How To Start A Service Business
by Tom Egelhoff
Starting a service business is one of the more difficult businesses to start because you don't always have a product that the customer can see or touch. The actual product of the business is you. And, if you are unknown to your customer, you may have a tough time in the early going convincing a customer that you are a professional at what you do.
In the early stages of your business you may need to provide all or a portion of a job to some customers to assure them of the quality of your work. A cleaning service may give one month free on a six-month cleaning contract in order to demonstrate the reliability of the company.
In this weeks article I want to show you what you'll be up against when starting a service business and some pitfalls to avoid. So let's get started.
Why Do You Want To Go Into Business?
One of the first questions anyone going into business has to ask themselves is why do you want to own your own business? For some it may be doing a type of work that they enjoy. Perhaps you are looking for financial freedom. For others it may be that they just want to be their own boss. If the latter is you, then I have some news for you. The business will probably become your new boss. Sometimes a business has a way of taking over your life and you'll find yourself with less free time than you had working for someone else. See: "Self-Analysis For Going Into Business."
Starting a new business, service or otherwise, also requires a certain amount of risk. You are probably going to have some kind of financial investment in your business and if the business is unsuccessful you risk losing that investment. There is also a risk of reputation in a service business. Since people don't have a product to be dissatisfied with they are going to voice their dissatisfaction of you to their friends and neighbors. See: "How To Be Perceived As An Expert In Your Field."
In addition, if you are starting your business while still working for an employer there are three reasons for business failure you should know about and you can find those here. See: "Small Business Failure: Three Reasons Why Your Business Will Fail & How To Avoid Them."
What Business Are You Really In?
You may think you clean carpets but what you really do is provide a healthy clean home. Or you may think you have a typing service but what you really provide is perfect letters, reports and other documents to customers that don't have time to do them. Before you can effectively start a business you must be crystal clear on what you are really providing to your customers. See: "Define Your Image To Your Customers." The real question to ask is what benefit will a customer receive from dealing with you?
Where Do The Customers Come From?
Every business has a target market. These are the people who are most likely to want or need your product or service. Your target market will have certain characteristics in common. They will be in a similar age group, have similar education, income, marital status, watch similar TV shows, listen to the same radio stations and read the same newspapers and magazines. See: "How To Make Friends And Turn Them Into Customers."
In order for your business to be successful you must find who these people are and the most economical way to reach them with your sales message. For How To Find Your Target Market, See: "Target Marketing: Who They Are And How To Find Them."
Who Are Your Competitors And How Do You Compete Against Them?
One of the biggest mistakes small businesses make is trying to, "Keep up with the Jones's". Just because your competitor does something doesn't mean you have to match them. Do what you do well and the money will follow. There is always going to be something you can do that your competitor either can't do or they don't want to do.
Make a list of your services and your competitor's services. What do you do they can't? What do they do that you can't? Are the things that you can't do temporary or permanent? For more on this, See: "How To Research Your Competition" and "Who is your real competition? The Answer May Surprise You."
How Will You Advertise Your Service Business?
Mastering the art of advertising is one of the hardest lessons for any business. And, it's even worse for a small town business because you are probably the advertising department. You may know everything there is to know about cleaning carpets but probably not a lot about advertising and marketing. That's not a slap at your intellect it's just that you've spent most of your time learning your craft and never had the need till now to learn about advertising and marketing. See: "Advertising: Learn From The Mistakes Of Others."
Large firms have the benefit of larger profits that will support a marketing or advertising firm. But many small businesses just don't have that luxury. So if you don't learn anything else on this site please learn this. Advertising must be an investment it must not be an expense. I know it seems like an expense when you are writing that check for the radio or newspaper ad. Make sure before you advertise anywhere that there is a reasonable expectation that the advertising will reach your target market and produce more dollars in business than it will cost. If this happens, advertising pays for itself. Here are two pages that will help you plan your advertising strategy and save some money.
See: "How to Create A Small Town Advertising Plan" and "25 Low Cost Advertising Plans."
The Last Word On Starting A Service Business
This is only a short synopsis of things you should know about starting your own service business. However, they will give you some things to think about. Free help is available to help you at the following places.
http://www.score.gov This is the Service Corps Of Retired Executives they are people who have been where you want to be. Their advice and help is free. Check their web site for the SCORE office nearest you.
http://www.sba.gov The Small Business Administration. These people can help with business plans, financing and other business start-up information.
Owning your own business can either be buying a job or working at a labor of love. If the latter is your driving force then you are destined for success. Remember, do what you love and the money will follow.
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Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 888-550-6100 or PO Box 271, Bozeman, MT 59771-0271
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