Lessons Learned: Build a strong foundation. Lessons learned from an IT Entrepreneur on how to build an ideal, converting, MSP in 2025

Lessons Learned: Build a strong foundation

In 2014, I embarked on a journey that would shape the next eight years of my life. With a vision in mind and a determination to succeed, I founded Grove Technologies, a Managed Service Provider (MSP) based in Maryland, focused on delivering exceptional IT solutions to businesses of all sizes. The company grew steadily, overcoming challenges and celebrating milestones, until 2022, when I decided it was time to pass the baton and sold the business. It was an incredible experience, filled with invaluable lessons, but as I reflect on those years, one thought keeps resurfacing: If I were to build a business again in 2025, I would do some things differently.

Starting and growing Grove Technologies taught me the importance of laying a solid foundation for a business—a combination of strategic planning, effective systems, and clear values that ensure stability and growth. Legal preparation, in particular, emerged as a critical factor in navigating the complexities of running a consultancy. By addressing legal requirements proactively—from securing trademarks to establishing proper bookkeeping systems—businesses can mitigate risks and avoid costly compliance issues. In today’s evolving business landscape, especially in 2025, this dual focus on proactive measures and ongoing compliance is more important than ever. While we ultimately found success, there were moments early on where the lack of proper groundwork caused unnecessary stress and delays. These lessons have stayed with me, and now, looking toward the future, I’d like to share how I’d approach creating a business with a more strategic mindset—a process that balances the softer elements, like crafting a meaningful brand and defining core values, with the essential hard elements, like ensuring airtight bookkeeping, securing trademarks, and setting up efficient payroll systems.

This blog post is both a reflection and a blueprint—a chance to look back at what worked, identify what could have been improved, and outline the steps I’d take to create a more robust and future-proof business. I’ll explore topics like establishing a business name and brand, defining core values, ensuring proper bookkeeping and payroll systems, and securing trademarks. Whether you’re an aspiring entrepreneur or a seasoned business owner looking to refine your approach, I hope my experiences and insights can offer valuable takeaways as you embark on your own journey. Let’s explore what it means to build a business with intention and resilience, starting from the ground up.

Sit back while I reflect on the things that worked for me, what I would ditch and what I would keep if I were to build the ultimate MSP in 2025.

Business Entity Formation

The first and most fundamental step in establishing a consultancy is choosing the right business entity. The decision you make here will influence your liability, tax obligations, and operational flexibility. In 2025, the most common options remain sole proprietorships, partnerships, limited liability companies (LLCs), S-corporations (S-Corps), and C-corporations. Each has its advantages and drawbacks, so it’s crucial to weigh them carefully against your business goals.

Sole Proprietorship: Simple to set up but offers no liability protection.
LLC: Combines the liability protection of a corporation with the tax benefits of a partnership. This is often ideal for small consultancies looking for flexibility.
S-Corporation (S-Corp): A popular choice for consultancies due to its tax advantages. With an S-Corp, business profits are passed through to the owners’ personal tax returns, avoiding double taxation. Additionally, owners can classify a portion of their income as salary, potentially reducing self-employment taxes.
Corporation (C-Corp): Suitable for larger operations or those planning to seek significant investment. Provides strong liability protection but comes with more regulatory requirements.

Once you’ve chosen the structure that fits your vision, the next step is registering your business with the appropriate state authorities. This typically involves submitting articles of incorporation or organization and paying a registration fee. Be sure to also obtain any necessary business licenses specific to your locality or industry.

If I were starting a consultancy today, I would choose an S-Corp. The tax benefits of this structure are particularly well-suited to a consultancy business, as it allows profits to be passed directly to owners’ personal tax returns, avoiding the double taxation faced by C-Corps. Additionally, the ability to classify a portion of income as salary can significantly reduce self-employment taxes, maximizing take-home earnings while maintaining compliance.

To establish an S-Corp, the process begins with filing articles of incorporation in your state. Most states provide templates and online filing systems to streamline this process. For example, you can find Maryland’s business filing resources here. Once incorporated, you’ll need to file IRS Form 2553 to elect S-Corp status—details and instructions are available on the IRS website here.

Beyond registration, it’s essential to draft foundational business documents like bylaws or an operating agreement, depending on your state’s requirements. You can find free or affordable templates for these documents on platforms like LegalZoom or Rocket Lawyer.

Finally, securing an Employer Identification Number (EIN) from the IRS is a must. This number is essential for opening business bank accounts, filing taxes, and processing payroll. You can apply directly on the IRS website here. By following these steps, you can lay a strong legal and operational foundation for your consultancy, ensuring compliance and positioning your business for sustainable growth.

Deleware

Hold up though what about Delaware? Yes, this is a great choice for many who want even more incentive when starting their business. I started my business in MD but if I had to do it again, I would incorporate in Delaware instead, why? According to the Harvard Business Services here are some of the key reasons.

One of the main reasons why companies incorporate in Delaware is the legal and liability protection of established corporate laws. Delaware’s well-established and business-friendly legal framework is designed to provide a clear and flexible environment for businesses to operate. These protections are simply incomparable to what is offered by any other state in the nation, which makes it the Incorporation Capital of the World.

Another reason why companies incorporate in Delaware is the incomparable tax savings. Some of the key corporate tax benefits of incorporating in Delaware include:

For companies operating outside of Delaware, there isn’t any state income tax. This can save a lot of money for companies that are incorporated in Delaware, but not conducting business within its borders.

There isn’t an inheritance tax on stock held by non-Delaware residents. This means that if the owner of a Delaware company passes away, inherited stock won’t be taxed if the owner lives outside of the Delaware.

Delaware does not have a state sales tax on intangible personal property (such as royalty payments); and shares of stock owned by non-resident aliens are not subject to Delaware taxes.

These are great reasons to consider starting your company entity in Delaware vs your local state. There are entire businesses that will help you incorporate for like Delaware Registered Agent Services.

Intellectual Property Protection

Protecting your consultancy’s intellectual property (IP) is a critical step in safeguarding your business’s unique identity and proprietary assets. From your business name and logo to any proprietary content you create, ensuring these elements are legally secured is essential for long-term success. Addressing these matters proactively can save your business from unnecessary risks, legal battles, or lost opportunities.

This happened to me on the onset of starting my business. I started a company, “Mac Gurus” that was already trademarked and in use by a similar consultancy in a different region of the US. About 2 years into my practice the name was challenged and I had to engage lawyers defending my right to use the name. I had no legal leg to stand on since I had never done any due diligence and that led me to have to rebrand my entire company very early on which was super disruptive.

The Risks of Waiting: Why Act Early?

Many entrepreneurs delay securing their IP, which can lead to costly pitfalls:

Trademark Conflicts: Launching without a trademark can result in legal disputes or rebranding if another entity owns your name or logo.
Lost Revenue: If someone trademarks your assets first, you might lose rights to use them, damaging your brand equity.
Legal Vulnerabilities: Unprotected proprietary materials or ideas can be copied, leading to potential losses.

Taking action early ensures a solid foundation, builds client trust, and reduces long-term risks. I certainly learned this lesson the hard way and I would do this differently in 2025.

Why Start with Core Values and Branding?

Before diving into trademarks and copyrights, it’s crucial to establish the foundation of your brand. Core values and a clear understanding of your target audience will shape your business identity. These principles define how you operate and resonate with potential clients.

Core Values: Ask yourself, what does your business stand for? Transparency, client focus, or innovation might be examples that guide your decisions.
Target Audience: Identify the industries or clients you aim to serve. Knowing your audience helps align your name, logo, and messaging.

Once these are clear, you’re ready to choose a business name and logo. Luckily when I had to rebrand early in 2015 I had the support of a client that provided such services. I was able to establish a for trade swap where I gave them free consultancy services for a logo and company name package or set of services. This is something I would prioritize when building a business if I ever did again and I would consider it a core cost that is part of the incorporation of the company.

I am lucky where I have a network of individuals that have worked with me to create a brand for my business. If you are considering building your company here are some resources that I can vouch for that would be good options for you.

Name and Logo: Your name should be unique and memorable, while your logo should visually capture your brand identity. For help, consider:
- LogoVent for professional logo design.
- Frozen Lemons for branding services.
- Fiverr for affordable freelancers.
- Namelix for AI-driven name ideas.

Trademarks: Protecting Your Name and Logo

We’ve talked a lot about what I would do differently, lets make sure we know how to put this into action. Trademarks safeguard your business name, logo, or slogan, granting you exclusive rights to their use. Here’s how to secure a trademark:

Conduct a Trademark Search: Use the USPTO’s Trademark Database to verify availability.
Prepare Your Application: Gather details like your name, logo, and the goods/services your business provides. Ensure your logo design meets USPTO standards.
File Your Application: Submit your trademark via the USPTO TEAS Portal.
Monitor the Process: The USPTO review process can take months. Respond promptly to any requests for information.
Maintain Your Trademark: Renew your trademark periodically to retain rights.

For assistance, platforms like LegalZoom and Trademark Engine can guide you through the process.

You don’t need to hire a lawyer when you first start out, I had to because I was thrust into the situation where I needed one but if you proactively ensure that you are taking the steps then you’ve already given yourself a head start. Filing for a trademark or even a patent may seem daunting or tricky but its not as hard as it seems. The USPTO is also unveiling in 2025 their new streamlined process for filing for a trademark so its never been easier to try on your own first.

Copyrights: Securing Proprietary Content

As a consultancy, your proprietary materials—such as training guides, frameworks, or methodologies—are key assets. I did not fully understand this when I first created my company. Registering these with the U.S. Copyright Office gives you legal ownership and prevents unauthorized use.

Marking these assets is just as important. If you end up hiring people to help you and these documents are not marked as sensitive, proprietary then some documents may risk being leaked or stolen. Be deliberate about marking documents as sensitive, proprietary, internal use only, not for public etc.. and insure that you train people on what they can and can’t do with documents with these kinds of markings.

I will have a blog article that outlines the security steps that I would take when building a new business so stay tuned for that. For now some good basic data governance will go a long way in ensuring that your company information is secure.

NDAs: Protecting Sensitive Information

Non-Disclosure Agreements (NDAs) are essential when sharing confidential information. To implement NDAs effectively:

Draft a Template: Use tools like Rocket Lawyer or LawDepot to create customizable templates.
Define Confidential Information: Clearly outline what the NDA protects.
Outline Obligations: Specify what parties can and cannot do with the information.
Get Signatures: Have all relevant parties sign the agreement before sharing sensitive details.

I would encourage you to make this a part of any 1099 or new W2 employee during their onboarding process. This ensures that your company assets are protected or at least protected from disclosure. Ideally you will also want a company handbook that offers a guide for what the employee can expect while working for you at your consultancy. Its not something I had prioritized when I first started my company but its something I certainly would spend more time on, on the onset of establishing a business in 2025.

Building Your Online Presence: Websites and SEO

I think for a lot of people a website is often an afterthought. I do not endorse the strategy that you need to hire a custom web design and development company especially when you are first starting out however… your website is often the first touchpoint for potential clients.

You at the very least have to consider that your website is an extension of your brand. It should invoke certain emotions when your clients arrive there. Instead of thinking how should my site look, ask yourself what do I want my clients to feel or know about my company and then start from there.

To build a strong online presence:

Domain Registration: Secure a domain name through providers like Namecheap or Google Domains. Ensure it aligns with your business name.
Website Creation: Use platforms like Squarespace or Wix for affordable and user-friendly website design.
SEO Essentials: Optimize your website to improve searchability:
- Use tools like Google Keyword Planner to identify relevant keywords.
- Include service descriptions, blog content, and metadata to improve rankings.
- Add an About Page to highlight your core values and expertise.

By prioritizing branding, trademarks, copyrights, NDAs, and a professional online presence, you establish a consultancy that’s protected, professional, and positioned for growth.

Financial Systems

One of the things that I struggled with when I first created my business was the concept of bookkeeping. This is not something a solopreneur will typically prioritize or know how to do on their own. Its also a cost as a one person entity that I was unable to afford especially in the early days when I was just getting started and I had very little revenue.

The first records keeping system I started with was a free one, c offers a free bookkeeping platform that allows you to manage reconciliations, and company invoices. Its an attractive offering for those that literally have no money to spend and they are willing to roll up their sleeves and get their hands dirty. This worked ok for me but it wasn’t a foundation that was conducive to growth and expansion. For example I needed to ensure that my time tracking were itemized on my clients invoices. This is doable in Zipbooks via their time entry platform however the time tracking capabilities were lackluster and led to a lot of manual effort which in turn was hard to scale.

Paying for a more modern platform like Quickbooks earlier on may have been more costly up front but it would have set me up for success later on. More importantly though its important to know when to do it yourself and when to delegate. Again for really small companies this is hard. Looking for businesses that can fully handle bookkeeping for you is an investment I would make earlier on in my business if I were creating the ideal MSP in 2025. Why? Because I made so many mistakes that it led to tax liabilities that were done by my own inexperience that could have been avoided if I had a bookkeeper managing my books for me.

Pilot Bookeeping is a great service that should just be part of your overall business strategy as it means that you now have a partner that you can rely on to ensure that you have perfect books each month for your business starting on day one. When I started my books I ended up having to go back and fix years of mistakes by the time I finally realized that I needed to move to a more managed solution. Unless you are already in the financial services industry or have a talent for bookkeeping I would advise that you budget for a good bookkeeper which I would do in 2025.

Initially when I started my company in 2014 I also managed my own business taxes using Turbo Tax Business edition. This was ok for me and worked for several years, but it did lead me to needing a look back review to see if there were any tax savings. Taxes is a huge part of your obligation when running a company. Just like having a good, accurate set of books, having a tax strategy for your business is important. This is not something I had any concept of when I first started my business. I had no idea what tax strategies to take when trying to grow my business. I simply paid taxes on all my profits for years before I partnered with a good business tax professional which taught me about the tax benefits of reinvesting profits for a lower tax bill.

If I had to do it over again I would partner with a company like DBN Tax sooner so that I could start growing the business vs just being overly taxed on the business too early on in my companies growth. Tax companies can also help you navigate those complex loopholes in the tax code that you may qualify for. For example you can hire a child if you can justify the work that child does and if you pay them at least $7K a year you can contribute to a 401K for them. This is tricky and has to be talked with to your tax professional but the ability to have these kinds of conversations early on in your business development is invaluable as you scale and grow.

Finally payroll, this is an odd one. You might think that when you first start your company you can just take money from your business account. As the owner you can draw some funds occasionally but if you plan on paying yourself make sure that you use a good payroll platform to ensure that you are in compliance with all federal and state requirements. The one I recommend Gusto is a great platform that allows you to setup payroll on auto-pilot and keeps you in compliance for all federal and state requirements. I did not pay myself for the first two years of starting my business from business funds, I had enough in savings to survive but if I had to do it over again I would use the payroll method to pay myself even if it was a small amount vs using an owner’s draw.

Its easier to track on the books, easier to manage for tax liabilities and easier to show how many people your entity is as it grows and scales. Keep in mind that even when you hire and pay your 1099 contractors you will want ot use a platform like Gusto to ensure that they have the tax documents they need to file as well.

Contracts and Agreements

When I first started in the consulting space, I didn’t fully understand the benefits of a contract. At least not as contracts as a tool, and what I mean by that are that they can be used for good and used for deceptive purposes. I had always heard about the use of contracts in the term that they were negative, and predatory vs something that can be used to protect you, your entity, your brand and your company assets. Having a strong customer contract can help mitigate disputes, outline the defined and agreed upon scope of work and when payments are to be rendered. When you engage in consulting without a contract you find yourself in a situation where there is no defined scope and no defined payment schedule. These are things that are critical for the overall success of your business.

One of the most overlooked aspects of starting a consultancy is the importance of comprehensive contracts. Whether dealing with clients, vendors, or independent contractors, well-drafted agreements ensure clarity, protect your interests, and help avoid disputes. As a consultancy, your contracts are not just legal tools—they reflect your professionalism and commitment to building trust.

Client Contracts: Key to Managing Expectations

A strong client contract defines the relationship and sets expectations for both parties. It is essential to include the following clauses:

Scope of Work (SOW): Clearly define the services you will provide. Be specific to avoid scope creep, which can lead to misunderstandings and unpaid work.
Deliverables: Outline what the client will receive, including formats, timelines, and any dependencies. Specify acceptance criteria for each deliverable.
Payment Terms: Include detailed payment structures, such as hourly rates, fixed fees, or milestone-based payments. State due dates, late payment penalties, and acceptable payment methods.
Confidentiality: Ensure both parties agree to protect sensitive information.
Dispute Resolution: Address how conflicts will be handled. Options include mediation, arbitration, or specifying jurisdiction for legal actions.
Termination Clause: Define conditions under which the agreement can be terminated by either party, including notice periods and refund policies.

Why This Matters: Comprehensive client contracts reduce the risk of misunderstandings, unpaid invoices, or legal battles. They also project a sense of professionalism that builds client confidence.

For templates and drafting tools, consider:

LawDepot for customizable client contract templates.
Rocket Lawyer for client agreements tailored to various industries.

Vendor Agreements: Ensuring Clarity in Third-Party Relationships

As a consultancy, you’ll often rely on third-party services or software. A vendor agreement protects your business by defining the terms of these relationships. Key components include:

Scope of Services: Specify what the vendor will provide, including service levels (SLA) and deadlines.
Payment Terms: Clarify costs, payment schedules, and penalties for late payments or non-delivery.
Liability and Indemnity: Define who is responsible if issues arise, such as service disruptions or data breaches.
Termination and Renewal: Include terms for ending or renewing the agreement.

Why This Matters: Vendor agreements prevent disputes and ensure your business operations aren’t disrupted by unclear terms or unmet expectations.

For vendor agreement templates, check:

LegalZoom for business contracts.
Pandadoc for customizable vendor agreement samples.

Independent Contractor Agreements: Staying Compliant

If your consultancy plans to hire independent contractors, having a solid agreement is critical for compliance with labor laws and protecting your business. Key sections to include:

Scope of Work: Clearly outline the contractor’s tasks and deadlines.
Payment Terms: Specify payment rates, schedules, and invoicing requirements.
Relationship Definition: Explicitly state that the individual is an independent contractor, not an employee, to avoid misclassification issues.
Intellectual Property (IP): Define ownership of work produced—whether it belongs to the contractor or your consultancy.
Confidentiality and Non-Compete Clauses: Protect your business’s sensitive information and interests.

Why This Matters: Misclassifying contractors as employees can lead to significant tax penalties and legal issues. A well-crafted agreement demonstrates your commitment to compliance.

For independent contractor agreements, explore:

Rocket Lawyer for legally compliant templates.
Bonsai for user-friendly contract generation tailored to freelancers.

Building Strong Relationships Through Contracts

Contracts are more than just legal documents—they’re the foundation of clear, successful relationships. By investing time and effort into drafting detailed agreements for clients, vendors, and contractors, you ensure transparency and protect your business from unnecessary risks. These proactive measures not only mitigate potential conflicts but also set the stage for trust and long-term partnerships.

Reflecting on my journey, I recognize that establishing these contracts earlier in my business would have saved time and avoided several challenges. For instance, having clear agreements with 1099 staff from the start would have ensured compliance and aligned expectations. Similarly, properly scoping projects using the techniques outlined above would have helped avoid scope creep and maintained client satisfaction. These are lessons I’ve learned the hard way, and they underscore the importance of starting with a strong contractual foundation.

Licenses and Permits

When starting a consultancy, ensuring that your business complies with all necessary licensing and permitting requirements is crucial. Neglecting this step can lead to fines, legal disputes, or even the inability to operate. Establishing these upfront ensures your business has a strong and compliant foundation.

Industry-Specific Requirements

Some consulting fields may require certifications or licenses specific to their industries. For example:

IT Consulting: Certifications such as CompTIA, Cisco, or Microsoft may be required or highly valued.
Financial Consulting: Licenses such as a CPA (Certified Public Accountant) or CFA (Chartered Financial Analyst) are often mandatory for offering financial services.
Healthcare Consulting: Compliance with HIPAA regulations and obtaining certifications relevant to healthcare information systems is essential.

Before launching, research the requirements for your niche and obtain the necessary credentials to ensure credibility and legal compliance.

General Business Licenses

Most businesses, including consultancies, need general business licenses to operate legally within their localities. Steps to obtain these include:

Research Local Requirements: Check with your state or local government to determine what general business licenses are needed. Resources like your state’s Secretary of State website can provide guidance.
Register Your Business Name: Ensure your business name is registered and doesn’t conflict with existing entities. This is often part of the local licensing process.
Apply for a License: Submit the required forms and pay the associated fees. Many states and municipalities offer online portals for streamlined applications.

Tools like Pandadoc’s vendor agreement templates can also help structure service contracts that may need to align with licensing requirements.

By securing all necessary licenses and permits early on, you demonstrate professionalism and compliance, reducing potential risks and ensuring smoother operations.

Insurance

Insurance is a cornerstone of risk management for any consultancy. By securing the right types of coverage early, you protect your business from unforeseen liabilities, safeguarding both your operations and your reputation. Here’s a breakdown of essential insurance types for consultancies:

Professional Liability Insurance

Also known as Errors and Omissions (E&O) insurance, this coverage protects your business against claims of negligence, errors, or omissions in the services you provide. For example:

A client may claim that your recommendations caused financial loss.
An oversight in a deliverable could result in costly legal disputes.

Professional liability insurance ensures that legal fees and settlements are covered, allowing your business to continue operating smoothly. You can explore providers like Hiscox or The Hartford.

General Business Insurance

General business insurance is designed to cover a range of risks, such as property damage, liability claims, and business interruption. It’s particularly useful for:

Protecting your office equipment or rented space from damage.
Covering third-party claims, like a client getting injured at your office.

Look into packages from providers like Progressive Commercial or Nationwide to customize coverage for your consultancy.

Employee Insurance Requirements

If your consultancy has employees, certain types of insurance may be legally required:

Workers’ Compensation Insurance: Provides benefits to employees for work-related injuries or illnesses. Requirements vary by state, so check local laws on platforms like WorkersCompensation.com.
Health Insurance: If you have 50 or more employees, you may need to offer health insurance under the Affordable Care Act (ACA). Use resources like Healthcare.gov for guidance.

Even if not required, offering health insurance can improve employee retention and morale, making it a worthwhile investment. When I first started my business it was hard for me to find health insurance options for companies under 5 people but so many options are out there now and the company or broker I would go with if I had to do it all over again would be Gusto for its ease of use and flexibility in options for small businesses.

By addressing your insurance needs early, you not only mitigate risks but also build trust with clients and employees, creating a stable foundation for growth.

Conclusion

I hope you enjoyed the second blog in this long series where I deep dive all my lessons learned. In this installment, its critical to remember that as an IT Services company has a strong and legal foundation so that it can continue to grow responsibly. Having these items in play early will avoid the chaos of not having these and allow you to work on growing and scaling the business earlier in your lifecycle.

Follow me for more as I explore my next lesson and building block as I craft the ideal MSP in my next post!