The Benefits of Starting a Service-Based Business
Written by
- Redaction Team
- Business Planning, Entrepreneurship
If you’re thinking about starting a business or if you’re a serial entrepreneur, you might be considering starting a service-based business. The landscape of opportunities is so ripe that it can be difficult for anyone to decide what type of business they should start. People often overlook businesses that offer services because they’re too much work. That fact is something that you can benefit from if you’re the type of person who isn’t afraid of working up a sweat or getting a little dirty.
Service-based businesses have low start-up costs
A few examples of service-based businesses would be a landscaping company, a cleaning service, or a handyman service. You can start a cleaning company for less than a hundred dollars if you have transportation. Even if you don’t have a car, you can take your cleaning supplies on the bus and go from customer to customer.
Service-based businesses are the perfect bizop for those who have a small budget. Not everyone starts a business with gold-lined pockets. Maybe you’re good with a hammer, and you want to someday own your own construction company. There’s no reason why you can’t start out as a handyman and work your way to the top. If you have the tools lying around or know someone who has them that you can borrow, you can start your own handyman service for next to nothing.
Your profit margins are through the roof
Service-based businesses are highly profitable. Sure, there are taxes you have to worry about, as well as your supplies, but beyond that, it’s pure profit. You also have to factor in the amount of time that you’re spending on each job. After all, time is money, and it’s the most precious resource that you have.
Your profit margins are even higher if you’re the one doing all the work. That means you don’t have to hire anyone and pay their salaries and all the taxes that go along with it. You know what your time is worth, and you can adjust your prices accordingly.
However, this is very important, you still want to sit down and figure out how much everything is costing you. If you own a cleaning company, you want to tally up how much it costs you to clean a home or an office building. You can’t wing it and just eyeball your expenses or you’ll end up short changing yourself in the long run. Know exactly how much everything costs down to your transportation so that you can charge your customers accordingly.
The risks are much lower
Everyone always talks about how small businesses are likely to fail within the first year or two. It’s true, most small businesses started today will fail. Your breakeven point is much lower when it comes to a service-based business. If you’ve invested a few hundred dollars into cleaning supplies, all you have to do is make that money back with a couple of customers and you’re good.
Typically, the only thing you risk is losing your time with a service-based business. That’s not going to be the case if you have to invest in something specific, like an industrial vacuum cleaner, but even at that, you still should be able to break even much more quickly than if you were selling products.
Customer loyalty is much higher with service-based businesses
If you sell a product to someone, the customer leaves once the transaction is over. With service-based businesses, you build up a relationship and that results in them becoming a repeat customer. It’s much easier to build a relationship with someone who you are offering a service to and they like what you do.
Repeat customers are the most important factor in the success of a service-based business. Your bread and butter, as they say, will be people who keep coming back for you to perform that service for them. The steady stream of income you receive from repeat customers will enable you to expand your business and potentially hire people.
Always go out of your way to build a relationship with every customer. Let them know how much you appreciate their business and that you’ll do whatever it takes to turn them into a loyal customer. Sometimes, it may require you to bend over backward for a customer, but in the early days of your business, you need to do whatever it takes to succeed.
Final Thoughts
If you’re willing to put in the work and get the word out about your service-based business, there’s the potential to make a ton of money. Don’t expect that you’re going to be super successful overnight, but if you’re persistent, there’s no reason why you can’t succeed. Always do market research and try your best to stand out from the crowd so people have a reason to choose you over your competition.
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