What You Need to Know About Owning a Service Based Business

Posted on Tuesday 26th of August 2014 by
Manish Khanna

Starting a new business can be a huge step for an entrepreneur or a team of businessmen. In general, a product based business may need more money, structure, planning and legal formalities in comparison to a service based business. That being said, there are a bunch of factors to consider and ‘to do’s’ that should be added in a list before setting up a service based business.

  • Value of Your Business

Before going all in on starting a service based business stop to consider its value and how well your service would be received in the market. Research and get accurate statistics as to how many potential clients could be interested in the service you have to offer. For example, you plan to start a pet sitting business but there aren’t many pet owners in your area. This kind of business plan won’t be fruitful for the growth of the business and the owner may end up spending more than profiting from the business.

  • What Do You Offer That Others Don’t?

Pulling customers in a service based business can be slightly tough than product based business as, in a product based business offers physical products and customers can make a decision however in a service based business you have a service to offer to your clients. Check your market and competitors and offer unique services to your clients so they will come back to you and spread a good word about your service in the market.

  • Analyze Your Skill Set

Many clients will look to deal with professionals and experts who have relevant qualification and certifications. For example, you’ll need valid degree if you are planning to set up a tailoring business. Not that every client would look for credentials but some would, so this is an essential step to start up a service based business. You may have the complete knowledge about your business but obtaining a certification in your field will help you get quality and long term clients.

  • Decide Where You Wish to Operate Your Business From

Many entrepreneurs start a small business and to begin with operate from home and later relocate to an office as the business expands. If you are planning to run your service based business from home you need to understand that there will be expenses that will come with it, similar to if you were running it from an office.

If in any case you plan to set up an office at home, you’ll have to deal with possible increases to the electricity bill, a business phone line, extra cleaning and possible maintenance. Running your business from home may also mean that you have to pay capital gains tax (CGT) which may apply when you sell your home. To know more on how CGT can affect your home based business visit ato.gov.au.

  • Do You Have the Necessary Tools?

Service based business like plumbing and Electrical Services will require you to have access to important tools before you can reach out to customers. Make sure to research well and stay up to date as per the market and get tools that are relevant to your business for example if you are planning to start up a pet grooming business, you will need important equipment required to groom pets such as de-shedding tools, hair trimming tools etc.

  • License to Run A Service Based Business

Like any other business, when you start up there are legal formalities you need to under-go and registration processes you need to go through. It is recommended to get in touch with experts or business advisors to know how you can register your business; how you can obtain a work permit, an Australian business number, tax structure etc. All are needed to start up a service based business.

  • Marketing and Promotion

To get business, it is vital to market your available services; this would require you to invest capital on marketers and strategists. Nonetheless, if you are confident about running your business, make sure to invest in quality marketing such as a business website, newspapers, ads, fliers and social media etc.

  • Samples & Testimonials

Unlike a product based business where clients can look at products and its quality, all that a service based business can offer is skills and expertise displayed in the service provided. Ask yourself, how do you plan to persuade your clients? Do you have any samples or testimonials of your work for display? Get relevant documents to display as samples, business cards, letterheads and a valid license to prove that you can provide a good service to the client.

  • Means of Communication

An important factor that differentiates product based business from service based business is that when you provide good service to a client, chances are that the client may want to deal with you again. For this purpose it is important for a business to set up a systematic means of communication for the clients. Ask yourself, if your business pans out well and does a lot of business, how will your clients get in touch with you? What would be your protocol to get back to them? These factors are important if you want your business to have a good name in the market and long term relationship with your clients.

  • Team or Individual Business

Do you plan to set up your service based business solo or with a team? If you plan to set up a team then you’ll be bound with legal liabilities and will have to provide them with

relevant benefits. Also, if you hire a team, you would be required to train them or hire a professional trainer to train your employees to the level of the market’s expectations.

By keeping these important factors in mind before you start up a service based business it will prepare you well and help you create a business that is receptive to the market. Good Luck!