On the surface, starting a service-based business like public relations, consulting, writing or coaching seems easy enough. You have the skills to deliver high-quality work and results, so you set up a nice website and spread the word among your network contacts that you’re looking for clients.
But running any type of business, especially a service company, is never “easy.” There will be long hours, difficult clients, frustrating projects and many other obstacles along the way. But for those who have what it takes to persevere, the rewards of turning your passion and skill set into a viable business far outweigh the challenges you’ll face.
So, what is it really like to start and run a service business? Entrepreneurs who have done it weighed in on the challenges and advantages, as well as the best practices for getting your company off the ground.
Why start a service business? – Developing and selling a physical product takes a lot of time, money and energy. Even if you run an e-commerce business, you still have to deal with packaging, shipping and returns. In a service-based business, your product is you. There are little to no start-up, overhead or production costs — all you need to do is build your reputation and get the word out.
You can also easily make adjustments and tailor your service to suit an individual client’s needs. If a client isn’t happy with how a campaign or website is developing, you can make changes according to their feedback in real time. This is much more difficult to do for products, which may need testing, licensing and remanufacturing.
While there are plenty of advantages to a service-based business, there are also a few challenges unique to this type of venture.
Pricing – How do you strike the balance between offering competitive rates and charging what your time is actually worth? That’s the question service-based companies are constantly trying to answer, and the solution isn’t always an easy one to find. Most service entrepreneurs, especially freelancers, severely undervalue themselves at first, and charge too little in the name of winning customers. This is particularly common among entrepreneurs with a time-based pricing model.
Reputation – Service-based businesses face the difficult task of asking clients to trust them and take their word that they can deliver what they promise. Even with testimonials and referrals, you’ll need to prove your worth to prospective clients by establishing a strong track record.
In order to build credibility and maintain long-term client relationships, you might think it’s a good idea to accommodate all requests for customized packages and services.
Selling yourself – Most service-based entrepreneurs agree that selling themselves as their “product” is one of the most difficult things they had to learn when they started their business. Physical products are relatively easy to market, but a service is abstract, and, as mentioned above, it all comes down to your reputation and the level of trust you have with your clients.
Steep competition – One of the greatest upsides to a service business is that it’s so easy to get started. However, this can also be one of its greatest disadvantages. Just about anyone with your skill set can offer the same types of services you do, so making yourself stand out above the competition might feel like a constant battle.