What is a Service-Related Business?
A service-related business is one that supplies its customers and clients with an intangible product rather than a tangible one. These businesses allow for the owner to market their talents and resources using them as a means to earn profit from their services. They utilize their skills to solve an immediate problem by providing an instantaneous solution. When was the last time you paid someone else for a service that you either did not want to do yourself, did not have the time to do, or simply did not have the necessary skill set for? These services can range from lawn mowing, valet service and food delivery to life coaching, graphic designing, photography, and the list can go on. It requires a sharpening of the soft skills, managing clients and their expectations, a flexible ethos for evolving needs and timelines, problem solving and troubleshooting.
How are they beneficial?
There are many benefits to be gleaned from not only owning a service-related business, but also receiving the service, as both the provider and the client serve to profit in one way or another which is the ultimate goal of a business.
A few ways in which clients benefit from service-related businesses are:
Convenience- the most obvious benefit to a customer is that they have the luxury of turning over a task that they find difficult or tiresome to a company that has the necessary experience and capabilities to ensure those tasks are completed in a timely and efficient way.
Custom Tailoring- Clients are able to stipulate particular terms that will align the service’s support with their specific area of need, whereas a physical product is not easily altered, and many times leaves a gap that customers will seek to fill in other ways. According to Accenture, 33% of customers who abandoned a business relationship last year did so because personalization was lacking.
The provider will also benefit in the following ways:
Low Start-Up Cost- essentially, the service being offered is you or a resource that you may already have. There are very few start-up, overhead or production costs to shoulder when running a service related business.
Adaptability- clients’ needs and wants will always be changing and undergo modification in some way and it is the company’s job to not only anticipate those needs but to adapt their platform, skills and offerings to them as well. Service providers have this advantage because while a physical product can take an extended period of time to be modified, a service can be improved in a relatively short amount of time. Microsoft found that brands are viewed more favorably by 77% of consumers if they proactively invite and accept customer feedback.
Flexibility- many service business owners have the leisure of scripting their own work hours according to what works best for their lifestyle. Although, it is to be noted that services such as content development, graphic design, and the like will facilitate a more flexible schedule than salon services and event management.
Challenges faced by Service Businesses
Valuation- how is a reasonable cost for services determined? What hourly rate should be charged? These questions, while challenging, present hurdles that every business owner needs to clear. One solution is to inquire about the overall costs in the market, determine what customers are willing to pay and how the business can profit from that.
Competition- for every market that a business offers a service for, there are usually competitors that are farther ahead in knowledge and experience with a loyal client base. Even if the market is new and relatively untouched, it only takes a spark to get the fire going. Other entities that offer the same services may influence market prices and other less dominant players will be forced to lower their costs to remain competitive.
Tips for Running a Successful Service Business
Delegate- If the business has grown and surpassed the point where one person’s expertise is insufficient, do not sacrifice quality for profit. As the business expands you may need the extra help, even on a part time basis, to meet clients’ rising demands.
Reinvent Your Business- as the times change, so will the needs of clients. Markets Insider found that service insight and knowledge are key to a good experience according to 62% of consumers. Avoid being inflexible and unwilling to evolve. Add a new niche, a new service, or go the extra mile that will separate you from your peers and give the business a competitive advantage.