Starting a service business is an excellent way to make money. Many service businesses start because owners see need in their local community for specific services they have expertise in. When you offer your services to people, many benefits come with it.
One of the best things about service businesses is that they can be started in any industry or niche, which means you’ll never run out of opportunities. Some service businesses offer services for free—for both you and the client—to build up their reputation and get more exposure. This blog post will cover everything from how service businesses work, what kind of service business you should start based on your skill set, and how owning a service business compares to selling products.
Services vs. Products
Many people who start a business today go for the product-based model, but there are many reasons why starting a service business is better than selling products. Many business owners are not aware of the benefits that come with selling services. Most people think that starting a service-based company is risky, difficult, and time-consuming. This couldn’t be further from the truth! In fact, most service businesses can start online in less than 30 days!
Selling products online is tough. It’s hard to find a product that people want, and even if you do, it’s difficult to get the word out about your business. In contrast, starting a service-based business can be much easier because you don’t have to worry about manufacturing or shipping anything. You just provide the service, and customers will come looking for you. This makes it easy for anyone with skills in an area they enjoy to start their own service-based company without having to invest thousands of dollars into inventory first.
For example, a franchise opportunity for smartphone repair service will earn more compared to selling brand-new smartphones to customers. After all, people would prefer having their gadgets repaired first compared to jumping to the decision to buy a new one. Repairs are more economical compared to replacements.
How Do Service Businesses Work?
Service-based businesses are different from product-based businesses because service-based businesses are service providers and not manufacturers. This means service companies offer services to people, unlike a product company that makes products for people.
Since service entrepreneurship is mostly about selling your skills instead of physical goods or items, the risk of inventory loss is lower than starting a retail business with an inventory of physical goods. Plus, service-based businesses are cheaper to start than the manufacturing and retail costs needed for a product company.
The service industry is also faster to scale up in terms of revenue potential than other industries like retail or manufacturing because it can quickly be scaled horizontally versus vertically. This means that service entrepreneurs have more leverage when it comes to negotiating service pricing and contracts.
Furthermore, service-based businesses are at an advantage because they can grow into other service offerings. Another critical advantage of service businesses is that they are less susceptible to economic downturns, which can be very common for retail and manufacturing companies. Service-based entrepreneurs also have the potential for higher margins because service providers don’t need to pay employees as much since their service providers are service entrepreneurs themselves.
Finally, service-based businesses can be scalable because service entrepreneurs can create a network of service professionals around their businesses. These service professionals can provide training and development to build an even stronger team that offers better customer service.
What Are the Challenges?
One disadvantage of starting a service-based company is that it takes more time to build a service-based company because service providers need to do more one-on-one work with customers. In addition to this, entrepreneurs need to make sure that they have the right skills and training offering quality services to their clients and customers.
Customer service is essential in service-based businesses because service providers need to service and solve the customer’s problem. Some service-based companies offer video chat, phone calls, or email to make sure that they are providing quality service for their customers even when they can’t meet them face-to-face.
Service professionals also need to have excellent interpersonal skills because they need to service their clients with the utmost respect and dignity. In service-based businesses, it is also important for service providers to be competent in fulfilling a customer’s needs because this will make them more likely to return as repeat customers or refer others in need of a service provider.
Investing in Service-based Businesses
Investing in a service-based business might be a good idea because this type of business can thrive in both bad and good economic times. For service-based businesses, there is more honor to have your customers come back for repeat service purchases that might not happen with other types of businesses such as those selling products. If you possess skills that you can maximize to earn a profit, then starting a service-based business is a good idea to consider.