Think about the last time you paid someone to do something for you. Whether it was painting your house, hemming a pair of pants, cleaning your pool or grooming your dog. Chances are, you paid this person because you either didn’t have the time, skills, tools, or desire to do it yourself.
Each of these are examples of service-based businesses— businesses that provide skilled services, personal labor, or expertise, rather than physical products or merchandise.
Service-based businesses are essential for the functioning of society. There’s no way every single person could learn (or have the tools) to replace their HVAC, maintain their property, groom their pets, repair a damaged windshield and re-do their roof, all while taking care of a job and family of their own.
More importantly, service businesses are extremely rewarding to start and run. If you get the business model right, you can be your own boss, work flexible hours, and help customers solve problems they don’t have the skills to do on their own.
Problem solving, resourcefulness, and ingenuity are at the core of the service business definition.
Service Business Definition: What is a Service business?
Service businesses provide professional, skilled work to solve a specific customer problem in exchange for money. These businesses can be one person shows, or consist of an entire team of skilled professionals.
Anytime you hire a professional for their expertise or knowledge, chances are they are a service-based business.
And as long as we have limited time, knowledge, and skills, we’ll have a need for service-based businesses.
Service Business Examples
Service business range from home services (lawn care and cleaning), to personal care (nail or hair salons), to professional services, (like law or digital marketing). Here are just a few examples to choose from:
- Appliance repair company
- Car repair
- Carpet cleaning business
- Chimney cleaning business
- Chimney sweep services
- Commercial cleaning business
- Copywriting business
- Digital marketing
- Dry cleaning service
- Electrical contracting business
- Elevator services
- Garage door services
- General contracting
- Graphic designers
- Handyman business
- HVAC business
- Janitorial services
- Junk removal business
- Landscaping company
- Lawn care business
- Locksmith services
- Moving company
- Painting business
- Pest control business
- Pet grooming Business
- Photography Business
- Plumbing business
- Pool service business
- Pressure washing business
- Real estate agent
- Residential cleaning business
- Roofing services
- Snow removal business
- Tailor or alterations expert
- Tree care company
- Window cleaning business
What makes a Service Business Successful?
Running a service-based business is different from a retail or product-based business.
There’s little-to-no manufacturing, inventory, shipping, or e-commerce involved. Instead, you’ll find yourself focusing more on customer service, team management, and learning how to price your services properly.
Here are five elements that are integral to how service businesses deliver intangible value to customers (also known as the service business model):
- Marketing and Sales
- Customer service
- Team management
- Business Operations
If you want to run a successful service business, you’ve got to understand each. So let’s dive into them.
The intangibility of services makes pricing a challenge for service business owners. It’s not like a physical product where you can work out the exact cost of material, add a markup, and know your profit.
Improper service pricing— either by pricing too high and losing customers, or pricing too low and not making a profit— is the #1 reason service businesses go under.
To save yourself the headache, try one of tehse eleven smart pricing strategies to hit the pricing sweet spot: charging a price that customers are happy to pay while earning healthy profits. These include hourly pricing, value-based pricing, tiered pricing, and bundled pricing.
Convincing prospects to hire YOUR services instead of anybody else’s is tricky. Most won’t know what they’re getting until they’ve actually used your service. As a result, many remain on the fence about giving you a shot.
So how do you overcome this inertia and successfully get new customers?
You focus on smart service marketing strategies that build up your brand, expertise, and reputation.
Here are a few service marketing methods to use when starting out:
- Your local network. Reach out to your family and friends to let them know you’re in business. “Don’t be afraid to let everyone know,” says Jason Creel, of Lawn Care Life. “That might look like a social media post, put it on Facebook, anywhere, but let all your friends and family know you’re starting a lawn care business.”
- Your professional website. A professional website establishes you as a serious business owner. Professionalism and perceived value are vital for any kind of business. But they’re especially important for service businesses because people are buying a skill. Clients also tend to perceive the service provider (you) and the service as one thing. That’s why you need to create a website that makes you look like a professional, makes it easy for them to book work, and increases the chances that prospects buy from you.
- A customer referral program. Consider building a referral program from day one. When looking for a service, people generally look for recommendations from their immediate, trusted network. If you want to get new customers fast, don’t just wait for these organic referrals. Instead, ask for them by setting up a referral program to maximize your profits.
- Online reviews. When shopping for products, consumers often look at specs, product images, and return policies before they buy. But since services can’t be ‘returned’, consumers rely much more heavily on positive reviews before making a purchasing decision. Again, you will receive some organic reviews, but create a plan for getting more reviews, and you will generate a constant stream of new work.
- Service Packages. Finally, once you’ve got your first few clients, consider creating different service packages and pricing them accordingly (see “Pricing”). Service packages help “productize” your service, making them easier to sell. Use professional quotes to explain your packages and close more deals.
3. Customer Service
Excellent customer service is one of the most important aspects of running a successful service business. It’s right there in the name!
Providing a services can be highly personal. Oftentimes, service businesses enter their customers’ homes and spend several hours with them. You may be restoring a prized piece of antique furniture, caring for a pet, or transplanting a generations-old tree.
In all of these cases, providing kind, generous customer service shows you really care, and can help you earn customers for life.
For service businesses, one of the easiest ways to cement your customer service is to communicate appropriately to clients before, after, and during the job.
“With a trash can cleaning business, using the pre-visit notifications is critical and allows you to stand out,” explains Brannon Fowler of The Trash Can Cleaners. “It also constantly keeps your name in the customer’s mind. Since we run a recurring service, it makes the customer very familiar with the business, which allows us to upsell other services. They can also respond to us scheduling adjustments if needed. We also use the CRM and notes features to make sure we know everything we can about an account if there was an issue or special request.”
For more customer service tips like these, read 12 Service Business Experts Share Their Best Customer Service Tips.
4. Team Management
A service business is often judged by its workforce. And rightly so.
Your employees are often the ones dealing directly with your customers. If their service standards aren’t up to par, they can damage employee relationships, or worse, your business’ entire reputation.
From recruiting the right employees (one of the top residential cleaning trends for 2020) and scheduling work to paying salaries and ensuring everyone is happy, team management is crucial to service business success.
Before making your first hire, consider a training plan, repeatable processes you can create, and how you’ll schedule and communicate with your team once the jobs start rolling in.
5. Service Business Operations
Your business operations are any process that allows the business function day-to-day.
They can vary from the simple to the complex, depending on how many employees you have and your client roster.
The more systematized and repeatable your business processes are, the more efficient (and profitable) your service business can be.
On the other hand, poor or broken process at any one stage will affect everything that comes after.
For example, if you don’t have a good system for scheduling jobs and showing up on time, customers will be unwilling to pay the full amount, leading to bad debt, unhappy customers, and frustrated employees.
Service business operations include:
- Collecting client information and work requests
- Estimating and quoting job costs
- Running payroll and business health reports
- Scheduling jobs and assigning employees
- Communicating with customers before, during, and after services are provided
- Collecting payment and managing accounts receivable
- Generating more business through marketing and sales
- Hiring, training, and retaining a skilled team
Even if you are a service business of just one person, you still need to have these operations in place.
“You need to have people and systems in place that allow your business to keep running, even if you’re not there. A lot of guys let their ego get in the way. They don’t understand the power of delegation and creating a team they believe in. Replace yourself in the field, start building systems, and start delegating—immediately.” – Stanley Genadek, Home Services Trends Report 2020
Starting Your First Service Business and Beyond
So, are you ready to start your own service business? Once you’ve wrapped your mind around the core principles listed above, we’ve got a handy step-by-step guide you can follow to achieve your financial and entrepreneurial goals.
And remember: Jobber is with you every step of the way— providing software that helps you organize your operations, impress your customers, and fuel your growth, and creating informational content that powers your success.