Most online articles about business growth do not apply to businesses that sell services, not products. Service-based businesses do not find success by abiding by the same basic fundamentals as product-based businesses, making them much tougher to grow. For businesses like consulting agencies, home improvement businesses, medical practices or auto repair shops, increasing productivity or revenue isn’t as simple as hiring more people, adding property, or purchasing expensive equipment.
In most cases, service-based businesses amount to a few dozen people who are led by two or three supervisors. They expand by creating different departments who manage their own clients but this won’t necessarily help the company grow to the same extent as a product-based business with a new release. In order to make this happen, service-based businesses must begin to operate more like product-based businesses.
1. Which Customers To Focus On
Operating like a product-based business means viewing and marketing your services like products. This begins with defining your core customer, or determining which of your current customers meet certain criteria that officially makes them good customers. Every businesses has their own criteria for a good customer but it’s usually best to see if they check off approximately three boxes such as profitability, being easy to work with, and the potential to refer other valuable clients to you.
Once you have compiled a decent amount of clients who meet your criteria, think about what these clients have in common. You’ll probably notice that they have similar values, found you through similar channels, or were in similar situations when they hired you. Their leaders might have comparable personalities or tendencies as well. This process will give you hints as to where you can find more potential clients like them and which strengths you should advertise while making your pitch.
2. Which Service Generates The Most Value
It’s common for a young service-based business to make the mistake of trying to sell many services to many different types of clients in an attempt to expand their client base. This might have been an effective way to grow early on but continuing to operate with this strategy ultimately results in a business becoming just pretty good at a decent amount of general skills. The more successful businesses service a niche market by gradually becoming bonafide experts at solving one or a couple of problems.They figured out which service generated the most value for their clients and then concentrated on getting better at it.
So, examine all the problems your services solve and separate those that are too difficult to be solved effectively for less money than you charge or in less time. You might find that some of the problems you solve can be solved through other, less complex means or by other people offering the same results as your business.
3. How To Package Their Services Like Products
At this point, you should have a good idea of your core customer and core service. Now it’s time to market that core service to your core customer like a product that solves an important problem your potential clients have. People buy products for a single, definable reason (hunger, needing Internet access, etc) and they choose products based on a short list of factors such as how the product is made and how it works. So, to make your service look like a product, define how your service is developed, the manner in which it is provided, and the roles of the team members involved in each process.
When it comes to your actual marketing strategy, go back to that critical problem you solve better than anyone else. Your brand position should emphasize the problem you are solving, not the various benefits of your service. The only outcomes you should focus on are those that are tangible, meaning they provide evidence that your service has effectively solved your client’s problem.
4. Where To Turn For Extra Funding
Figuring out how to scale a service-based business also opens you up to the same tools frequently accessed by product-based businesses, like debt financing. The business lending industry has responded to the recent increase of service-based businesses by creating small business loans tailored for businesses that do not get paid in full right away or get paid monthly but need substantial capital to perform their services or pay regular expenses. They might struggle to make payroll in the event of a big job being put on hold or a new client changing their mind about the terms of a deal.
Working capital loans like a merchant cash advance or a business line of credit allow borrowers to fund their operations and make payments on a variety of frequencies (monthly, bi-weekly, daily, etc). Your payments would be lower while sales are lower, and larger when more cash is flowing in.
The Businesses Of The Future
Unlike your bank, alternative business financing companies like United Capital Source understand that the budgeting difficulties and cash flow extremities experienced by service-based businesses are often beyond their control. But in order to grow, they need to continuously market themselves and take on larger or multiple clients. We give these businesses flexible terms that allow them to make payments on the schedule that makes the most sense for them. Today’s digital landscape will only make room for more service-based businesses, so it’s time for the business lending industry to adapt to this dramatic change in their target market.