So You Want to Start a Service-based Business?
Okay, so you want to launch a service-based business, but where do you start? Well, the fact you’re even reading this article, the fact you’re even thinking of that question “where do I start?”, already puts you ahead of most people.
The truth now is that most service-based businesses are started by what I refer to as accidental entrepreneurs, In other words, they didn’t necessarily set out to create a business. It was more that working for themselves became an option at a specific time in their life.
For example, maybe after redundancy or not wanting to go back to full-time employment after having children, therefore, most service-based business owners set up their small businesses, just doing what they used to do for their previous employer but just doing it for themselves.
If you don’t take careful consideration right at the get-go, at the launch phase of your business there is a real risk that you become a statistic. In the UK right now, one in five businesses fail in their first year, and between 50%-60% of businesses will fail in their first three years.
However, if you give careful consideration, right from the beginning of your entrepreneurial journey to what I’m going to share with you now, then you give yourself and your business every chance of success.
As I said, most business owners that offer services don’t necessarily give careful consideration to what they’re actually selling. They used to build websites for someone else, now they do it for themself. They used to do HR work for a corporate, now they’re an independent HR advisor. They used to be a financial advisor for a bigger organisation and now they’re an independent financial advisor. This might be what you are thinking as well.
Setting the right foundations
However, it’s not as simple as that in order to build your successful business on the right foundations. The first thing you need to do is give really careful consideration to the product that you are actually going to sell. While sometimes using the word ‘product’ can be confusing. When you think of your service, because you think, well, it’s you providing a service! Actually, one of the first things we need to do is productise that service. In other words, can we take that service and can we put it in a wrapper – in a box? You’re going to find it much easier to sell your product and it’s much easier to explain your product if you can wrap it in virtual packaging. Therefore, rather than thinking I build websites or I’m an HR consultant, think about what problems I actually solve, and what benefits and value I offer potential clients and start to think about rather than selling a website, you are selling a solution, you are selling problem-solving, you are selling some kind of positive gain.
2. WHO ARE YOU GOING TO SELL THIS TO?
The next question you want to give yourself time to think over is, who are you going to sell this to? Again, if you come from a corporate background, you may have never had to consider this, as a small business owner, this is one of the most important questions you can ask yourself, rather than just selling your services to anyone and everyone who’s out there.
Whoever happens to be within your frame of reference you want to actually think about a specific target market. This is really important when it comes to pricing, we’ll talk about that in just a moment. This is also really important when it comes to marketing and when it comes to targeting your potential prospects. So the question I ask my clients is “who would benefit the most from what you do?”
So, look at your own background, look at your own history, look at your own unique set of skills and rather than commoditizing yourself by calling yourself an HR consultant or web developer, actually ask yourself the question, which is “given all of my specific experience, my attributes, skills and abilities, what do I bring uniquely to the table. If I wrap that up within my HR services, who would benefit the most from that? Who could I offer the most value to?”. And a great question to follow up with is “who’s going to pay the money? Who’s going to pay good money, for good business service?”
How good you are
You see it doesn’t matter how good you are at what you do. You could be providing a five-star service, but if you’re selling it to a two-star client, someone that doesn’t necessarily value what you are doing to the degree that maybe they should, either because they just don’t value it, or because it just doesn’t have the degree of impact in their specific business to warrant paying five-star prices – they’re only ever going to pay you two-star money!
The third thing you want to give careful consideration to is price. Now, this is different to how most business owners tend to start up. Most businesses start with, Okay, well, I’ve been an HR consultant for 10 years, so I’ll do HR consultancy. I’ll do it for whoever’s in front of me and when it comes to pricing, I’ll charge, whatever the kind of market rate is.
If you feel confident, then you’ll charge middle to upper ranges of what most people are charging. If you’re feeling a little like an imposter or maybe feeling a little bit out of your depth, because this is a brand new business and whilst you might have loads of experience, you’ve not had the experience of running a business before, you may end up pricing yourself on the cheap end of the market. Either way, you’re still pricing yourself based on a very narrow bandwidth of possibility, the lower end of the market in the upper end of the market
Get out of that mindset
The truth of the matter is, you want to get out of that mindset altogether by asking the question, we just asked in number two, which is “who is going to benefit the most from what I’m doing?”.
Once you work out who’s going to benefit the most from what you’re doing, you can work out within that who’s going to pay good money for a great service. Now you’ll start to see that you are more valuable than you would’ve otherwise thought yourself to be, and you may be more valuable to the market or that specific part of the market than you would be to others.
So now you can price yourself based on the customer and your impact on that customer and the benefit you offer that specific customer, rather than looking at yourself as a commodity in a marketplace – one of many HR consultants, one of many financial services experts, and one of many web developers.
4. WHERE ARE THESE PEOPLE AND HOW AM I GOING TO SELL TO THEM?
The fourth consideration is, where are these people and how am I gonna sell to them? Once we’ve worked out what we’re doing, we wrap it up in a way so that our very specific clients will be enticed to buy our services. Once we’ve priced ourselves, hopefully as premium products and premium services to people who want to pay premium prices. Now we have to think of how do I go and find those customers? because these customers probably aren’t right under your nose. These customers aren’t necessarily going to be within your friendships, your family, or your immediate community, so you need to give careful consideration to where these people are.
These people may well be networking. It may be specialist networking, you may need to go and do some investigation there to find out where these people are networking, it might be online, it might be offline, or you might need to tap into networks and communities. You may have one contact and you can use that one contact to refer you to more people, and those ‘more people’ can refer you to even more people and you work your way into a community that way, or build a community for yourself even, or you look at social media. If you’re business to business (B2B), the obvious choice is going to be LinkedIn, it’s a huge database of your potential niche clients.
Starting a business is not always easy, especially when it comes to management and other important aspects and new businesses frequently end up focussed on the wrong areas of their business. These first four steps are actually the four steps that are going to take your business to its first, maybe even its second level. As your business grows, as you create greater degrees of success, there are more complexities in running a business that you’ll encounter. And of course, there are things you need to do right from the outset. Like for example, your marketing, your position in the marketplace, etc.
However, by giving careful consideration to these first four questions, I’m giving you the opportunity to do what most businesses don’t do, which is to put their best foot forward and to start to stand out in the marketplace, right from day one, to be able to charge a good price for a great service and to be able to differentiate themselves from all their competitors.
It is tough out there for new business owners, there’s no doubt, the statistics speak for themselves. However, when you get these things right, you open up a door for great possibilities and huge opportunity, to create the life you want, the business you want and the future that you want.