Managed Service Provider Business Plan Template
If you want to start a successful managed service provider business or expand your current managed service provider business, you need a business plan.
Fortunately, you’re in the right place. Our team has helped develop over 100,000 business plans over the past 20 years, including thousands of managed service provider business plans.
The following managed service provider business plan template and example gives you the key elements you must include in your plan. In our experience speaking with lenders and investors, the template is organized in the precise format they want.
Managed Service Provider Business Plan Example
I. Executive Summary
Business Overview
[Company Name] is a new managed service provider located in downtown [Location]. Our company provides a comprehensive package of scalable managed IT services to local small and midsize companies. These services include network and infrastructure management, security solutions, cloud computing, and backup and recovery. We cater these services particularly to companies that are not in the tech sector, such as manufacturing, construction, and hospitality businesses. With our professionalism and expertise, we can take care of all of our clients’ IT needs so they can focus on more important matters.
Products Served
[Company Name] has a team of highly skilled professionals who can provide a full suite of managed IT services. We offer multiple packages and plans for our clients to choose from that will vary in pricing and services provided. Our services include:
- Network and infrastructure management
- Data analytics
- Wireless network support
- Backup and recovery
- Security solutions
- Disaster recovery planning
- Cloud computing services
- 24/7 support
Customer Focus
[Company Name] will primarily serve small and midsize organizations in need of IT services. These companies typically do not have the budget or manpower to do this work on their own. We will also target companies that operate in non-tech sectors such as hospitality, construction, and manufacturing. We expect many of these businesses to make $5 million or more in revenue annually depending on the size of the organization and the industry they are in.
Management Team
[Company Name] is founded and led by [Founder’s Name], who has been an IT professional for [X] years. Throughout his career, he has provided both small and large companies with IT support and has managed several teams of IT professionals. His most recent experience was at a major software corporation where he oversaw 20 professionals and provided IT support to over 100 clients. His education, experience, and leadership skills will be the company’s most valuable assets.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- [Company Name] provides a full suite of services that are in high demand.
- [Founder’s Name] has surveyed businesses in the target market and received extremely positive feedback saying that they explicitly want to make use of [Company Name]’s services.
- The location is in an economically vibrant area where new businesses are starting at a fast rate.
Financial Highlights
[Company Name] is currently seeking $600,000 to launch. Specifically, these funds will be used as follows:
- Office design/build: $200,000
- Equipment and supplies: $200,000
- Working capital: $200,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name] is a new managed service provider located in downtown [Location]. Our company provides a comprehensive package of managed IT services to local small and midsize companies. We cater our services particularly to companies that are not in the tech sector, and therefore may not have the budget or expertise to manage an IT team on their own.
Clients who work with us can expect a full suite of services depending on the package they purchase. These services may include help desk support, security solutions, data analytics, and cloud computing services. Whatever our clients need, we will be able to provide it with great skill and friendly service.
[Company Name] is founded and led by [Founder’s Name], who has been an IT professional for [X] years. Throughout his career, he has provided both small and large companies with IT support and has managed several teams of IT professionals. After working for several years for other companies and firms, he is ready to apply his experience and skills to create a managed service provider of his own.
[Company Name]’s History
After completing a market analysis, [Founder’s Name] began surveying the local vacant office space and located an ideal location for his new company. [Founder’s Name] incorporated [Company Name] as a Limited Liability Corporation on [Date of Incorporation].
Since incorporation, the company has achieved the following milestones:
- Located available office space for rent that is in a busy commercial district
- Developed the company’s name, logo, and website located at [website]
- Determined equipment and necessary supplies
- Began recruiting key employees
[Company Name]’s Products/Services
[Company Name] has a team of highly skilled professionals who can provide a full suite of managed IT services. We offer multiple packages and plans for our clients to choose from that will vary in pricing and services provided. Our most basic packages will only provide one or two services while our premium packages will provide the full suite. Some of the services we provide include:
- Network and infrastructure management
- Data analytics
- Wireless network support
- Backup and recovery
- Security solutions
- Disaster recovery planning
- Cloud computing services
- 24/7 support
III. Industry Analysis
You can download our Business Plan Template (including a full, customizable financial model) to your computer here.
Managed service providers help companies manage their network and IT infrastructure without wasting time, resources, or budget to do it. They provide numerous benefits such as scalability, flexibility, the ability to bridge talent gaps, and faster technology adaptation. These services have been invaluable to several industries that would rather utilize their resources to focus on their core responsibilities and missions. Due to this high demand for their services, managed service providers have seen incredible growth in the past five years and will continue to do so.
According to Grand View Research, the global managed services market size was valued at USD 267.35 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030. This is substantial growth not seen in many sectors.
The main driving factor of this growth is due to small and midsize businesses utilizing outsourced managed service providers to take on non-core activities. In fact, according to Mordor Intelligence, about 60% of managed service providers have clients with 1-150 employees and only about 5% have clients with over 500 employees. Therefore, managed service providers are essential to startups and small-to-midsize businesses and will continue to be in high demand for these sectors.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve local small to midsize businesses in need of managed, scalable IT services. We expect that these businesses will have at least a few dozen employees and earn at least $5 million or more in annual revenue.
Customer Segmentation
[Company Name] will primarily target the following three customer segments:
- Startups: Businesses that have been in operation for two years or less often need efficient IT services that work within their budget. We can provide them with basic packages that will cover their most essential needs.
- Small to medium-sized businesses: The area has many small and mid-sized businesses with less than 1000 employees. These businesses have varying IT needs. With our flexible packages and scalability, we can provide service packages that meet their unique needs.
- Large businesses: [Company Name] will also target larger organizations that are looking for managed service providers to help them with IT infrastructure.
V. Competitive Analysis
Direct & Indirect Competitors
The following businesses are located within a 20-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
ABC Technology Solutions
ABC Technology Solutions is one of the most recognized managed service providers in the region. Since 2001, ABC Technology Solutions has enhanced the efficiency and security of the IT infrastructure of multiple local industries, including construction, manufacturing, and hospitality. The firm offers numerous services to these industries, including firewall management, antivirus protection, data storage, and disaster recovery. Clients who work with ABC Technology Solutions can expect high-quality services and friendly support available 24/7.
Riverside Systems
Founded in 1999, Riverside Systems serves businesses of all sizes that are located in the [Location] metro area. Riverside Systems provides a full suite of services including security systems, data storage and analytics, back and recovery, cloud computing and analytics, and 24/7 support. Additionally, the firm helps with project management and offers business continuity and infrastructure solutions. With so many services, it is no wonder that many local businesses opt to collaborate with Riverside Systems.
Polar Networks
Since 2005, Polar Networks has been a popular managed services provider, especially in the hospitality sector. The firm helps clients optimize their connectivity and streamline their IT operations. Polar Networks achieves this by providing clients with numerous services including the design and deployment of IT infrastructures, connectivity support, network monitoring, and installation of security features.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. Those advantages include:
- Management: [Founder’s Name] has been extremely successful working in the IT industry and will be able to use his previous experience to provide the best service experience. His unique qualifications will serve customers in a much more sophisticated manner than [Company Name]’s competitors.
- Relationships: [Founder’s Name] knows many of the local leaders, business managers, and other influencers within [Location]. With his [X] years of experience and good relationships with business leaders in the area, he will be able to develop an initial client base.
- Client-oriented service: [Company Name] will have IT professionals on standby 24/7 to provide support to all of our clients.
VI. Marketing Plan
The [Company Name] Brand
The [Company Name] brand will focus on the company’s unique value proposition:
- Service built on long-term relationships
- Big-firm expertise in a small-firm environment
- Thorough knowledge of the clients and their varying needs
- Excellent managed IT services provided by top professionals in the industry
Promotions Strategy
[Company Name] expects its initial target market to be businesses within a 20-mile radius of its location. [Company Name]’s promotion strategy to reach these individuals includes:
Targeted Cold Calls
[Company Name] will initially invest significant time and energy into contacting potential clients via telephone. To improve the effectiveness of this phase of the marketing strategy, a highly focused call list will be used, targeting startups and small businesses. As this is a very time-consuming process, it will primarily be used during the startup phase to build an initial client base.
Referrals
[Company Name] understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.
Social Media
[Company Name] will invest heavily in a social media advertising campaign. [Founder’s Name] will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Publications
The company will place print advertisements in key local publications, including newspapers, area magazines, and business newsletters. Additionally, [Company Name] will print brochures and place them in specific locations frequented by target individuals, such as small business development centers.
Website/SEO
[Company Name] will invest heavily in developing a professional website that displays all of the features and benefits of our services. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.
Direct Mail
[Company Name] will blanket businesses with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts, or provide other incentives for companies to try out our services.
Pricing Strategy
[Company Name]’s pricing will be on par with competitors so clients feel they receive great value when purchasing our managed service packages.
VII. Operations Plan
Functional Roles
To execute [Company Name]’s business model, the company needs to perform several functions:
Service Functions
- Provide managed IT services
- Provide 24/7 customer service and support
- Sell service packages to new clients
Administrative Functions
- Marketing
- Bookkeeping and accounting
- Hire and train staff
- General administrative functions
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is founded and led by [Founder’s Name], who has been an IT professional for [X] years. Throughout his career, he has provided both small and large companies with IT support and has managed several teams of IT professionals. His most recent experience was at a major software corporation where he oversaw 20 professionals and provided IT support to over 100 clients.
Though [Founder’s Name] has never run a managed service provider firm himself, his previous experience has given him an in-depth knowledge of the business, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Hiring Plan
[Founder’s Name] will serve as the President of [Company Name]. To launch, he needs to hire the following personnel:
- IT Staff (6 to start)
- Administrative Staff (2 to start)
- Marketing Staff (2 to start)
- Sales Staff (2 to start)
IX. Financial Plan
Revenue and Cost Drivers
The key revenues for [Company Name] will come from charging fees for the services we provide.
The major cost drivers for the company include marketing expenses, labor, equipment purchasing and maintenance, and overhead costs.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $600,000 to launch. The capital will be used for funding capital expenditures, building and design, purchasing equipment, labor, marketing expenses, and working capital.
Specifically, these funds will be used as follows:
- Office design/build: $200,000
- Equipment and supplies: $200,000
- Working capital: $200,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
