MSP Challenges: What Stalls A Small MSP, And How To Fix It

The MSP challenges that stall a small shop are mostly operational. The owner is the only escalation path, work never reaches an invoice, flat fees drift into unlimited labor, and prices lag costs. Each has a number to check, a point at which to act, and a fix.

This guide comes from the team behind SherpaDesk, a helpdesk and professional services automation (PSA) tool a small IT team can run alone. Two founders who ran their own MSP have built it since 2001.

What Are MSP Challenges?

MSP challenges are the recurring business problems that keep a managed service provider from growing its margin, its team, or its client base. In a small shop they cluster around four questions: who does the work, what gets billed, what the contract covers, and what the shop is liable for.

These are problems of running the service business, not the IT problems your clients bring you. For the basics of the model, read what an MSP is; before your first client, read how to start an MSP.

The Problems At A Glance

Work the table top down. Security exposure comes first, because it can't wait for a quiet month. Then come the money leaks, then capacity, then growth. Within each group, act on rows whose trigger you've hit.

Security Exposure You Carry For Every Client

CISA's Cybersecurity Performance Goals 2.0 put MFA on "privileged administrative accounts for key IT systems" first. They also say: "Test backups and recovery on a recurring basis, no less than once per year."

Check this number. Count the admin accounts with access to client systems that lack MFA. Then list each client's backup set with its last and next restore-test dates.

The fix. Turn on MFA for those accounts this week. Restore-test every untested or overdue set, starting with one client this month. Our guide to MSP cybersecurity covers the full baseline, and MSP vs MSSP explains when to bring in a security partner.

Work That Never Reaches An Invoice

The billable hours you never captured are the margin you never made. A tech fixes a printer on the way out and never logs it. Or billable time is logged and never invoiced. Two leaks, so run two checks.

Check this number. First, check last month's closed tickets and visits for client work with no time entry. Second, take every chargeable time entry and confirm it appears on an invoice. Included support creates no extra labor charge; logging it shows the contract's delivery cost.

The fix. For missing entries, log time on the ticket before it closes, not from memory on Friday. For entries missing from invoices, fix the billing step: review uninvoiced chargeable entries before every invoice run. Our guide to billable hours tracking covers rounding, minimums, and utilization.

Flat Fees That Turn Into Unlimited Labor

Flat fees make invoices predictable, which is why clients like them. The risk is that "covered" quietly grows: a laptop rollout or a file-share rebuild logged as a support ticket. One r/msp commenter's answer to an owner unsure whether to bill a payday emergency: "This is only fuzzy because you didn't define it in your agreement". On that payday call, which sat outside the client's agreement, the top-voted reply was shorter: "Always bill for your time."

Check this number. For each flat-fee client, divide the service fee by the service hours your team logged against it. Leave out resold licenses and other pass-through charges, and hours invoiced separately as projects. Say you bill a dental office $1,500 a month in service fees and your team logged 20 service hours: that's $75 of revenue per logged service hour.

Compare the result with your target rate and with last quarter. If it's low, sort the hours into work your agreement excludes and work it includes. Before you change the price, check the included hours for repeat incidents and rework.

The fix. Let the agreement set the line. Routine admin, patches, and small configuration changes can sit inside support; name the work that's excluded and quote it separately. Capped included hours with an overage rate is one model; unlimited support with named exclusions is another. Our managed services pricing guide compares the models, and the agreement guide covers the scope and exclusions clauses.

Prices That Haven't Moved In Years

If a client's price hasn't moved since they signed, check whether your costs have: wages, licenses, insurance.

Check this number. List each client with the date of their last price change. Next to it, put their revenue per logged service hour from the calculator. Look hardest at the rows that are both old and low.

The fix. Price from your costs, not from what the shop down the road quotes. Write an annual review into the agreement and give clients notice in writing. Clients still on hourly break-fix need a different conversation, covered in our guide to break-fix vs managed services.

When a client asks to pick services à la carte, decide which kind of request it is. A supported option is one you've priced and deliver the same way for every client: put it on the price list. A bespoke exception gets its own quote and written scope, or a no.

You Are The Only One Who Can Fix Things

You take the laptop on vacation and check tickets at night. One r/msp member summed it up: "My laptop has travelled with me more than my wife has." Prospects notice too. A solo owner reported losing a deal over one objection: "What if you died then who is handling my IT or taking over your contracts".

Check this number. Count last month's tickets that only you could have closed, because the fix lived in your head.

The fix. Write down the five fixes you repeat most. Our guide to helpdesk SOPs has templates.

Then test one: another tech follows the document alone and records each point where missing access, missing authority, or a missing instruction forced them to ask you. Fix those gaps and run the test again.

For time off, solo owners on r/msp describe coverage deals with other small MSPs; put yours in writing.

Hiring The Second Tech

Check this number. Track your hours for two weeks in two buckets: admin and tech work. In the admin bucket, look for work you can automate or delegate in invoicing, onboarding paperwork, renewals, and retyping. Tech work is tickets and projects that need someone qualified.

If tech work alone still crowds out sales and quoting, you need capacity. Before you hire, price it and check that recurring income covers it alongside your existing obligations.

BLS, May 2025 and June 2026.

That's $7,364 a month before tools or a vehicle, built from a median wage and the private-industry benefits share. Our guide to how to start an MSP covers hiring choices.

Service Slips As The Team Grows

Without a shared standard, techs improvise. Check three habits.

• No written standard. Write down response targets per priority and how a reply should read.
• Cherry-picked tickets. When techs choose from the queue, the quick fixes go first and the hard tickets wait. Route by rule instead, as our ticket triage guide shows.
• Feedback nobody acts on. After a ticket closes, ask one question: "Was your problem fully resolved?" A "no" gets a call from you or the lead tech within one business day, and the ticket reopens.

Check this number. Look at missed response targets by priority, not just by tech, and at the five oldest unresolved tickets. Our SLA management guide explains how to set and report the targets.

The fix. Give every tech the same targets, routing, and knowledge base. Write down what they may decide alone, using the gaps the owner test above turns up.

Failed Handoffs Between Tools

The number of tools matters less than what breaks between them. A PSA, an RMM, and an accounting package can work well together, or lose hours at every handoff.

Check this number. Pick one paid ticket from last month and trace it from the first email to the payment. Record three things: every time someone retyped data, every point where no one clearly owned the ticket, and any billing error.

The fix. Repair one handoff before you shop for software. If time was retyped into accounting, connect or export it. If an RMM alert sat unowned, route alerts to a queue with an owner. Then trace a new ticket through that step and confirm the failure is gone. If you do shop, our best MSP software comparison lists prices for small teams.

One Client Too Big To Lose

Check this number. Divide all revenue from your largest client over the last 12 months by your total revenue over the same 12 months. Then list your fixed obligations, from payroll to your own salary, and ask which you couldn't pay if that client left next month.

The fix. Keep the relationship and reduce the dependence, as two separate jobs. A quarterly business review shows the client what they paid for.

Win clients in one niche you serve well to reduce dependence. Our MSP marketing plan is built for a small team.

Compete on that niche, not on breadth: sell the services you deliver well to every client there, and refer out the rest. Block a weekly slot for sales that tickets can't take.

Run Contracts And Billing In SherpaDesk

About the author

Patrick Clements Co-founder & CEO, SherpaDesk

Patrick co-founded SherpaDesk and has led it as CEO since 2013. He has worked with IT service providers since 1998, first on network projects for schools and government offices, then on the helpdesk software their technicians use every day.

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