So you have something to offer the world, and you want to share it, in exchange for monetary compensation? Welcome to capitalism!
In this intro article to service businesses, we’ll explore a little bit about what a service business is, and examine whether it might be something you’d be interested in starting.
Like most young kids, the first service business I started was a lawn mowing business. Desperate for a shiny new purple iMac computer, my brother and I started trudging around town trying to get people to let us mow their lawn for them. It wasn’t easy, dragging around after school, pulling out the lawn mower (thankfully we could just use our parents), and hiking around town with it. But in the end, not only did we have a nice fat stack of cash for our iMac, but eventually had the money for another brand new computer as well! Good planning, a little marketing, and some good parents and neighbors had helped turn our first business venture into a success!
Now, I’m sure you’re thinking, “that’s great and all but I’m not 12 years old and I need something more sustainable than that.” So, let’s take a look at some of the main considerations of this business path, before you even decide to go down the road or not.
Take inventory of your strengths.
One of the first things you will need to do, with any business venture, but especially with a service business, is determine your strengths and what you can sell. Unlike a retail business, where the probability of success relies heavily on the products you purchase for resale, in a service business, YOU are the product. You control the quality, the presentation, the distribution and the value of the only product you have. If you think you can start a business sewing clothes and repairing shoes, and yet have never done either, it won’t matter what kind of demand there is for it, you probably won’t succeed.
Maybe you already have an idea in your mind of what you want to offer. It could be something you’ve been doing for a while that you know you’re good at, and want to turn it into a profitable business, or something that’s always excited you that you want to learn more about and offer to others. Either way, start to write down some of the pro’s and con’s of whatever endeavor you’d like to try out, specifically in relation to your existing skills and talents. Ask yourself things like :
Will I enjoy this as a money making “job”, or do I really only like it as a hobby?
Can it be “scaled”? In other words, is there an actual demand or is it a very niche idea?
How much infrastructure will I have to build or invest in to be able to provide the service?
Do I know someone that can assist or guide me in getting started in this particular field?
Am I in a good enough physical condition to sustainably provide the service for a long time?
Is the service I’m offering different enough from other services that it will be easy to attract customers?
Get an idea for the demand.
All ideas are great in our heads. Everyone should want this, right? Everyone needs a little more of this service in their life, don’t they? It is easy to get blown away by our own ideas of how amazing something is, and not have a true grasp on the actual demand there might be for a service you’d like to offer. This part is really key - do your research. Find out if what you’re going to be launching - anyone actually wants to spend money on. Here are some tips for doing some market research on demand.
Ask people that you know. It can be that simple. People you trust - just ask them if they’d ever buy what you’d thinking of offering.
Go to trade shows or fairs that relate to the general industry you’re looking to get into. Ask business owners, talk to professionals, look at flyers and glean information from informal conversations.
Look up your competitors - locally, in other states, in other regions. See what they’re offering, how much they charge, and how much social media interest they generate for their particular services, and how much interest their is!
Use polling on social media for your idea - encourage comments on the data you are seeking to acquire.
Determine demographics for your service, and look up local demographic info online. A quick search of your own town on https://factfinder.census.gov can yield a ton of information about who lives where.
Use a site like https://trends.google.com to determine the average searches for certain keywords over months and years to determine if you are in a slump or peak for demand.
Knowing you do have value is key!
Determine your costs beforehand.
Despite the fact that you don’t have to worry about inventory or sourcing for your service business, understanding what it will take to be able to effectively deliver your service is very important. Do you need only a pen and paper, and a good head on your shoulders? Will you need an additional vehicle, a new computer, equipment, extra training, permits, certificates, etc? Weighing the cost not only to acquire these items, but to maintain them too is key to understanding how much it will cost you to get going and how much cash flow you need to generate to stay in business while you search for customers. And, oh yeah, that is likely going to cost something too. Here are some considerations when thinking about the costs of setting up business.
What are the specific and “bare bones” items I need to get this business off the ground? What will they cost me to acquire, and maintain?
Do I have access to items that I already own that I can re-purpose into business tools and infrastructure?
Do I have access to extra cash or availability of a business loan if necessary?
How much time will I have to invest in getting things set up, and will I be doing it while still working full time, or jump in feet first and go for it?
What licenses, permits, or regulations will I have to comply with that will cost money?
Will I be doing all the “peripheral” business tasks like bookkeeping and payroll and record keeping myself, or paying for that?
These are just a few of the things to take into consideration as you delve into the world of service business. At the end of the day, if offering or providing the service is nothing something you are passionate about, and good at, take caution when moving into that field. You don’t want to find yourself stuck being forced into providing a service to survive, that you don’t truly enjoy.
Next time, in Part 2 of this article, we’ll look even more at some of the considerations regarding services.
Until next time,
BEN