You’ve Got This: The Entrepreneur’s Guide to Starting a Service Business
There are so many good reasons for starting a service business.
Maybe you want to escape the 9-5, work with your hands, or build a legacy for your family. Or maybe, like Henry, you have no choice but to start over. They’re all good reasons.
Service businesses, including contracting, cleaning, and landscaping companies, keep our communities safe, comfortable, and functioning. Owning your own can be incredibly rewarding.
The thing is, it takes guts to start a service-based business. You have to be focused enough to see it through, even when things don’t go to plan.
It’s not impossible, but you need to be prepared and know what you’re getting into. If you’re ready to start a service business—and you want to do it right—here’s what you need to know.
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1. Plan your business
Even if you’ve got it all figured out in your head, you should absolutely write down your business plan. It doesn’t have to be anything formal. Just open a blank document, or grab a notebook, and write down what comes to mind for the following questions.
You can always edit or ask someone to review your plan later—in fact, you should! But the important thing is to start gathering information now.
- What skill are you selling?
The biggest difference between starting a service-based business and starting a product-based business is that, instead of selling coffee or t-shirts, you’re selling yourself. You need to have a skill people are willing to buy. So, what skill do you have that others are willing to pay for? Do you have the licenses, training, and physical ability to do it day in and day out?
- What is your ‘why’?
Why do you want to start a service business? Write down your top three reasons, and keep the list with you at all times. There will be days that you get discouraged. You might put in a ton of work and not see any rewards for months. Remembering your ‘why’ will help you stay focused on achieving your goals.
- What do your customers really want?
Answering this question will require some research. Your task is to discover what your potential customers are really looking for. For example, do they want someone to trim their trees once a year? Or, do they want a service partner who can advise them on proper tree care and preventing disease?Either answer is fine, but you need to make sure it aligns with the type of service you can (and want to) provide.*This step is incredibly important, because it will determine everything: what services you offer, how to market yourself, and how you can price for profit! Make sure you talk to real people in your target market and listen carefully to their needs.
- Who is your competition and what are they doing differently?
It’s nearly impossible to enter a market that has zero competitors. Find out who is already servicing your target market. What are their strengths and weaknesses? What are they doing that you know you can do better? What aren’t they doing that you can capitalize on?Alternatively, are these ‘competitors’ actually partners you can work with instead of against?
2. Get your financials in order
You’re not starting a service business because you want to go broke. But the hard truth is that many businesses fail because they can’t manage their cash flow.
You need a clear picture of how much money you have, want, and need. Write down the answers to the following questions. From here, you can decide if you’ll apply for a loan or investment to get your service business off the ground.
- What are the startup costs for your service business?
You can start a cleaning business with almost no money, but getting into HVAC/R requires more of an investment. Where does your business stand? Make a list of upfront expenses, including insurance, office space, a work vehicle, uniforms, and any special equipment you’ll need. Remember, you don’t need every single shiny new toy to start.
- What equipment do you already have? What will it cost to buy or rent the rest?
First, list the assets that you already have. Then, make a spreadsheet of the equipment you still need and how much it will cost to buy or rent each piece. Instead of buying everything at once, buy new tools only as you book jobs that require them.
- Will you work full time, part-time, or seasonal?
One of the greatest things about starting a service business is that you don’t have to jump in full-time. Many successful businesses started part-time as side-gigs, or seasonal work based on the industry. Depending on your current financial situation and startup costs, consider starting slow and easing into a full-time operation.
- How much will you pay yourself?
If you have employees (either administrative staff or other technicians), then you need to factor in their wages. If it’s just you, be realistic about how much profit you need to generate. In both cases, you need to be able to pay yourself and re-invest in the business.
A trusted financial advisor is invaluable at this stage.
3. Register and set up your business
This is the stage where all of your business planning becomes reality. Use this checklist to make sure you don’t miss a thing.
Remember to keep track of each step in your business plan document. Keeping all of this information in one place is crucial should you ever need to work with an investor or auditor.
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4. Build your team
It’s easy as an entrepreneur to feel like you have to do everything yourself. Don’t fall into this trap. One of the most common pieces of advice from successful entrepreneurs is to partner with people who can do the jobs you don’t want to.
In other words, figure out what you’re good at, and outsource the rest.
A team can include anything from starting a service business with a partner, outsourcing calls to a virtual assistant, or at the very least, finding a trustworthy financial advisor, bookkeeper, or mentor to keep you on the right path.
In your business plan document, write down the roles and responsibilities you want to add to your dream team. This can include immediate or long-term hires.
Whatever your dream team looks like, remember, you’re not in this alone.
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5. Learn how to market yourself
Remember when you wrote down your reasons for starting a service business? Becoming a marketing guru probably wasn’t on there.
But if you want your service business to take off, you need to get comfortable with promoting yourself.
Repeat business is vital in service businesses. When it comes to getting your first customers, focus on providing truly above-and-beyond customer service. Don’t be afraid to ask questions and find out what they are happy with or where you can improve. If they’re happy with the service, always ask for referrals.
Early-stage customers can be extremely valuable. Here at Jobber, our very first customer has provided invaluable feedback, several referrals, and he’s still a happy customer today. You can hear his story on episode #2 of the Built By You podcast.
So, how do you market your service business when you’re just starting out? Don’t over complicate it.
- Start with an online presence by creating a Facebook Business Page and Google my Business profile.
- Next, make sure you ask every happy customer to leave you a positive online review.
- Join local business associations, networking events, and get comfortable promoting your new service business every chance you get. You could also consider getting a truck wrap, branded uniforms, and referral flyers to help make your business look more legitimate and polished.
6. Put systems in place
Imagine that your business had to run without you. How would you organize it so that someone else could take over for you and keep things running smoothly?
This is called systematizing your business, and it’s the only way to scale. Creating systems will make every single aspect of your business run better, prevent costly mistakes, and allow you to make more money with less effort.
So, what does an operational system look like? Every business is a little different. Start by creating a process checklist for when a new customer calls.
It might look something like this:
- A new prospect fills calls or fills in an online work request
- Respond with a quote within 24 hours to secure the job
- When the quote is approved, schedule the job
- Once the work is complete, send the invoice
- Collect payment within 5 business days by cash, cheque, or online payment
- Send a follow-up email to request an online review or referral
This checklist is so simple that any new person you hire can follow it. Eventually, you can have processes for every situation. For example, how to follow-up if the customer hasn’t approved the quote yet, how to automate referrals, or even what to do once you arrive on the job site.
Systematizing your business is a constant process. For more examples, see the 4-step sales process that helped this company scale, or watch this video.
7. Continue learning and growing
Starting a service business is the easy part. The hard part is staying focused, adapting, and constantly learning and growing from your experiences.
The actual service you provide—whether it’s house cleaning, landscaping, pressure washing or plumbing— is just one of the dozens of skills you’ll need to succeed.
Other necessary skills you can develop over time include:
- Time management
- Financial literacy
- Customer communication
- Community building
- Hiring and training
- Expectation setting
- Customer service
- Personal growth
If this list seems overwhelming, don’t worry. Nobody expects you to learn it all overnight. Instead, learn from your mistakes, build a community of peers around you, and keep a growth mindset.
At the end of the day, that’s the recipe or starting a service business you can be proud of.
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Originally published May 2016, last updated February 2021.