. For example, if you specialize in cloud solutions, partnering with a cybersecurity firm can create a comprehensive package for clients.
• Assess reputation and credibility: It's essential to partner with reputable and credible organizations. Research their history, client testimonials, and industry standing to ensure that their values align with yours.
• Consider geographical reach: If you plan to offer managed IT services to clients beyond your local area, partnering with firms with a wider geographical reach can help you expand your market and serve clients in multiple locations.
• Explore technology integrations: Look for partners whose technologies can integrate with your own. This can streamline processes, improve efficiency, and deliver a more seamless experience for clients.
• Establish clear communication channels: Effective communication is vital for successful partnerships. Ensure there are open lines of communication, regular check-ins, and a shared understanding of goals and expectations.
• Attend industry conferences or events to network and connect with potential partners.
• Join professional IT associations or organizations that offer networking and partnership opportunities.
• Consider forming strategic alliances with vendors or suppliers who can provide additional resources or expertise.
• Seek out partnerships that can help you access new market segments or target specific industries.
• Don't rush into partnerships - take the time to thoroughly evaluate potential partners and ensure their values align with your own.

By identifying the right partnerships or collaborations, you can leverage the expertise and resources of others to enhance your managed IT services business. These partnerships can help you offer a more comprehensive suite of services, access new markets, and strengthen your position in the industry.

Create A Comprehensive Operational Plan

Once the target market, services, and financial projections have been established, it is crucial to create a comprehensive operational plan that outlines the day-to-day functions and processes of the managed IT services business. This plan serves as a roadmap for how the business will operate and ensures that all aspects are taken into consideration.

1. Define the organizational structure: Determine the roles and responsibilities of each team member, including management, technical support, sales, and administration. Clearly outline reporting lines and establish a hierarchy to ensure efficient communication and decision-making.

2. Establish standard operating procedures (SOPs): Develop SOPs for various operational tasks such as client onboarding, project management, help desk support, and maintenance activities. These SOPs provide a step-by-step guide for employees, ensuring consistency and efficiency in service delivery.

3. Implement robust project management: Use project management tools and methodologies to streamline project workflows and ensure timely completion of tasks. Assign project managers who will oversee project execution, monitor progress, and communicate with clients to keep them informed.

4. Create a training and development program: Invest in the continuous training and development of employees to keep them updated on the latest technologies, industry trends, and best practices. This will enable them to deliver high-quality services and stay competitive in the market.

5. Develop a backup and disaster recovery plan: Identify potential risks and establish protocols for mitigating failures or disruptions in service. Regularly backup client data and implement a disaster recovery plan to minimize downtime and ensure business continuity.

• Regularly review and update the operational plan to adapt to changing market conditions and business needs.
• Implement a quality assurance process to monitor service delivery and identify areas for improvement.
• Collaborate with employees and seek their input when developing the operational plan to foster a sense of ownership and commitment.

By creating a comprehensive operational plan, managed IT services providers can establish a strong foundation for their business. This plan will ensure that all operational aspects are well-defined and aligned with the overall business goals, enabling smooth execution of services and ultimately, client satisfaction and success.

In conclusion, writing a business plan for managed IT services is a crucial step towards ensuring success in this competitive industry. By following the nine steps outlined in this checklist, you can effectively identify your target market, analyze the competition, define your services, determine the necessary legal requirements, create a financial projection, outline your marketing and sales strategy, develop a pricing model, identify potential partnerships, and create an operational plan.

With a well-crafted business plan, you can position your managed IT services business for growth and profitability. This project-based approach, popular in the US, allows for flexibility, collaboration, and clear deliverables. By providing measurable results, you can foster trust and build long-term relationships with clients. By following this checklist, you are one step closer to achieving your business goals in the managed IT services industry.

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How to Create an MSP Business Plan

Some MSPs will tell you that you should not waste even a minute of your time creating a business plan while your business is only a project. Other, more mature managed IT providers will tell you that, unless you have to secure funding from a partner or investor, an MSP business plan is - you guessed it - a waste of time.

The simple truth is that a business plan is an instrument. In this article we will define the core purposes of an MSP business plan and explain when it might be helpful for a start-up or already-established managed IT provider.

What Is an MSP Business Plan?

A business plan is a written document containing a detailed overview of the future or existing business, including mission, strategic and operational goals, marketing analysis, financial estimations, and technical considerations. Its purpose is to prove that the idea behind the business is well thought out and that the business will be profitable.

Further reading How to Build a Successful MSP Business

MSP Business Plan Purpose

As noted above, the details and the depth of an MSP business plan depend on its aim and the people involved. There can be several different purposes of business planning:

• Give investors enough data to make an informed decision. For example, if you have enough knowledge and a well-formulated and calculated business plan, you can count on some form of private investment to gather the capital to begin a business.
• Create a roadmap. A step-by-step roadmap, with operational and strategic goals, and a mission statement will help you to focus your business on what really matters – KPIs, MRR growth, verticals , and a thought-through offering. This will help you and your team to understand the nature of the business better and, in the end, achieve better, more focused, results.

Don't forget, however, that a business plan can be changed during the lifetime of your MSP. It should not be carved in stone; if the nature of your market or your goals change, change your plans accordingly. Below, you will find the basic points that should be included in any MSP business plan. Bear in mind that we do not discuss financial estimation and analysis, due to the specifics and the complexity of the topic.

Executive Summary

An executive summary is a short description which overviews the main points of the business you are about to start, including overview of the nature of the business, customer description, challenges you are about to solve ,  services you will offer , team profile, and sources of funding.

Business Description

The business description contains the most general idea and objectives of your business. It should include he mission statement and the vision of the company, strategic goals, core business objectives, and key tracking metrics.

The business description is one of the most underestimated parts of an MSP business plan. Many managed IT providers tend to think that it contains nothing else but general words that mean nothing. However, this part can be a starting point for a strong corporate culture, which, as we know, can be one of the greatest competitive advantages of them all.

Market Analysis

Ultimately, this part of an MSP business plan will show you, your partners or investors that your idea is viable. It should contain as many details as possible about the market you are about to enter, including:

• Your target customer, including considerations of whether or not to target verticals, the size of customers, and the number of customers you will be able to acquire and handle.
• Competition research. Look at the number and the nature of MSPs and break/fix companies working in your area. Are there any big competitors who rule the market? Are there any niches that you can make use of?
• Your positioning. Considerations about the services you are about to offer, the stack and, if possible, the software and hardware tools you will work with. You should either create a positioning which will distinguish you from your competition or be sure that you will offer a similar, yet superior stack.

Developing a successful MSP Business Model: a comprehensive guide

Introduction.

In today’s technology-driven world, businesses rely heavily on efficient IT systems to operate smoothly. Managed service providers (MSPs) play a crucial role in assisting organizations by offering proactive IT management, support, and strategic guidance. However, building a successful MSP business model requires careful business planning, a solid business model, and the ability to navigate the dynamic landscape of the MSP industry.

According to a recent survey, the global managed services market size was valued at USD 267.3 billion in 2022 and is expected to grow at a compound annual growth rate of 13.6% from 2023 to 2030. In this article, we will delve into various aspects of developing a thriving MSP business, including the MSP business model, pricing strategies, targeting the managed services market, and establishing productive vendor partnerships in the managed services space. We’ll also investigate how Parallels RAS can contribute to your successful MSP business, and how you can become a partner today .

Understanding the managed service provider (MSP) business model

The MSP business model revolves around providing comprehensive IT services to clients, which are typically invoiced on a monthly subscription basis for a specified duration, typically through contracts spanning 1, 2, or 3 years. By combining multiple services into a monthly fee structure, MSPs provide clients with a comprehensive IT solution that caters to their needs. This model offers cost predictability, scalability, and the ability to offload IT infrastructure management to the MSP.

MSPs can establish long-term relationships with recurring revenue streams. Instead of relying on a break-fix approach, building an MSP business plan to focus on proactive remote monitoring, maintenance, and management of clients’ IT infrastructure is key. MSPs offer a range of services, including data backup and recovery, cybersecurity, remote management, hosted desktops and applications, cloud-based solutions, and help desk support. MSP clients benefit from access to robust IT services while focusing on their core business objectives.

When reconsidering building an MSP business model, there are several key performance indicators (KPIs) and objectives that can help gauge the success of your MSP. Meeting or exceeding service level agreements (SLAs), receiving positive customer feedback, and maintaining a low customer churn rate help to build customer satisfaction and loyalty, which are crucial for long-term success.

Profitability and cost management are also key considerations for an MSP, monitoring metrics such as monthly recurring revenue (MRR) growth, new client acquisition rate, and controlling operational expenses enable you to maintain a healthy financial position to ensure growth and success of your MSP business.

Parallels RAS offers MSPs a cost-effective solution by incorporating built-in security, multi-factor authentication, high availability load balancing, and streamlined management.

Identifying your target market

Identifying and targeting managed services customers is a critical aspect of building a successful MSP business. By understanding the specific needs, pain points, budget constraints, the local MSP market, and IT requirements of potential clients, MSPs can shape their services and pricing to deliver maximum value across all target markets.

SMBs often have limited IT resources and expertise, making them prime candidates for outsourced managed IT services. MSPs can tailor their offerings to address the pain points commonly faced by SMBs, such as data security, network stability, and scalability.

Mid to large enterprises typically have complex IT infrastructures, multiple locations, and a high demand for specialized services. MSPs targeting this market segment should emphasize their ability to handle large-scale projects, offer 24/7 support, and provide customized solutions. Addressing the needs of large enterprises, such as data governance, compliance, and business continuity, enables MSPs to develop comprehensive service offerings and pricing models that meet their needs.

Certain industries, such as healthcare, finance, or legal, have distinct IT requirements and compliance regulations. MSPs can specialize in serving these industries by understanding their unique requirements and tailoring their services accordingly. For example, healthcare organizations may require HIPAA compliance and data security expertise, while financial institutions may need robust cybersecurity solutions. By developing industry-specific knowledge and demonstrating compliance expertise, MSPs can position themselves as trusted partners within these sectors.

Setting the Right Pricing Model

Determining appropriate pricing strategies and MSP business plan is crucial for MSP profitability. Common pricing models include tiered pricing, per-device pricing, and per-user pricing. Each model has its own advantages and considerations, and MSPs must assess factors like service scope, client requirements, and market competition, as well as associated costs when setting prices. Flexible pricing options, such as bundling services, can provide value to clients while maximizing revenue for MSPs.

Tiered pricing : This model involves offering different service levels or tiers, each with a specific set of features and price points. Clients can choose the tier that aligns with their needs and budget. Tiered pricing enables MSPs to cater to a range of clients, provide flexibility, and upsell additional services as clients’ needs evolve and scale.

Per-device pricing : With this model, MSPs charge a fixed fee for each managed device (e.g., servers, workstations, network devices) within a client’s infrastructure. Per-device pricing offers transparency and predictability for clients and enables MSPs to scale prices based on the number of devices under management.

Per-user pricing : This model involves charging a fee for each user or employee within a client’s organization who requires IT support and services. Per-user pricing accommodates organizations with varying user counts and provides a straightforward pricing structure.

Conducting regular cost reviews are essential to ensure competitiveness and profitability in the dynamic MSP industry. Changes in vendor pricing, such as increased license and cloud storage costs, can impact MSPs’ profit margin. Managing these changes means managed service providers can adapt their business strategy and guarantee a sustainable pricing model.

Developing a service portfolio

MSPs create a service portfolio by combining various technologies and manufacturers to offer a comprehensive and integrated suite of managed services to their customers. MSPs need to understand their customers’ specific needs and pain points. This involves conducting a thorough assessment of their IT infrastructure and processes, identifying areas for improvement, and understanding their business goals. By gaining insights into customer requirements, MSPs can design a service portfolio that addresses their unique challenges.

For example, an MSP might partner with cloud service providers, backup solution providers, virtualization platform providers, and cybersecurity vendors. The goal is to curate a set of technologies that work seamlessly together to meet customer requirements.

The key lies in packaging these services together as a cohesive managed services business model and offering them within a single monthly billed service. By aligning services with specific industries or compliance requirements, MSPs can position themselves as trusted experts and drive growth.

The importance of vendor partnerships in the MSP industry

Vendor partnerships are vital for MSPs to deliver high-quality services to their clients effectively. Collaborating with reputable technology vendors provides access to innovative tools, software, and expertise, enabling MSPs to enhance their service offerings. These partnerships also facilitate efficient issue resolution, product training, and marketing support.

Building productive vendor partnerships requires a strategic approach. Collaborating with vendors who offer reliable products with a full feature set, comprehensive support, and attractive pricing helps MSPs deliver exceptional value to clients. Effective vendor management involves regular communication, staying informed about new technologies, and providing feedback for product improvement. Building strong relationships with vendors can lead to exclusive benefits including co-marketing opportunities, technical training, and enhanced customer relationships.

Implementing a robust sales and marketing strategy

By implementing a robust, well-defined sales and marketing strategy, MSPs can effectively target their desired markets, differentiate their services, establish competitive pricing models, and leverage vendor partnerships to enhance their sales and marketing efforts. MSPs can pursue growth strategies such as customer acquisition, expanding service portfolios, entering new markets, and nurturing client relationships.

A well-executed sales and marketing strategy combined with a strong business value proposition and supported by effective vendor partnerships can help to fuel MSP growth and build a successful MSP business model. Collaborating with vendors is essential for MSPs to access sales training, marketing resources, and technical support. Vendors can offer training programs to enhance the sales skills of MSPs’ teams and provide marketing collateral, co-marketing opportunities, and lead generation to support marketing plans.

Emphasizing customer service and satisfaction

Customer service and satisfaction are paramount within managed services. MSPs not only provide technical support but also become strategic partners in managing their customers’ important data, systems, and infrastructure.

Responsiveness and high service levels are essential in providing proactive support, managing critical customer data, and maintaining customer trust. By delivering exceptional customer service, MSPs can not only meet customer expectations but enhance customer satisfaction, build long-term relationships, and establish a positive brand image in a competitive market.

By embracing the MSP business model, understanding different pricing strategies, targeting the right market segment, and establishing productive vendor partnerships, MSPs can build a successful business plan to position themselves for growth and profitability.    Parallels RAS (Remote Application Server) is a comprehensive virtual application and desktop delivery solution that can be leveraged by MSPs to deliver virtual applications and desktops to organizations as part of a managed service solution. The seamless integration of Parallels RAS enables MSPs to provide a combined managed IT solution, encompassing virtualization, cloud services, data protection, and cybersecurity. And this enables MSPs to effectively manage and support integrated technologies, providing a comprehensive solution that meets their customers’ evolving IT needs.

• Easy deployment and management : Parallels RAS provides a streamlined deployment process, enabling MSPs to quickly set up and configure virtual applications and desktops for their clients. The management console offers a centralized interface to efficiently manage and monitor the entire infrastructure.
• Scalability and flexibility : Parallels RAS is designed to be scalable, enabling MSPs to easily accommodate growing customer demands. It supports various deployment scenarios, including on-premises, hybrid, or fully cloud-based, providing flexibility to tailor the solution to the specific needs of each client.
• Multi-platform support : Parallels RAS supports a wide range of platforms, including Windows, macOS, Linux, iOS, and Android. This enables MSPs to deliver virtual applications and desktops to diverse client environments, ensuring compatibility and accessibility across different devices.
• Security and compliance : Parallels RAS incorporates robust security measures to protect client data and applications. It includes features like two-factor authentication, SSL encryption, and granular access control to ensure secure remote access.
• Cost efficiency : Parallels RAS offers MSPs a cost-effective solution by incorporating built-in security, multi-factor authentication, high availability load balancing, and streamlined management. It supports integration with popular hypervisors, such as VMware, Hyper-V, and Nutanix AHV, enabling MSPs to utilize their preferred virtualization platform. By leveraging these features, MSPs can enhance security, minimize downtime, and improve productivity. This ultimately leads to significant cost savings and operational efficiency gains.

Learn more about how to become a Parallels RAS Partner.

A Guide to Creating MSP Business Plan

• MSP Business Plan

If you are running a managed service provider, it is possible that a good amount of your customers come from referrals. These can be a great source of business, especially for those that are just starting up. However, as your company grows, it is important to expand your business without relying too much on referrals while ensuring that you have adequate resources. This is where the MSP business plan enters the picture. Creating a comprehensive MSP business plan can help work your way towards business expansion.

The Basics of an MSP Business Plan

An MSP business plan is a high-level document that defines your strategy, long-term goals, success metrics, pricing, and potential profitability. Having a business plan will help you predict the events that could threaten your business posture. Understanding the cost of IT services will allow you to come up with the perfect budget and maximize ROI for your business.

Now what are the necessary elements when building your MSP business plan?

Mission statement

You need to create a mission statement for your MSP business plan . It should specify the reasons why you do what you do. For example, what value can you offer to customers? Here are some examples where you could take inspiration from:

• Help small businesses set up and maintain effective IT infrastructure
• Deliver support for client hardware
• Maintain efficient and secure IT systems
• Become a leader in technology and the best IT service provider

After coming up with your mission, share it with your team so everyone will be able to live by these values.

MSP Executive Summary

This tells the “why” of your business. Start by determining what market needs does your MSP address. Identifying this is critical because your business’ executive summary must exhibit your goals about the main drivers of your business.

After doing a thorough analysis of your current business and financial situation, you can add your MSP executive model into your business plan . The things that should be included in your executive summary are the overview of the nature of the business, customer description, challenges your MSP try to solve, as well as the services you offer.

An MSP executive summary can save you resources by identifying a defined scope of services and target market. This could help explain to your team what projects and goals should be prioritized.

Local MSP Market and Competitive Analysis

MSPs are a localized type of companies. In order for you to succeed, you should be able to build a solid client base. Performing a local market analysis will require you to collect information about competitors in your market area, within 10-30 miles of your operations location. Make a research about various pricing strategies, offerings, and the unique services they offer to customers. Know about the demographics of their customers – are they small businesses, healthcare, legal, or manufacturing? Business planning can be seamless once you identify these key market analysis questions.

MSP Operating Plan

Your MSP operating plan will determine how you will perform the work. What people, processes, and technology will you utilize to provide high-quality services? If you are already running an MSP, identify the areas that need to improve.

In addition, you should also consider your own inventory. What products do you need to run your business? Will you require on premise hardware or on demand software? Another question to ask is the location of your MSP.

MSP Financial Planning

When considering your financial plans, you should compute your profit margins and examine your potential revenue sources. Having a strong sense of your financial situation can help move your business forward.

While a break/fix model may have worked for your MSP in the past years, you should consider transitioning clients to a per-user or per-service approach if necessary. Your financial plan should revolve around Key Performance Indicators (KPIs) and business goals. The KPIs should include:

• Monthly recurring revenue
• Sales conversion rate
• Source revenue

Setting up Goals with your MSP Business Plan

After setting the strategies for your MSP business plan, make sure that they are compliant with the SMART framework. SMART is an acronym that stands for the following elements: Specific, Measurable, Achievable, Relevant, and Time-based. You want to have a clear vision for the future of your company, as well as the goals and objectives for each project that are carefully planned, clear, and trackable.

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Final Thoughts

Planning can help you achieve the goals you have set for your MSP company.

When organizing your MSP business plan, you should think about your customers, your team, the potential market for your services, and your sources of income.

If you are looking to improve customer experience as part of your business planning, you may use MSP tools provided by ITarian. We offer a centralized platform to reduce operational costs and improve quality of service.

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IT Services Business Plan Template

Written by Dave Lavinsky

IT Services Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their IT companies.

If you’re unfamiliar with creating an IT business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an IT business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is an IT Services Business Plan?

A business plan provides a snapshot of your IT business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for IT Company

If you’re looking to start an IT business or grow your existing IT company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your IT business to improve your chances of success. Your IT business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for IT Businesses

With regards to funding, the main sources of funding for an IT business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for IT companies.

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How to write a business plan for an it services business.

If you want to start an IT business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your IT business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of IT business you are running and the status. For example, are you a startup, do you have an IT business that you would like to grow, or are you operating a chain of IT businesses?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the IT industry.
• Discuss the type of IT business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of IT business you are operating.

For example, you might specialize in one of the following types of IT businesses:

• Computer repair: This type of IT business provides computer maintenance and repair services.
• Computer training: This type of IT professional specializes in teaching others how to use computers as well as various software and computer programs.
• IT support: This type of IT professional provides services for businesses such as setting up a network, backing up data, and systems management.
• Cloud computing: This type of IT specialist helps individuals and businesses establish cloud platforms and tools, or may help to migrate their information to the cloud.

In addition to explaining the type of IT business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of new clients served, the number of repeat clients, reaching $X amount in revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the IT industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the IT industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your IT business plan:

• How big is the IT industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your IT business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your IT business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of IT business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other IT businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of IT consultants, in-house IT support, or do-it-yourself IT tutorials. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of IT business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for clients to acquire your product or service?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an IT business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of IT company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide cloud computing, data center management, or network setup services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your IT company. Document where your company is situated and mention how the site will impact your success. For example, is your IT business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your IT marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your IT business, including answering calls, meeting with new clients, billing and collecting payments from clients, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your IT business to a new city.

Management Team

To demonstrate your IT business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing IT businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an IT business or successfully running a small IT consulting service.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you charge your clients an hourly rate of $250 per hour, and will you work 5 hours per day? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your IT business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an IT business:

• Cost of equipment and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of your IT credentials.

Writing a business plan for your IT business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert on IT business planning. You will understand the IT industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful IT business.

Don’t you wish there was a faster, easier way to finish your IT business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s business plan services can give you a winning business plan.  

Other Helpful Business Plan Articles & Templates

Managed Service Provider Business Plan Template

Written by Dave Lavinsky

Managed Service Provider Business Plan

You’ve come to the right place to create your Managed Service Provider business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Managed Service Provider businesses.

Below is a template to help you create each section of your Managed Service Provider business plan.

Executive Summary

Business overview.

Guardian Managed Solutions is a startup managed service provider located in Boston, Massachusetts. The company is founded by Pax Houghton, who has experience in comprehensive IT solutions, along with the expertise of business acumen and team management. Pax Houghton has determined he can confidently start and effectively grow Guardian Managed Solutions company to be relevant to the IT industry and highly-profitable. He believes his experience of strategic growth, marketing skills, financial capabilities, and wide and deep knowledge of IT solutions and practices will provide everything needed for long-term growth and profitability.

Guardian Managed Solutions will provide a comprehensive array of services for a wide variety of clients. Guardian Managed Solutions will be the one-stop solution for all IT needs, providing services and products to each client while supporting the strategic goals of the company. Guardian Managed Solutions will be the ultimate choice in Boston for clients to ensure that every need of the customer is fully and completely met.

Product Offering

The following are the services that Guardian Managed Solutions will provide:

• Comprehensive IT services for businesses of all size
• Client support and empowerment to reach solutions
• Proactive, secure, and cost-effective technology solutions
• Solutions that enable clients to focus on their core business objectives
• Network infrastructure design and management
• Cybersecurity solutions and monitoring
• Cloud services and migration
• Data backup and disaster recovery
• IT consulting and strategic planning
• Day to day project and client management

Customer Focus

Guardian Managed Solutions will target all businesses who require IT support and infrastructure. Guardian Management Solutions will also target companies that need design and installation of IT structures. Guardian Management Solutions will target clients who require large service contract packages and high-level IT protection behaviors for their infrastructure.

Management Team

Guardian Managed Solutions will be owned and operated by Vijay Sinek. He recruited his former associate, Jay Hawkins, from their former place of employment to be the Director of Operations for Guardian Managed Solutions.

Vijay Sinek graduated from Cambridge University, U.K. with a bachelor’s degree in technology solution-finding. He earned a full scholarship to attend Cambridge University and completed his degree within three years of enrollment. Vijay is a Upcoming Entrepreneur, as highlighted in the Young Entrepreneur magazine and has been elected to the Young Americans to Watch roll.

Vijay Sinek has been a professional in the IT solutions sector for over ten years. As such, he has extensive knowledge of current and new systems that are being introduced into large and small businesses across the globe. Former clients have already committed to follow Vijay to his new enterprise and are eagerly awaiting the opening of the company.

Jay Hawkins, a former associate in Vijay’s prior business, will be the managing director in Guardian Managed Solutions and will oversee staff positions that work directly with IT systems. He graduated from Brown University with a bachelor’s degree in International Business.

Tabby Townsend is the office manager for Guardian Managed Solutions. She has been a professional office manager for over ten years and has worked with Vijay in his prior position. Her call to the industry began when she experienced a security breach on her own computer twenty years ago.

Success Factors

Guardian Managed Solutions will be able to achieve success by offering the following competitive advantages:

• Friendly, knowledgeable, and highly-qualified team at Guardian Managed Solutions
• Comprehensive menu of services encompassing a total package of solutions
• Managed IT support and helpdesk services
• Guardian Managed Solutions offers the best pricing in town. Their pricing structure is the most cost effective compared to the competition.

Financial Highlights

Guardian Managed Solutions is seeking $200,000 in debt financing to launch Guardian Managed Solutions. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs for the print ads and marketing costs. The breakout of the funding is below:

• Office space build-out: $20,000
• Office equipment, supplies, and materials: $10,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $10,000
• Working capital: $10,000

The following graph outlines the financial projections for Guardian Managed Solutions.

Company Overview

Who is guardian managed solutions.

Guardian Managed Solutions is a newly established, full-service IT solutions provider in Boston, Massachusetts. Guardian Managed Solutions will be the most reliable, cost-effective, and efficient choice for all businesses in Boston and the surrounding communities. Guardian Managed Solutions will provide a comprehensive menu of IT solutions and services for any company to utilize. Their full-service approach includes a comprehensive set of IT support.

  Guardian Managed Solutions will be able to manage multiple large, medium and small companies. The team of professionals are highly qualified and experienced in IT services and the attention and care required to build effective systems. Guardian Managed Solutions removes all headaches and issues of the IT sector and ensures all issues are taken care of expeditiously while delivering the best customer service.

Guardian Managed Solutions History

Guardian Managed Solutions is owned and operated by Vijay Sinek, a former graduate of Cambridge University, U.K. Vijay has been experienced in the IT solutions sector for over ten years and has extensive knowledge of current and new systems. His expertise includes large and small systems for a wide variety of businesses. He has gained the trust and commitment of several businesses to contract with the new company when it opens based on his past expertise and commitment to managed services at the highest level.

Since incorporation, Guardian Managed Solutions has achieved the following milestones:

• Registered Guardian Managed Solutions, LLC to transact business in the state of Massachusetts.
• Has a contract in place for a 10,000 square foot office at one of the midtown buildings
• Reached out to numerous contacts to include Guardian Managed Solutions.
• Began recruiting a staff of three and office personnel to work at Guardian Managed Solutions.

Guardian Managed Solutions Services

The following will be the services Guardian Managed Solutions will provide:

• Day to day client management

Industry Analysis

The managed service provider industry is expected to grow over the next five years to over $394 billion.

The growth will be driven by the economic demand that is becoming more and more reliant on IT infrastructure to keep their operations up and running. The growth will also be fueled by software and technology-driven instrumentation that will offer components to service not yet known in the industry. The growth may be driven by larger and higher demand, depending on the efficacy of current systems and the need for change within a decade.

Costs will likely be reduced as systems become more affordable and accessible. IT systems will be a standard feature in small businesses by the end of 2025 and will require little upkeep; this will lower the costs and apply better solutions across the board. Costs will also likely be reduced by a steady stream of young solution providers eager to capitalize on the IT industry by introducing new concepts and commercialization methods.

Customer Analysis

Demographic profile of target market.

Guardian Managed Solutions will target clients in Boston, Massachusetts. Guardian Managed Solutions will target all businesses who require IT support and infrastructure. Guardian Management Solutions will also target companies that need design and installation of IT structures. Guardian Management Solutions will target clients who require large service contract packages and high-level IT protection behaviors for their infrastructure.

Customer Segmentation

Guardian Managed Solutions will primarily target the following customer profiles:

• Companies within Boston, Massachusetts
• Businesses who require IT support
• Companies who require IT infrastructure rebuilds
• Companies that need design and installation of IT structures
• Clients who require large service contract packages
• Clients who require high-level IT protection behaviors for their infrastructure

Competitive Analysis

Direct and indirect competitors.

Guardian Managed Solutions will face competition from other companies with similar business profiles. A description of each competitor company is below.

Tech Solutions & Service

Started by Terri Tracson, Tech Solutions & Service is focused on small enterprises with complex IT needs. This might include a medical device company heavily invested in 3D printing, a security company hosting high-net worth individual securities, or a middle-range growth company requiring specific sets of IT solutions for military-grade needs.

Terri Tracson, a graduate of University of California, Los Angeles, started Tech Solutions & Service after being employed in the industry for ten years. She found that this industry had gaps in service and gaps in solutions to provide the absolute best IT possible. With that, she built an extensive list of clients and opened her own business. Tech Solutions & Service has one focus: providing secure and cost-effective technology solutions that enable all businesses to focus on their core business objectives.

Essential Tech Design

Essential Tech Design was founded in 2022 by Jess and Troy Halston. The two brothers attended Brown University and determined at the same time that the degree they sought was in IT system design. After graduation, the brothers set up Essential Tech Design in silent partnership with their father, Jackson Halston. The focus for Essential Tech Design is one of detailed and customized technology design for businesses with little to no housing space for complex systems. Essential Tech Design offers full package solutions that include complex housing for security systems and small systems for organizations that require specific industrial designs and security protocols alongside.

Healthcare IT Solutions

Healthcare IT Solutions was started in 2020 by Norton Small, a graduate of Boston University in Massachusetts. He holds a master’s degree in IT service and solutions and his company, Healthcare IT Solutions, is designed to meet the needs of clinicians and hospital staff throughout the US. The company owns proprietary IT systems that address every privacy and practical need within healthcare systems and offers a full setup and service package for new clients who buy into long-term contracts.

Healthcare IT Solutions has built systems for over one hundred companies and is known for the creativity of complex solutions found within healthcare management systems. The owner, Norton Small, is known for his interest in cutting edge technology for tomorrow’s IT solutions and invests heavily in startups and other ventures that support new technology and off-the-grid testing processes.

Competitive Advantage

Guardian Managed Solutions will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

Guardian Managed Solutions will offer the unique value proposition to its clientele:

• Highly-qualified team of skilled employees who are able to provide a comprehensive set of services and solutions.
• Data backup and disaster recovery services for the US government.
• Unbeatable pricing for clients; they will offer the lowest pricing in the city.

Promotions Strategy

The promotions strategy for Guardian Managed Solutions is as follows:

Word of Mouth/Referrals

Guardian Managed Solutions has built up an extensive list of contacts over the years by providing exceptional service and expertise to former clients. The contacts and clients will follow the company to their new destination to help spread the word of Guardian Managed Solutions.

Professional Associations and Networking

Vijay Sinek will attend all networking associations and trade events within industry sectors. He will also work toward becoming an officer or leading member of each group to grow the recognition of the company he owns.

Website/SEO Marketing

Guardian Managed Solutions will fully utilize their website and engage in SEO marketing to targeted client groups. The website will be well organized, informative, and list all the services that Guardian Managed Solutions provides. The website will also list their contact information and list their past and present IT solutions. The website will engage in SEO marketing tactics so that anytime someone types in the Google or Bing search engine “IT solutions company” or “IT solutions near me,” Guardian Managed Solutions will be listed at the top of the search results.

The pricing of Guardian Managed Solutions will be moderate and on par with competitors so customers feel they receive excellent value when purchasing their services.

Operations Plan

The following will be the operations plan for Guardian Managed Solutions. Operation Functions:

• Vijay Sinek will be the owner and president of the company. He will oversee all staff and manage client relations. Vijay has spent the past year recruiting the following staff:
• Jay Hawkins, a former associate in Vijay’s prior business, will be the managing director in Guardian Managed Solutions. He will oversee staff positions that work directly with IT systems.
• Tabby Townsend will be the office manager who will direct the office administration, client files, and accounts payable.

Milestones:

Guardian Managed Solutions will have the following milestones completed in the next six months.

• 5/1/202X – Finalize contract to lease office space
• 5/15/202X – Finalize personnel and staff employment contracts for the Guardian Managed Solutions
• 6/1/202X – Finalize contracts for Guardian Managed Solutions clients
• 6/15/202X – Begin networking at industry events
• 6/22/202X – Begin moving into Guardian Managed Solutions office
• 7/1/202X – Guardian Managed Solutions opens its doors for business

Financial Plan

Key revenue & costs.

The revenue drivers for Guardian Managed Solutions are the fees they will charge to clients for their services.

The cost drivers will be the overhead costs required in order to staff Guardian Managed Solutions. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

• Number of clients Per Month: 20
• Average XX per Month: $85,000
• Office Lease per Year: $100,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Managed Service Provider Business Plan FAQs

What is a managed service provider business plan.

A managed service provider business plan is a plan to start and/or grow your managed service provider business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections. You can easily complete your Managed Service Provider business plan using our Managed Service Provider Business Plan Template here .

What are the Main Types of Managed Service Provider Businesses?

There are a number of different kinds of managed service provider businesses, some examples include: Lower-level Managed Service Provider, Mid-level Managed Service Provider, and High-level Managed Service Provider.

How Do You Get Funding for Your Managed Service Provider Business Plan?

Managed Service Provider businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Managed Service Provider Business?

Starting a managed service provider business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster. 1. Develop A Managed Service Provider Business Plan - The first step in starting a business is to create a detailed managed service provider business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your managed service provider business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your managed service provider business is in compliance with local laws. 3. Register Your Managed Service Provider Business - Once you have chosen a legal structure, the next step is to register your managed service provider business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 4. Identify Financing Options - It’s likely that you’ll need some capital to start your managed service provider business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 7. Acquire Necessary Managed Service Provider Equipment & Supplies - In order to start your managed service provider business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your managed service provider business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

Your Guide to a Solid MSP Business Plan

Without a complete business plan, an enterprise is likely to fail, and managed service providers are no exception. A business plan is an essential item for any MSP that wants growth and profits.

Initially, your IT company might have gained its first clients from referrals or business acquaintances, but by itself, this is an unreliable channel. Growth requires a business plan.

In spite of the importance of a business plan, there are many service providers in the market that operate without one. In this article, we’re going to review how to create an effective MSP business plan that will help you move your business ahead.

1. Executive summary

First, you should describe your current business situation, what you have now, and how you’ve managed to get to this point. You should provide:

• A brief summary of what your company does
• Key milestones in your company’s history
• The team, who helps you to run the project, and how experienced these people are
• What helps you to stand out from competitors
• Your current financial state.

2. Local market analysis

Next, you should gather and summarize information about the other companies currently in your market that offers similar services to similar customers.

Try to find out as much information about your competitors as you can: what they offer, where they advertise, the resources of their capital and other key metrics.

3. Mission statement

If you still don’t have a mission statement, you absolutely need to create one for your IT services business plan. Your mission statement is the core of your business, and the reason why you do what you do. Of course, the first thing that you may think of is money. But let’s look a bit farther outside of your office. What value can you offer to the world?

Here are some good examples of what a strong MSP strives to do:

• Help small businesses create and maintain effective IT infrastructure
• Provide effective support for client hardware
• Develop and maintain efficient and secure IT systems to support all customers
• Become a technology leader and the best IT service in the provider’s local area.

Once you establish your mission, share it with your team to make sure that everyone has the same mindset and shares the same values.

4. State your vision

To create an effective mission statement, you need to have a clear understanding of where you would like your business to be in one, five and even 10 years.

What would you like your key metrics to be over time? How many clients do you plan to work with, and how much revenue do you want to receive on a monthly basis?

5. Set up clear goals and objectives

The following are the metrics that can be measured and expressed with the help of precise numbers:

• Number of customers
• Number of new customers you plan to onboard per month
• Monthly recurring revenue
• Number of devices to monitor
• Number of new devices to be added each month
• Number of workers

6. Structure of operations

This portion of your MSP business plan should contain a step-by-step guide describing how you plan to reach your goals.

List exactly what should be done on a daily basis, and what functions your employees need to fulfill. What should be done to set up your office? How will you scale your operations to correspond with your future growth? What kind of skills should your workers have?

Review every aspect of your business and list all current operations and any projected future needs that align with your business plan.

7. Marketing plan

As we’ve already stated above, you can’t rely solely on referrals. You should always have a solid marketing plan to attract new customers. Write down the sources that you’re going to use for advertising: your blog, CPC (cost-per-click) or CPM (cost-per-media) platforms to drive traffic to your website, or traditional media such as print and TV/radio advertising. Learn what b2b lead generation tactics you might want to use .

Calculate your advertising budget and how much you expect to pay per lead.

8. Sales plan

Finally, you should calculate and write down your sales metrics.

How many leads per salesperson do you expect to get per month? How many salespeople do you need in total? How much will each one be compensated per month? How are you going to compensate them for their efforts?

A solid business plan is an advantage for any managed service provider. Knowing what to expect in the near future and beyond can eliminate several headaches for a business owner.

When you know how to compose a business plan, you set up a strategic roadmap for your IT company and have something to show to potential investors. As soon as you implement the plan into your business processes, you will notice the benefits and how much easier your business processes become.

Alexander Negrash is director of marketing at CloudBerry Lab . Read more CloudBerry Lab blogs here .

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How to start an MSP successfully

From the dawn of the computer age in the mid-20th century to today's digital-first economy, information technology has grown from a niche market to an integral component of global commerce. As IT systems become more complex, so too are the demands placed on businesses to manage them.

Managed service providers (MSPs) are essential to the ever-evolving digital landscape, providing a wide range of services to help organizations maintain, secure, and optimize their networks. For would-be entrepreneurs, starting an MSP can be a great way to leverage knowledge and experience in the IT field to create a successful business.

But while the potential rewards of starting and running an MSP business can be great, getting up and running can take time, dedication, and a thorough understanding of the associated costs and risks. This article will cover the key steps to start an MSP, from honing a skill set and defining a niche to protecting your business.

Define a concrete skillset and niche

Many believe that starting an MSP business requires a given provider to offer all-encompassing IT services. But in reality, your skillset and focus will determine the success of your business. With this in mind, identifying an area of expertise, like cloud computing or cybersecurity, is a crucial first step to plotting your company's future success.

In the 1980s, the late  Professor Theodore Levitt of Harvard Business School  argued that a business's most significant opportunities for growth might not come from broadening its customer base, but rather from narrowing it. By focusing on a particular set of competencies, MSPs can provide their clients with specialized expertise and service tailored to their needs.

In the same vein, MSPs should also be thinking about what an ideal customer would be for them. Defining a target customer profile ensures that you are providing the best possible services for that group, versus trying to be a generalist.

The IT industry encompasses a wide range of services and solutions, so when it comes to establishing an MSP business, distinguishing between those you can offer and those you can't is critical. Identifying the area of expertise and niche of your MSP business will help ensure that you deliver quality services and solutions that meet your customers' needs.

Some key areas to consider:

• Cloud computing and hosting services
• Network security solutions
• Cybersecurity
• Data storage and backup
• Help desk and tech support services
• Business continuity planning
• Remote monitoring and proactive maintenance
• End-user training and support

In the early stages, defining the scope of your operations can be challenging, and it's vital to remain open-minded about the possibility of broadening or narrowing your services offering in the future. For example, are you looking to provide broader IT support, like server and system administration, or deep expertise in a specific area?

Should you provide general help-desk support or specialize in specific fields like cybersecurity? This may be the difference between building an MSP vs. MSSP (managed security service provider). Whether you focus narrowly or broadly, make sure you understand the customer needs in your chosen niche and that you have the resources to provide the best service possible.

In some cases, what services you provide may be impacted by the needs of your customer base. To see why so many businesses need managed services support, check out our eBook, Are managed services the right move for your business?

Understand profit vs. loss and value vs. cost

While providing IT services is the core purpose of any MSP business, entrepreneurs must also understand the financial side of their operation. Before opening for business, understanding profit vs. loss and value vs. cost when offering services and solutions is essential for long-term success.

Most people today have a basic understanding of how to perform a  cost-benefit analysis , but many young startups need to take the time to analyze their pricing models thoroughly. How much is each service or solution worth to your customers? How much does it cost to provide them with that service or solution? Is there a better way to structure your pricing model?

These are the questions you must ask yourself when understanding costs and profits. Doing so will help you set prices that will make it possible for you to profit while also ensuring that your customers are getting value for their money.

IT is one of the most rapidly evolving sectors of the global economy. As such, keeping track of industry data will provide crucial insight into how best to structure your enterprise for success. Whether you're considering starting an MSP business or looking to optimize your current operation, read our report,   The SMB Opportunity for MSPs: 2021-2026  to gain further insight into the market and uncover strategies for success.

Work these understandings into your pricing strategy

Understanding the theory and fundamentals of growing a business is one thing, but putting it into practice can be challenging. To ensure that you're offering competitive prices while safeguarding your profits, you'll need to develop a pricing strategy that works for your business.

Creating a pricing strategy starts with assessing the market. Researching your competition and understanding their services and prices will help you to position your offerings accordingly. For example, will the MSP model best suit your business, or will structuring your services as a value-added reseller (VAR) be more beneficial? When it comes to MSP vs. VAR , both are viable options, but you want to see what fits your niche in the industry.

Once you understand the nuances of your chosen market, honing in on your target customers will help you develop the best pricing strategy for your business. Are you targeting smaller companies or larger organizations? What services and solutions will they need, and what kind of prices will they be willing to pay? Combining your understanding of the market with your target customer's needs will help you to develop a pricing strategy that allows you to maximize profits while also providing your customers with fair prices.

Don't forget the hidden costs of doing business

Starting a business is exciting, but unforeseen costs can quickly derail your progress. Expecting the unexpected and planning for unforeseen expenditures can be the difference between success and failure. While the cost of hardware and software solutions is easy to foresee and plan for, other costs like marketing, travel expenses, and employee training can be more difficult to anticipate.

Think through the services you plan to offer, and make sure to factor in any additional costs associated with them. For example, suppose you are offering managed IT services. In that case, your business will need to factor in the price of hiring and training employees and any additional costs associated with maintaining your customer's systems.

If you're offering remote backup services, you'll need to consider the costs associated with storing your customers' data in secure offsite locations and the costs associated with managing the backups.

Understanding the total cost of providing a service or solution to your customers will help you to create a pricing model that is both competitive and profitable. Automating specific processes and partnering with established vendors allow you to keep costs down while maintaining and potentially improving the quality of your services.

ConnectWise offers tailored software solutions for MSPs that can help to streamline and automate many of the administrative tasks associated with running your business. Our  manageable and reliable MSP platform  provides a comprehensive suite of tools for planning, executing, and automating operations, freeing up resources and allowing you to focus on what matters most - delivering quality services to your customers.

Be sure to protect your business

As an MSP, you'll be responsible for managing mission-critical systems for your customers. As such, you'll need to ensure that you have adequate protection in place for your business and your clients' sensitive data.

Data protection starts with developing policies and procedures to ensure the security of customer data at all times. You'll need to create a data protection policy, document best practices for handling customer data, and define roles and responsibilities so that your team knows what is expected of them.

In addition, investing in robust cybersecurity solutions like firewalls and antivirus software can help to detect cybersecurity threats . Maintaining regular backups of customer data can facilitate faster recovery in a disaster, and investing in insurance policies can help provide additional protection in the event of a breach.

Protection also means legal support for your business as well. Establishing a strong managed services agreement will help set expectations with your clients in terms of your working relationship.

Find training opportunities for your team

To offer quality services, your team must have the right skills and experience. Training can ensure that employees have the necessary knowledge to provide high-level services.

Find out what certifications and qualifications are recommended for your services and create a training plan outlining the steps needed to achieve those goals. A business is only as strong as its team, so developing your personnel is crucial to scaling your business.

To dive deep into how these pieces come together, download our eBook,  How to Successfully Grow and Scale Your Business , today.

Documentation matters

Creating detailed documentation of services and processes is critical to running an MSP business. A well-documented system enables your team to refer back to instructions quickly and reduces the risk of mistakes. This also helps to free up resources so that employees can focus on providing quality services.

When creating documentation, make sure to:

• Clearly outline the steps needed to perform a task
• Define roles and responsibilities
• Establish processes for emergency scenarios
• Develop contingency plans

Clearly defined and documented processes help ensure your team can efficiently and accurately manage customer systems.

Build a community with customers, peers, and vendors

Building relationships with customers, peers, and vendors will help to foster a sense of community and create opportunities for collaboration. Utilizing customer feedback to identify market trends can help you stay ahead of the competition, while keeping up to date with industry trends can help you stay on top of new services and technologies.

Creating relationships with peers helps promote a sense of community and engagement in the industry, while partnering with established vendors helps you to keep costs down. Engage your partners in conversations to share industry insights and develop strategies for success.

In today's world, networking is essential for growing and scaling your business, and investing time in building relationships can significantly impact your enterprise's continued success.

The good news here is that there are already several existing communities for new and veteran MSPs to come together and share knowledge. ConnectWise’s IT Nation is the foremost global community of peers, thought leaders, and experts in the industry.

Don't be afraid to be boring

In managed services, reliability and consistency trump glamor and flash. Managed service providers must deliver reliable and consistent services, so feel free to be boring.

As you begin your journey, developing a solid business model that emphasizes reliability and consistent service delivery should precede flashy marketing and gimmicks. A solid foundation built on reliable and consistent service delivery will help ensure your business's long-term success.

Become a value-added managed service provider

The goal of any managed service provider should be to become a trusted partner, not just a vendor. By offering value-added services, such as proactive maintenance and customer education, you can differentiate yourself from other providers and become a trusted partner in the eyes of your clients.

Don’t let recession concerns hold you back

With the current economic headwinds, it’s easy to fall into the mindset that this is a bad time to start an MSP, or any business for that matter. Not necessarily. Compared to other industries out there, the outlook looks brighter for new MSPs that are able to demonstrate value to their clients.

The main reason for this is that MSPs, by nature, help small businesses with automation and efficiency. These are two factors that are essential for businesses right now, so that makes a lot of opportunity for a new MSP. Worldwide IT spending is actually expected to increase 2.3% in 2023, so be ready to take advantage.

Starting an MSP business is a big step, and while it can be overwhelming, providing world-class service at the forefront of the IT industry is incredibly rewarding. Whether you're just starting or looking to scale an existing business, you need both a comprehensive strategy and the right tools. ConnectWise’s Business Management suite can help ensure your MSP business is positioned for success and efficiency for years to come. Contact us and our team of experts to help you get started.

How much does it cost to start an MSP?

The cost of starting an MSP business will depend on several factors, including the size and scope of the business, the services you will offer, and the tools needed for operations. Managed service providers typically require investments in software , hardware, and personnel training, as well as infrastructure costs such as office space and internet access.

What insurance does an MSP need?

Managed service providers should consider investing in professional liability insurance, which provides coverage for claims arising from negligence or errors and omissions. Another item to invest in is cyber liability insurance, which covers recovering from a cyber attack or data breach.

What are the benefits of an MSP?

Managed service providers can offer a variety of benefits to their clients, including cost savings, increased efficiency, and improved security. By outsourcing IT needs, businesses can free up resources to focus on core business activities and reduce operational costs. MSPs can also provide businesses with comprehensive IT support services, such as proactive maintenance, remote monitoring, patch management, and data backup and recovery.

How do I start an MSP company?

Starting an MSP business is no small task, but with the right tools and a solid plan, you can set yourself up for success. Determine the size and scope of your business, develop a comprehensive strategy that outlines services, pricing models, and marketing plans, and invest in the necessary hardware and software to get started.

How do MSPs get clients?

Network, network, network. Building relationships with potential clients and developing a referral base is critical to getting your name out there and acquiring new customers. Investing time in industry events, webinars, and marketing activities can help you reach more people and grow your business.

How do you make your MSP successful?

A successful MSP business is built on quality service, reliable customer support, and up-to-date technology. Invest in training and certifications to stay ahead of the curve, develop strong partnerships with vendors, and keep an open line of communication with customers.

Are MSPs profitable?

Managed service providers are generally very profitable. With a growing demand for IT services, an MSP business can provide a steady income from customer contracts and consulting fees. Investing in the right tools, building relationships with clients, and offering value-added services can help ensure that your MSP business is thriving.

What is the average size of an MSP?

The average size of an MSP varies, but most are small businesses with fewer than 50 employees. Many larger organizations have multiple locations and hundreds of employees, while smaller companies may have just one office and a few staff members. The size of your MSP will largely depend on your customer base and the services you offer.

Recommended

• Introduction

What is an MSP?

• Pricing models
• How to get MSP clients
• Client onboarding process
• Common mistakes
• Best practices
• Metrics and KPIs
• Download evaluation kit

A guide to running a successful managed services business

A road map to building a profitable MSP practice

• Download MSP software for free
• Current trends in managed services
• Pricing models for managed IT services
• Bundling: How to build your offer
• How to land your first client
• Making the right technology choices
• The importance of good help desk software for MSPs
• Choosing the right technology
• Help desk for MSPs

ServiceDesk Plus MSP   Resources   What is a Managed Service Provider (MSP)?

Today’s managed service providers (MSPs) are not just helping organizations with the day-to-day functioning of their IT infrastructure but also assisting them in keeping up with the latest tools, trends, and industry best practices. For instance, MSPs not only deal with small issues like printer malfunctions and password resets but also help in securing data from breaches that could harm an organization financially and impact its image among customers.

Managed services is no longer a new concept. It is estimated that over 75 percent of Fortune 1000 companies outsource all or at least some part of their IT infrastructure to an MSP or value-added reseller (VAR).

Having said that, the managed services industry is still developing. A lot of MSPs are struggling to retain their clients, and a lot of VARs and system integrators (SIs) are still skeptical about becoming an MSP.

This guide is designed to steer you in the right direction when it comes to making decisions about IT services and managed services. Whether you're just starting up, have been in business for a while but are still struggling to grow, or want to take your MSP business to the next level, this guide will help you achieve your goals.

In this guide, we’ll discuss how to build the right kind of offers for your clients, the basics of client onboarding, the issues that MSPs face, best practices, and a lot more to help you successfully grow your MSP business.

What are MSPs?

• The difference an MSP makes

Why do customers consider MSPs?

• Client onboarding basics for MSPs
• Common mistakes growing MSPs make
• The challenges MSPs face
• Best practices for successful MSPs
• Essential sales metrics and KPIs for MSPs
• How to stand out in a crowded MSP market
• Download MSP software's evaluation kit

IT has taken the driver’s seat in most businesses, and the level of focus it takes to manage IT infrastructure sometimes ends up swaying an organization from focusing on their business goals. This is where the concept of a managed services provider (MSP) comes into the picture. They handle the management of technologies along with core IT maintenance functions, such as break/fix and patching.

An MSP is a company that provides managed services to organizations, which usually involves remotely handling their entire IT infrastructure or a part of it as mentioned in the service-level agreement (SLA) between the two parties. Pricing models for MSPs may be tier-based, à la carte, value-based, etc. The subscription-based pricing model makes it easier for organizations that want expert services, the latest tools, and to only pay for the resources they use. Services such as 24x7 monitoring, issue resolution, network security, and IT asset management all come under the scope of MSPs.

Unlike traditional IT service providers, MSPs tend to take 360° responsibility for the services that are outsourced to them instead of just providing on-demand services. They act as IT consultants and provide expert advice when their clients need to make strategic IT decisions. More and more organizations are opting for MSPs in order to reduce their IT risks and be ready for any future technological disruptions .

The difference an MSP makes (Types of service providers)

When it comes to outsourcing, there are two types of service providers:

Break-fix service providers

• Managed service providers (MSPs)

Break-fix service providers are fine for organizations that do not need heavy IT assistance, but those that do will end up paying a lot more than what MSPs charge for the same services if they go with a break-fix service provider.

Managed services are proving to be a boon to all organizations, especially for small and medium-sized businesses (SMBs). By 2018, about 39 percent of SMBs used managed services in some capacity while the entire MSP market stood at $180.5 billion. This number has only increased, standing at $223 billion in 2020.

Break-fix service providers deal with every issue as a separate case, and charges for on-site visits are their major source of revenue. Therefore, some break-fix service providers may take longer to fix an issue to drive up the number of on-site visits. On top of that, there are a few other issues with such service providers, such as:

• Unpredictable costs.
• Longer response and service time.
• Higher charges for emergency on-site visits.

The benefits of MSPs over traditional/break-fix service providers

Trained, expert IT professionals

Eliminates the need to get any accreditation

No build time involved

Stays up-to-date with the latest technology

Implements industry best practices

Managed services are proving to be a boon to all organizations, especially for small and medium-sized businesses (SMBs). By 2018, about 39 percent of SMBs used managed services in some capacity while the entire MSP market stood at $180.5 billion . This number has only increased, standing at $223 billion in 2020. SMBs and large enterprises consider MSPs their trusted partners, as they have been interacting with them for all of their IT needs day in and day out.

The most successful MSPs:

Focus on efficiency

An MSP’s job is to ensure that their client’s business is functioning smoothly 24x7. To accomplish this, an MSP will perform routine hardware maintenance tasks to avoid downtime and outages, provide continuous help desk and remote IT support, automate security patches and software updates, and even help with IT consulting.

MSPs also provide expert advice whenever required, as they come with industry experience in putting the right tech in the right areas.

Make data security their priority

MSPs know that a client's data security is a top priority, as an MSP’s entire business depends on clients trusting them with their IT infrastructure and personal data. Any breach in security could potentially damage their client's image and subsequently their own. This is why MSPs go above and beyond to protect their clients’ data with fully managed and layered network security in order to avoid cybersecurity threats, preserve business continuity, and avoid any type of data loss. Apart from that, MSPs also play a huge role in data backup and disaster recovery.

Service delivery being the most important capability, MSPs design networks and data centers that will be resilient in the face of IT infrastructure problems. MSPs’ data centers are much more robust than a standard enterprise IT service provider’s , ensuring that even if there’s trouble in the MSP’s main offices, the flow of services will not stop. This acts as an added layer of security for an MSP’s clients.

Help clients meet their business needs

An MSP’s main objective is to prevent problems and maintain business continuity. To meet that goal, MSPs find, implement, and manage a solution that fits their client's business needs.

They help their clients with budgeting (understanding current expenditure in order to cut costs and allocate resources accordingly), planning (understanding long-term and short-term needs to find technology solutions that scale with their business), and implementing the latest solutions.

Help their clients innovate

In order to scale, every business needs to innovate. And on that path, organizations may need to perform certain time-consuming, stressful, and resource-intensive activities, such as migrating to the cloud or switching to different software.

An MSP can be a boon to an organization for such activities. They help organizations save precious time and resources by taking up IT projects (whether large or small), spending less money by implementing best practices , and providing cost-effective ways to implement new technologies .

So far, we've already established that organizations are drawn towards MSPs. A question arises here:

What is it exactly that organizations are expecting to get out of these services?

Research indicates that the services offered by MSPs are not necessarily the only reasons why organizations consider hiring an MSP. Organizations are looking for a wide range of benefits when they decide to invest in a managed services model. The following are the reasons organizations decide to go with an MSP (based on the research mentioned above):

• Improved security
• Proactive approach to IT problems
• Better uptime
• Gain access to newer technologies
• Cost savings over in-house IT
• Peace of mind
• Free internal staff for strategic work
• Tap into cloud solutions
• Lack of internal IT
• Handle remote office IT

Benefits of MSPs

Cost-effectiveness:.

Outsourcing services to an MSP offers an organization the ability to significantly cut operational expenses thanks to the MSP’s constantly upgraded technology and expertise in the field, helping to control IT costs and saving the organization's resources from menial tasks and processes such as hardware issues and other general break-fix services.

MSPs adhere to an SLA that's shared with the client and includes the client’s precise requirements. An SLA helps ensure timely service delivery and efficient management of hardware and software, in turn boosting the client’s productivity.

Apart from that, subscription-based pricing (discussed in detail in the " Pricing models of managed IT services " chapter) makes an organization’s expenditure on outsourced business processes and functions predictable, which helps in keeping the organization’s budget in check.

Access to expertise

Apart from the latest tech, MSPs also come with well-qualified, trained, and experienced IT professionals who are equipped to handle certain tasks that an organization's resources are not built to handle, neither are they supposed to. This frees up IT teams to focus on strategic initiatives.

Sometimes an organization requires a specific ability once in a blue moon. In such cases, an MSP can help an organization avoid the expense of training internal staff for skills that are rarely required.

Be it day-to-day IT help desk activities, network monitoring , or management of IT assets, MSPs can expertly provide 360-degree management of outsourced business functions and processes.

Focus on core business

As a business grows, certain business functions and processes may become the responsibility of the IT team, swaying them from their original objectives or simply remaining incomplete because they’re beyond the team’s scope or capacity.

Capabilities such as updating and patching systems, backing up data, and generating reports on how well IT infrastructure is functioning can be outsourced to MSPs, shifting the focus of IT departments back to uplifting their business via innovation and revenue-generating activities.

Scalability

Businesses need to scale up or down as demand fluctuates. When a business expands, unexpected hurdles may arise. To deal with this internally, a business will need to add or remove a substantial amount of resources. Organizations aren’t typically ready to make these adjustments when it comes to IT requirements.

This is where an MSP’s ability to rapidly accommodate IT changes helps a business stay productive and avoid downtime. MSPs can provide the necessary amount of services and support as and when required and handle any IT issues that arise on the way.

MSPs proactively identify opportunities for improvement to support their clients' business objectives.

Minimizing risks

Millions of businesses fall victim to hacking due to poor network security. Many SMBs go out of business every year because of security breaches, as customers lose trust and shift to competitors. With the exception of huge conglomerates, implementing a separate IT team just to ensure data security can burn a big hole in a business’s pocket.

MSPs can offer proactive security solutions to help avoid security breaches. Their services include constant monitoring of servers and websites, performing data backups, and immediately alerting the organization upon noticing any suspicious activity.

Staying technologically compliant is imperative for organizations to stay in business. There are rules and regulations set by certain governing bodies that organizations need to follow. For less established organizations, handling compliance on their own can be a nightmare.

MSPs are likely familiar with the compliance regulations that organizations are required to follow and can easily point out the areas that require work and help find solutions. An MSP will notify its clients of the expiration dates of their software licenses periodically, keep clients' payment information secure, and ensure that its clients’ security practices are compliant with the current rules and regulations.

Highly responsive: 24x7 availability

When an organization has a global business presence, working hours shift from 9-5 to 24x7, and so does the need to have a system in place to deal with all sorts of IT issues. MSPs offer 24/7 support, 365 days a year. With SLAs in place, MSPs ensure service continuity and remain highly responsive whenever required.

Trends in Managed Service Provider industry

Managed IT services pricing models

MSP software's RFP template

An exclusive package of feature checklist.

ServiceDesk Plus MSP RFP

Comprehensive list of must-have features that can be used as a benchmark for your IT help desk.

Are you looking to replace your existing MSP platform this year?*

A Guide to Managed IT Services for Small Businesses

May 24, 2022

When running a small business, there are always a lot of tasks to juggle. IT issues will often pop up at the most inconvenient times, acting as both a distraction and a possible setback. With 31.7 million small businesses in the US representing 47.1% of the total workforce, IT problems are common across many industries. Although they take up a significant part of the economy, their challenges are more impactful due to their size.

According to the  Bureau of Labor Statistics , 80% of small businesses make it through their first year. 50% are around after five years. And this progressively drops to a 20-year 15% survival rate. Several factors create those rates. There’s a globally high technology adoption rate, where 93% of adults use the internet , making more than just a storefront needed. Small businesses are expected to have an online presence too.

With the internet being essential, it’s also exposed small businesses to more threats than ever before. Alarmingly, 60% of hacked small businesses  go out of business  within six months. Whether attempting to steal credit card information or ransoming valuable data, they can damage companies and customers alike. That has created a demand for managed IT services for small businesses.

Table of Contents

What Is a Small Business? What Are Managed IT Services for Small Businesses? What Types of Services Can They Provide? Why Not Just Use In-house IT? Top 7 Challenges Faced by Small Businesses

Cybersecurity Technology Changes Money Management Overworking Customer and Client Needs Troubleshooting IT Preparing for the Future

Top 7 Benefits of Using Managed IT Services for a Small Business

Better Cybersecurity Improved Productivity Scalable IT Services Experienced IT Staff Reduced Costs On-demand Support Maintaining IT Compliance

Cutting Costs with Small Business Managed IT Small Businesses Can Afford Industry-standard IT Services Learn How Managed IT Services Can Help

What Is a Small Business?

A small business is an independently owned and operated company with fewer employees and revenue than a standard-sized business. They often focus on a specific commercial industry or economic sector. This targeted approach allows them to compete with larger organizations and doesn’t require as much revenue to stay profitable.

What Are Managed IT Services for Small Businesses?

Managed IT services offer third-party support with any IT-related issue or project, bringing broader expertise to small businesses. That removes the need for in-house IT staff. Since they work with multiple clients across many industries, they have insight into the latest issues and innovations. They can react to problems as they develop and proactively implement new hardware and solutions to help companies stay competitive.

What Types of Services Can They Provide?

MSPs can provide many types of IT services requested by small businesses. Consultations and assessments are also available for those unsure of what they need. These are catered to the company’s needs, goals, and future expectations. Through this process, they can prioritize areas of greater improvement while minimizing costs by not implementing unneeded solutions. Some of the services offered are:

Cybersecurity

• IT consulting
• Assessments
• 24/7 monitoring
• Cloud storage
• Data recovery
• Software training
• IT compliance
• Hardware upgrades
• Network overhauls
• IT help desk support

IT consultants can recommend services based on their needs, allowing small businesses to receive customized support. Every company has unique functions or products, which means IT can benefit them diversly. Managed IT services aim to match the solutions to those specialized needs.

Why Not Just Use In-house IT?

Many small businesses have at least one person to rely on for basic IT needs. Whether they’re a trained IT engineer or simply the most experienced person in the room, there’s a limitation to the time, resources, and knowledge to handle major problems and provide routine support. That can be inefficient and can have severe consequences if something is outside the scope of what they can address.

Hiring internal IT staff can also be an expensive and risky approach. It requires upfront funding to get them trained and integrated. An IT specialist can  cost an average  of $54,495 a year, while the median for cybersecurity experts is $120,708 annually. That can go upward depending on location, demand, and experience. Since they’re on staff payroll, they’re also being paid for lull periods when there’s nothing to do.

Since the staff member is internally trained, all the risk and liability go to the small business. If they’re dismissed, it requires restarting the process anew. It can take anywhere from  8 to 26 weeks  for a new worker to reach full productivity. IT professionals are on the higher end of that scale.

Besides those factors, they may also be missing the knowledge necessary to handle every problem. Their understanding centers on the company’s focus areas, preventing them from acquiring the broader experience of small business outsourced IT. As a result, in-house staff isn’t always equipped to handle every problem.

Top 7 Challenges Faced by Small Businesses

Small businesses face many challenges beyond what they can quickly solve as a self-run entity. These can come in many shapes and sizes. Some can be prepared for, while others may be unexpected and only happen in specific situations.

Most organizations store a lot of valuable information. There’s a variety of threats, like viruses, ransomware, and hackers whose goal is to exploit any weaknesses they can find. Whether it’s ransoming a database or collecting information to sell to third parties, the end goal of cybercriminals is to make money off the small business’s data.

Technology Changes

Technology continues to change steadily, with innovations shifting the way businesses, customers, and clients interact. Online shopping is one example, with  74% of adults  doing it in some form. Having an online presence and website-based retail has become important for those who don’t visit in person.

Money Management

There are a lot of risks with starting up a company, and a lot of them revolve around money management. Most people don’t have the luxury of significant outside investments, meaning their success or failure relies on their ability to be profitable. Having the proper accounting and payroll tools can go a long way in tracking money and costs.

Overworking

Employees and owners alike may have to wear many hats within a small business. That means filling in multiple roles to keep things functional, leading to overworking and higher fatigue without proper workload management. In the long run, this can be damaging to a company as burned-out staff are less productive and may provide lower quality work.

Customer and Client Needs

Like with technology changes, customer and client needs can shift over time. They might expect new services while society’s needs continue to evolve. These might be completely different from state to state in countries like the US. Keeping up with these can be challenging, especially with IT, where mistakes can be costly.

Troubleshooting IT

A full-time worker spends  22 minutes a day , on average, troubleshooting IT problems. That translates to 95 hours a year, or almost 2 ½ weeks of lost productivity. Depending on the issue or job, it may take additional time to get back on task after a distraction.

Preparing for the Future

Anticipating future changes in IT is not an easy task. Whether it’s a new security issue or a fresh digital innovation, two main factors are involved: reaction and preparation. Both parts can be complex, especially without specialists who can answer questions, anticipate problems, and support setting up new systems.

Top 7 Benefits of Managed IT Services for a Small Business

Competition with larger organizations means finding ways to get higher quality solutions at a fraction of the cost. With the help of managed IT services, small businesses can better use money through several benefits offered.

Better Cybersecurity

MSPs use a variety of digital tools to help keep clients safe. That includes endpoint protection like antivirus, firewalls, DNS filters, and spam detection to counteract most threats to your devices and networks. By combining those with monitoring software, an IT specialist can quickly respond to anything that manages to bypass those layers of protection.

Improved Productivity

With overworking being an ongoing concern, managed IT services can help reduce some workloads and improve employee efficiency through additional software tools and staff training. By reducing worker strain, there is less likely to be a drop in productivity that can accompany burn-out.

Scalable IT Services

There’s no one-size-fits-all solution to the services that a small business needs. Customers and clients can be variable, products offered will differ, and the tools that employees use may change over time. With scalable IT services, it can be customized to individual needs and adapt to changes in operational scale.

Experienced IT Staff

Managed IT services have access to a larger pool of employees due to their organization specializing in providing IT and managing multiple clients. Since all the staff is well trained and certified, they have expanded knowledge and ability compared to an in-house team. That allows them to help with common problems and have outside-the-box thinking with complex and unexpected issues.

Reduced Costs

Training IT staff and providing the needed experience can be costly for any small business. Finding the right solution can also be the difference between improvement and years of spendy IT maintenance of a poorly designed system. Managed IT services remove the risk of in-house IT staff and directly implement the best and most cost-effective solutions.

On-demand Support

Organizations never know when a problem will emerge, even with a strong IT foundation. Instead of wasting time troubleshooting IT issues,  helpdesk services  can provide on-demand support for issues of any size. Assistance can arrive even during off-hours, as many small business IT companies will provide 24/7 helpdesk services with an emergency contact line.

Maintaining IT Compliance

Meeting IT compliance is essential for cybersecurity and meeting compliance requirements within many industries. Assessing infrastructure for compliance is a complicated role and requires someone with specialized experience. Managed IT services can do all the heavy lifting by ensuring compliance is up to par.

Cutting Costs with Small Business Managed IT

For a small business, managing IT problems can be a big and expensive task that they aren’t always equipped to handle. Relying on employees to troubleshoot their issues can lead to large drops in productivity as time spent dealing with IT problems is time not used on doing their job. That being said, hiring a full-time IT technician can be expensive and unnecessary since they won’t be needed or best used much of the time. That’s where having a small business managed IT team can help companies cut costs while offering a higher level of service.

Instead of hiring an employee full-time, you’re only paying for working hours and core user support, which decreases the overall price. That ensures the company budget goes towards services being received and is not spent on an employee who uses a lot of their time simply waiting for problems to happen. That makes it both a more affordable and more effective use of a limited budget.

Small Businesses Can Afford Industry-standard IT Services

Using small business managed IT services isn’t just about cutting costs but is also about receiving industry-standard IT. Even at their best, a single in-house IT technician can’t handle the output of a whole team of IT specialists. When an emergency happens, a solo technician will be underequipped and leave companies with much longer periods of downtime. That not only lowers the revenue of a small business but can also harm the experience of its customers.

By using managed IT services for small businesses, that problem is avoided due to IT companies maintaining a larger pool of employees. That means industry-standard IT support is within reach even for small businesses on a tighter budget. Scalable services are what is keeping that more affordable. If a problem only requires a simple fix by one person, then that is what’s provided. If disaster strikes and a larger team is needed to react quickly and solve a significant issue, that’s also available on demand. Using a scalable approach to IT has allowed even small businesses to afford top-tier IT services.

Learn How Managed IT Services Can Help

Managing a small business can be an expensive  and hard task. With everything from equipment costs and incorporation fees to office spaces and inventory management, upfront and monthly expenses can quickly grow. Cybercriminals are a constant threat too. As each day brings new situations and unexpected challenges, building a solid IT foundation helps financially and can boost productivity in many areas.

Whether a stable specialty store or a new start-up, operating costs are central to the function of any small business. Without revenue, there is no company. Outsourcing with managed IT services can help cut expenses while better utilizing available resources. Staff can focus on their business and worry less about their IT systems by letting third parties handle IT functions.

Running a small business isn’t easy. ITonDemand’s  managed IT services  offer an experienced team to take on any IT challenge. We provide fully outsourced IT or can partner with in-house staff to better utilize them. Our client-first approach will help you get the most out of your money while keeping your IT costs down with the right tools and software. Your technology should work with you, not against you. With help from ITonDemand, we can make that happen.

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What Is A Managed Service Provider (MSP)?

Updated: Sep 26, 2022, 12:00pm

Table of Contents

Definition of a managed service provider, common msp coverage areas, how does an msp work, benefits of using an msp, how to find an msp, is an msp right for your business, frequently asked questions (faqs).

An organization responsible for managing and delivering services to another organization as per their requirement is called a managed service provider (MSP). The services provided by an MSP typically are ongoing and remote. Traditionally, an MSP was used to manage or deliver information technology (IT) services like infrastructure, security, networking and applications. But a modern-day managed service provider may also manage an organization’s other business needs, such as staffing, payroll , customer engagement and vendor management.

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In this article, we will discuss what an MSP does, what are the benefits of using an MSP and how you can find the MSP right for your business.

A service provider that manages one or more of your business areas to maintain business continuity on a day-to-day basis is a managed service provider. MSPs are used as strategic partners to improve operational efficiency of businesses of all types and sizes from small to medium-sized (SMBs) to government agencies and nonprofit organizations.

Managed service providers have a pool of experts that can handle the most complex business processes. Thus, through MSPs, you get access to the best talent and latest technology available in the market without costs increasing quickly.

You can find a managed service provider to handle almost all your business processes. Traditionally, when IT infrastructure became crucial for business success, organizations started outsourcing their IT processes including Infrastructure installation and management, networking, security and data warehouses, this gave them access to the MSP’s expertise and capabilities without incurring high costs.

The same principle is now applied to any business processes in which organizations do not have in-house expertise and setting up the capabilities would require diverting resources from more important activities. For instance, with hybrid work models and multiple categories of employees―full-time, part-time, freelance, contractual and more―in every organization, human resources has become a complex process. So, many businesses choose to outsource their different human resources (HR) activities to professional employer organizations (PEOs) .

Business processes that are usually outsourced to a managed service provider includes:

• IT services and infrastructure
• Workforce management
• Recruitment
• Vendor management
• Contract management and compliance
• Human resources

Once you have selected an MSP and the contracts and service-level agreements (SLAs) are in place, the service provider starts by fully analyzing the outsourced processes. This enables them to identify how to maximize resource utilization and reduce costs while improving process efficiencies. Their experts also identify challenges within your processes, which you might not have been able to do yourself.

Based on the analysis and liabilities and risk identification, the service provider builds a fully customized solution and provides ongoing maintenance and support for the outsourced processes.

Current business landscape is highly competitive and it makes sense for businesses to focus on their core competency. However other departments like staffing, HR , payroll and benefits administration, IT infrastructure and applications, are crucial for smooth running of the overall business.

MSPs have expertise in the processes that they manage. So, when you hire an MSP for noncore processes, you and your team can focus on activities that drive growth while ensuring that other processes are also being run by experts and not getting neglected. Here are some benefits of hiring an MSP:

• Processes are run by highly specialized and experienced experts
• Save on hiring and managing in-house experts to run the same processes
• Get access to the latest technologies and applications
• Scale up or down according to changing business needs quickly
• Most MSPs are subscription-based software-as-a-service (SaaS) services; you can easily predict the amount you will be spending every month

Before you find an MSP to manage a business process/area, you need to assess your needs and decide on a budget for it. Ask yourself―do you have the necessary in-house expertise to handle the processes you are planning to outsource. If you have the expertise, is it available freely or will you need to reallocate from other projects? Also, you need to consider if you will need to hire more people.

If you do not have the necessary expertise in-house, what will be your expenditure in the short-term, such as initial establishment costs, and then the recurring costs in the long term if you want that capability in-house. You should be spending less than that amount on the managed service provider.

Once you have decided that hiring a managed service provider would be more efficient and cost-effective, make a shortlist of eight to 10 MSPs. Research into their past performance, available team of experts and testimonials from past clients to understand if they will be able to meet your needs.

Remember that it is not necessary that they have a prior experience that is identical to your requirements. If they have the necessary expertise and the willingness to provide what you want, that should suffice.

Talk to the service providers representatives and understand how they will be managing and maintaining the services. This will help you in comparing the shortlisted MSPs and reaching a conclusion. Needless to add, the MSP must be able to work within your budget.

An MSP with a proven track record of success is best for you but if someone is new but willing to learn and provide excellent services, you should be open to trying them out. Changing MSPs frequently does not bode well for business continuity and growth. So, explore their company culture and try to judge if you would be able to forge a long-term relationship with them.

How much should an MSP cost?

An MSP should cost less than it takes you to set up the capability in-house. While calculating the cost of setting up the in-house team, take into account not the initial fixed cost of hiring and buying tools but also recurring costs of employee payment and engagement.

What is the role of a managed service provider?

A managed service provider is responsible for delivering services, such as IT infrastructure and maintenance, security, payroll and benefits administration, vendor management, HR, and customer relationships management (CRM) to your business. They are further responsible for the day-to-day administration and management of these services.

How do managed services work?

The business area that you have outsourced is typically managed by the MSP using SaaS. The application creates users with requisite permissions, and they can use the application as if it were running in-house.

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A seasoned small business and technology writer and educator with more than 20 years of experience, Shweta excels in demystifying complex tech tools and concepts for small businesses. Her work has been featured in NewsWeek, Huffington Post and more. Her postgraduate degree in computer management fuels her comprehensive analysis and exploration of tech topics.

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Services Plans

Keep your infrastructure healthy and secure, with 24/7 support to improve business productivity and efficiency. , businesses of every size need it support..

Whether there are trained professionals on staff or a small group of technology-minded employees brought in to mind the IT, most business’s “IT” is not covered by their area of expertise.

While it is tempting to keep everything internal, modern cloud, mobile, and IoT computing make the need for properly managed IT essential to businesses of any size.

What Are Managed IT Services Plans?​

Managed IT services plans consist of multiple types of managed services that are bundled together for purposes of customer convenience and cost savings. The term “fully managed” means that the managed service provider functions as the customer’s full IT department, while the term “co-managed” means that IT management responsibilities are distributed across the customer and their IT service provider. Managed IT services plans generally provide a combination of proactive and responsive IT support to customers, helping them to proactively maintain their IT infrastructure but also responding quickly to any technical support issues that arise. Managed IT services plans commonly include offerings such as managed patching, help desk services, infrastructure monitoring and alerting, application management, and technical consulting.

NexusTek Managed IT Services Plans

Support care.

Foundational IT Services for Businesses Seeking a Fully Outsourced IT Department

NexusTek Support Care is a fully managed IT service plan that was specifically designed to function as a business’ full IT department. Our certified engineering team provides your business with both proactive and responsive support to maintain the health of your IT infrastructure. The plan includes remote engineers who will provide you with expert consultation and support on IT matters ranging from day-to-day technology issues to long-term planning. Providing an additional layer of support, our 24-hour help desk is there to assist your employees to resolve any technology issues that may arise.

Support Care benefits include:

• Maintains IT performance to keep your business productive and efficient​
• 24-hour help desk ensures that employees get the help they need to stay productive
• Personalized services from engineers who get to know your business and IT infrastructure
• Expertise that empowers your business to make smart and informed IT decisions

Proactive IT Maintenance & Security for Businesses Seeking a Fully Outsourced IT Team

NexusTek Total Care is a fully managed IT service plan that delivers the support of a full IT team, fortified by the security that today’s businesses need. In addition to infrastructure and user support services to keep your IT healthy and running smoothly, the Total Care plan also protects your business with a multi-layered cybersecurity defense. With a combination of preventive and responsive solutions, the Total Care plan reduces the likelihood of cyberattacks while also ensuring a swift, effective incident response should an attack occur.

Total Care benefits include:

• Empowers employees to protect your business against social engineering attacks
• 24/7/365 monitoring reduces cyber risk by quickly identifying and containing threats
• Assures your customers, partners, and vendors that your infrastructure is secure
• Helps with qualifying and obtaining lower premiums for cyber insurance

Managed IT Services Plans Features

Why NexusTek for Managed IT Plans?

The complexity of the modern IT infrastructure offers countless opportunities to businesses. Even small and medium-sized businesses (SMBs) are taking advantage of all that technology has to offer the business world. With cloud computing, the explosion of business applications that have hit the market, and the variety of device types from laptops to servers to IoT devices, needless to say the management of the average business’ IT landscape has gotten quite complicated. When you partner with NexusTek for a managed IT plan, your business gets the luxury of taking advantage of all that modern technology has to offer, with the convenience of an expert team of technicians to manage the complexity such technology brings. With NexusTek as your managed service provider, you can focus on using your IT to make your business a success, while we focus on making your technology work for you.

Do NexusTek’s Managed IT Plans have vCIOs?

NexusTek offers a Virtual CIO or vCIO with any of its managed IT plans as an add-on service. The vCIO is an executive-level technology leader who possesses in-depth knowledge on both technology and business, as well as the interconnections between the two. As technology has advanced and become more complex (and pervasive) over the years, business leaders increasingly recognize that a business’ IT cannot truly be separated from its business strategy. Thus, it is important to create an IT strategy that is aligned with your business strategy. This is easier said than done, as business leaders are not typically well versed in IT, and IT leaders may not have much experience with the principles of business management. A vCIO does have knowledge of both areas, however, and because of this can provide invaluable insights that business leaders can use to make more informed and strategic IT decisions. With NexusTek as your managed service provider, you can add a vCIO on an ongoing basis, effectively adding a technology leader to your executive team. Or you can add a vCIO on a time-limited basis, which may be useful when planning IT overhauls or for IT assessments in areas like cybersecurity, modernization, or IT spend.

What if NexusTek's Managed Care plans don’t fit my business’ IT support needs?

NexusTek’s Managed Care plans were created to match what the majority of businesses are looking for when seeking fully outsourced IT services. However, some businesses may need a different level of support than our fully managed IT plans offer. In this case, we suggest reviewing our Co-Managed IT Service Plan, which was designed for businesses seeking a customized, co-managed IT partnership that allows them build upon their existing IT capabilities. We encourage you to connect with one of our expert technology consultants, who will learn more about your business’ specific needs and determine whether a customized plan might be feasible. To connect with a technology consultant to discuss your business’ IT support needs, you may call, email, or submit an online request. Click on the “Contact Us” option on the upper right-hand corner of our website for details. 

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IMPORTANT INFO About Global CrowdStrike Outage

Swan Bitcoin Drops IPO Plan, Cuts Staff and Will Shut Managed Mining Unit

Bitcoin financial services firm Swan Bitcoin pulled its plan to take the company public, discontinued its managed mining unit and cut staff across several units.

Swan CEO Cory Klippsten said in a social media post that the company will still offer bitcoin {{BTC}} financial services and free bitcoin education. "Without the expectation of significant near-term revenue from our Managed Mining unit, we are pulling our plans to IPO in the near future," Klippsten wrote in the X post.

"Accordingly, Swan is pulling back from our accelerated spending plan for our core financial services business. Unfortunately, this includes staff cuts across many functions," he added.

ANNOUNCEMENT - @Swan is unlikely to continue with our Managed Mining business in the near term. Without the expectation of significant near-term revenue from our Managed Mining unit, we are pulling our plans to IPO in the near future. Accordingly, Swan is pulling back from our… — Cory Klippsten 🦢 #Bitcoin is for everyone (@coryklippsten) July 22, 2024

The move comes at a time when the mining landscape has become more competitive after the recent Bitcoin halving , which cut the block rewards by half. The availability of spot bitcoin exchange traded-funds (ETFs) have also deterred many investors from the mining industry, shutting some doors to capital for miners. As a result, many miners are struggling to keep their business profitable by being pure-play mining operations and pivoting some of their infrastructure to serve artificial intelligence and cloud computing-related services.

Despite the Bitcoin halving making the mining ecosystem tougher and less profitable to navigate, several private miners are still vying to go public following bitcoin's record high earlier this year. Genesis Digital Assets , formerly backed by FTX's Sam Bankman-Fried, and two of Northern Data's units were among other firms reportedly planning IPOs.

Earlier this year, Swan said it will go public within the next 12 months and the mining unit had 160 megawatts (MW), or 4.5 exahash per second (EH/s), worth of computing power up and running.

At the time, the firm also said that the mining business has been funded by institutional investors, with more than $100 million and hopes to raise more capital to expand its operations. Tether was among the backers of Swan's managed mining service, with as undisclosed amount of investment into its business.

Read more: Bitcoin Halving Is Poised to Unleash Darwinism on Miners

UPDATE (July 22, 18:29 UTC): Adds additional context in the last paragraph about Swan's $100 million funding and investors.

This story originally appeared on Coindesk

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Tech Accelerator

Crowdstrike outage explained: what caused it and what’s next, a crowdstrike update caused a massive it outage, crashing millions of windows systems. critical services and business operations were disrupted, revealing tech reliance risks..

• Sean Michael Kerner

What might be considered the largest IT outage in history was triggered by a botched software update from security vendor CrowdStrike, affecting millions of Windows systems around the world. Insurers estimate the outage will cost U.S. Fortune 500 companies $5.4 billion.

The outage occurred July 19, 2024, with millions of Windows systems failing and showing the infamous blue screen of death ( BSOD ).

CrowdStrike -- the company at the core of the outage -- is an endpoint security vendor whose primary technology is the Falcon platform, which helps protect systems against potential threats in a bid to minimize cybersecurity risks.

In many respects, the outage was a real manifestation of fears that computing users had at the end of the last century with the Y2K bug. With Y2K, the fear was that a bug in software systems would trigger widespread technology failures. While the CrowdStrike failure was not Y2K, it was a software issue that did, in fact, trigger massive disruption on a scale that has not been seen before.

What caused the outage?

The CrowdStrike Falcon platform is widely used by organizations of all sizes across many industries. It is the pervasiveness of CrowdStrike's technology and its integration into so many mission-critical operations and industries that amplified the effect.

The outage was not a Microsoft Windows flaw directly, but rather a flaw in CrowdStrike Falcon that triggered the issue.

Falcon hooks into the Microsoft Windows OS as a Windows kernel process. The process has high privileges, giving Falcon the ability to monitor operations in real time across the OS. There was a logic flaw in Falcon sensor version 7.11 and above, causing it to crash. Due to CrowdStrike Falcon's tight integration into the Microsoft Windows kernel, it resulted in a Windows system crash and BSOD.

The flaw in CrowdStrike Falcon was inside of a sensor configuration update. The sensor is regularly updated -- sometimes multiple times daily -- to provide users with mitigation and threat protection.

The flawed update was contained in a file that CrowdStrike refers to as "channel files," which specifically provide configuration updates for behavioral protections. Channel file 291 is an update that was supposed to help improve how Falcon evaluates named pipe execution on Microsoft Windows. Named pipes are a common type of communication mechanism for interprocess communications on Microsoft Windows.

With channel file 291, CrowdStrike inadvertently introduced a logic error, causing the Falcon sensor to crash and, subsequently, Windows systems in which it was integrated.

The flaw isn't in all versions of channel file 291. The problematic version is channel file 291 (C-00000291*.sys) with timestamp 2024-07-19 0409 UTC. Channel file 291 timestamped 2024-07-19 0527 UTC or later does not have the logic flaw. By that time, CrowdStrike had noticed its error and reverted the change. But, for many of its users, that reversion came too late as they had already updated, leading to BSOD and inoperable systems.

What services were affected?

Microsoft estimated that approximately 8.5 million Windows devices were directly affected by the CrowdStrike logic error flaw. That's less than 1% of Microsoft's global Windows install base.

But, despite the small percentage of the overall Windows install base, the systems affected were those running critical operations. Services affected include the following.

Airlines and airports

The outage grounded thousands of flights worldwide, leading to significant delays and cancellations of more than 10,000 flights around the world. In the United States, affected airlines included Delta, United and American Airlines. These airlines were forced to cancel hundreds of flights until systems were restored. Globally, multiple airlines and airports were affected, including KLM, Porter Airlines, Toronto Pearson International Airport, Zurich Airport and Amsterdam Schiphol Airport.

Public transit

Public transit in multiple cities was affected, including Chicago, Cincinnati, Minneapolis, New York City and Washington, D.C.

Hospitals and healthcare clinics around the world faced significant disruptions in appointment systems , leading to delays and cancellations. Some states also reported 911 emergency services being affected, including Alaska, Indiana and New Hampshire.

Financial services

Online banking systems and financial institutions around the world were affected by the outage. Multiple payment platforms were directly affected, and there were individuals who did not get their paychecks when expected.

Media and broadcasting

Multiple media and broadcast outlets around the world, including British broadcaster Sky News, were taken off the air by the outage.

Analysis of the CrowdStrike outage

In this podcast, TechTarget Security editors Rob Wright, Alex Culafi and Arielle Waldman assess last week's CrowdStrike outage and the organization's response.

Why Apple and Linux were not affected

CrowdStrike's software doesn't just run on Microsoft Windows; it also runs on Apple's macOS and the Linux OS .

But the July outage only affected Microsoft Windows. The root cause of the outage was a faulty sensor configuration update that specifically affected Windows systems. The channel file 291 update was never issued to macOS or Linux systems as the update deals with named pipe execution that only occurs on the Microsoft Windows OS.

The way that the Falcon sensor integrates as a Windows kernel process is also not the same in macOS or Linux. Those OSes have different integration points to limit potential risk.

However, there was a reported incident in June from Linux vendor Red Hat, where the Falcon sensor -- running as an eBPF program in Linux -- triggered a kernel panic. In Linux, a kernel panic is a type of crash, though typically not as dramatic as BSOD. That issue was resolved without Red Hat reporting any major incidents.

The dangers of putting all your eggs in one IT basket

Discover the possible consequences of relying on a concentrated and interconnected pool of vendors for all your infrastructure needs.

What happens when the IT infrastructure is too big to fail?

CrowdStrike chaos shows risks of concentrated big IT

CrowdStrike disaster exposes a hard truth about IT

How long will it take businesses to recover from this outage?

CrowdStrike itself was able to identify and deploy a fix for the issue in 79 minutes. While CrowdStrike quickly identified and deployed a fix for the issue, the recovery process for businesses is complex and time-consuming. Among the issues is that, once the problematic update was installed, the underlying Windows OS would trigger BSOD, rendering the system inoperative using the normal boot process.

IT administrators had to manually boot affected systems into Safe Mode or the Windows Recovery Environment to delete the problematic channel file 291 and restore normal operations. That process is labor-intensive, especially for organizations with many affected devices. In some cases, the process also required physical access to each machine, adding further time and effort to the process.

Some businesses were able to apply the fix within a few days. However, the process was not straightforward for all, particularly those with extensive IT infrastructure and encrypted drives. The use of the Microsoft Windows BitLocker encryption technology by some organizations made it significantly more time-consuming to recover as BitLocker recovery keys were required.

It is estimated that it could potentially take months for some organizations to entirely recover all affected systems from the outage.

The latest news on CrowdStrike's recovery efforts

Bitlocker workaround may offer aid for crowdstrike customers, crowdstrike: 97% of windows sensors back online after outage.

CrowdStrike outage underscores software testing dilemmas

Hackers take advantage of outage

While the outage was not due to a cyberattack, threat actors have taken advantage of the incident .

According to a blog post from CrowdStrike, the security vendor has received reports of the following malicious activity:

• Phishing emails sent to customers posing as CrowdStrike support.
• Fake phone calls impersonating CrowdStrike staff.
• Selling scripts claiming to automate recovery from the botched update.
• Posing as independent researchers saying the outage was due to a cyberattack and offering remediation insights.

CISA urges individuals and organizations to only follow instructions from legitimate sources and avoid opening suspicious emails and links.

How can businesses be better prepared for tech outages?

The CrowdStrike Windows outage highlighted the vulnerabilities of modern society's heavy reliance on technology. While system backups and automated processes are essential, having manual procedures in place can significantly enhance business continuity during tech outages.

But there are a few things businesses can do to be better prepared for tech outages, including the following.

Test all updates before deploying to production

It has been a best practice for years to allow automated updates to ensure systems are always up to date. However, the CrowdStrike issue laid bare the underlying risk with that approach. For mission-critical systems, testing updates before deployment or having some form of staging environment before pushing updates to production might help to mitigate some risk.

Develop and document manual workarounds

Manual workarounds ensure critical business processes can continue even when technology fails. This approach was common before the digital age and, in the event of outage, can serve as a fallback. Documenting and practicing manual procedures can help mitigate the effect of outages, ensuring businesses can still operate and serve their customers, even during an outage.

Perform disaster recovery and business continuity planning

Outages happen for any number of different reasons. Having extensive disaster recovery and business continuity practices and plans in place is critical. Part of that effort should include the use of redundant systems and infrastructure to minimize downtime and ensure critical functions can switch to backup systems when needed.

Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.

For more information about the CrowdStrike outage, read the following articles:

Is today's CrowdStrike outage a sign of the new normal?

CrowdStrike chaos casts a long shadow on cybersecurity

Dig Deeper on Business software

CrowdStrike update chaos explained: What you need to know

Why is CrowdStrike allowed to run in the Windows kernel?

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