One of the common pieces of advice I hear given to managed service providers (MSPs) is to “go narrow”—find a niche and become a specialist.

This is generally sound advice. Specialization typically means your MSP faces less competition and becomes much easier to find in an otherwise crowded marketplace.

But finding an area to specialize in is easier said than done. So how do you find a great niche for your MSP?

Finding your MSP niche

In my experience working with MSPs, the path to specialization comes in one of two ways:

  • The MSP intentionally targets the niche.
  • The MSP stumbles into a niche and find it works for them.

For instance, I know of one MSP who specializes in working with law companies. They didn’t set out to work with law companies. They worked with a single law company who became a good client.

They learned the lingo and nuances of working with that law company, and before they knew it, their client was referring them to other law companies. Within a few years, the majority of their clients were law companies.

The MSP then made the decision to focus their marketing efforts exclusively on law clients. They’ve done rather well with this specialization—but it certainly wasn’t an intentional focus to start.

Your own MSP may be sitting on a potential niche right now. How will you know it’s a good niche for you? By answering three questions.

The three questions to ask about a niche

When it comes to finding a niche, you may already have a potential specialization in play—you just haven’t spotted the signals yet.

Make a list of your existing clients and ask yourself these three questions about each of them:

  1. Does this client’s industry have specific industry lingo and specialized line of business (LoB) applications that I’m familiar with?
  2. Do I enjoy working with this client?
  3. Does this client pay us well for our expertise?

Most MSPs will have some clients who tick one or two of the three boxes.

You may have clients who use their own industry-specific lingo. For instance, dental practices call the people they serve patients rather than clients. Using the right lingo is important for building trust with similar prospective clients. When you can speak the same language as a prospect, you gain credibility.

You may also have clients who use specific LoB applications you’ve become familiar with. Perhaps you’re even an expert in these apps.

Those same clients may also pay well, and on time. But are those clients fun to work with?

Enjoyment of the relationship is an important box to check, because if you don’t like working with a particular type of client, then building a niche around them is a non-starter. I wouldn’t advise anybody to focus on working with companies they find a chore to serve!

Then again, you may have a client you know inside and out. You speak their language. You know their software. They’re even fun to work with. But they don’t pay very well or are often late with their payment.

Sadly, this is a niche a lot of MSPs find themselves in: Serving clients they understand and can serve well, but who can’t afford to pay them what they’re worth. This isn’t a good niche for you—at least if you want to be profitable.

To find the right niche, you need to check all three boxes.

What’s the perfect MSP niche?

The fun part of finding the perfect niche is that it’s really up to you. As long as a client ticks all three boxes, you’re headed in the right direction.

The next step is to ask your existing clients in the niche for referrals. You can also start to shift your marketing towards your desired specialization, using the language of that niche and testimonials (or social proof) you’ve gathered from your existing clients.

Start attending your target clients’ specialized events and trade shows. Subscribe to their specialized industry publications. Soon you’ll be an invaluable partner because you “get” them in a way that other, generalist MSPs don’t.

When this happens, your business thrives. And you’ve found the perfect niche for you.