A service business is the best type of business to start as your first business. Period.
Not only is it very likely that you’ll succeed, but you’ll learn countless valuable lessons that can be applied to any future venture.
One of the most important things you’ll learn is that what drives success and profits is often counter-intuitive. What you think would work often doesn’t. And what you think will hurt your business, often helps (See tip #2 for an example).
Typically my content is directed toward the handyman business, and this is no exception. However, this article applies to any service business out there. It is the knowledge that I’ve learned while running my handyman business. Take this advice and apply it with your own unique style and you will soon be reaping the rewards of running a successful service business.
Tip #1: Leverage your competitive advantage
In other words, find a way to be unique. Doing so will help you stand out from the competition and help you avoid being viewed as a commodity.
A competitive advantage can be a variety of things and doesn’t have to be anything crazy, but it must appeal to your target customer.
Are you fast? Are you cheap? Do you offer quality that you can’t get anywhere else? Are you environmentally friendly? Are you trustworthy? Do you have immediate availability? Are you easier to work with in some way? Do you package your services in a unique way that your customers will love?
One way I differentiate myself as a pro handyman is to talk about my past engineering career. People seem to like that and view me as a better option. It gives me more credibility.
Now, if you aren’t doing at least one thing better than your competitors, then you risk being viewed as a commodity. At that point, the only way to differentiate yourself is with a lower price, which is the best way to fail in the service business.
Low prices only work if you have a breakthrough in efficiency (you can do things faster or with fewer resources than the competition). For a small service business, low prices usually just mean low profits. So don’t try to make price your competitive advantage unless you are faster in some way.
Once you identify your competitive advantage, and you’ve made sure that your ideal customers actually care about it enough to influence their decisions on who to hire, it’s time to leverage that advantage with your marketing.
Any time you create an ad or any type of marketing, you’ll want to feature that competitive advantage. That could mean in your logo, on your website, on your business cards, and everywhere it makes sense. You really can’t overdo this. You may get bored talking about it, but as long as it keeps working, keep focusing on it.
Basically, find a way to be better than your competition in one area and focus on promoting that. You don’t need to be better at everything, either. Just find one way to be different.
Tip # 2: Know your customers
This is hands down the most important tip on this list.
I don’t mean that you need to know your customers personally. I’m just saying that you need to understand who they are, what they want, and what motivates them to make a purchase.
One of the biggest mistakes new service pros make is trying to appeal to too many different customers. This is one of those counter-intuitive things I mentioned above. It seems like it would make sense to appeal to everyone because it gives you more people to sell to. But what happens is you end up being a mediocre solution to everyone, instead of the best solution to one defined group of people.
It’s far more profitable (and enjoyable) to be considered the best solution for one group of people. Of course, it would be best to be considered the best solution for everyone, but that is nearly impossible to do. If you try, you’re profits and sanity will suffer.
Design your service to fill a need of a very specific group of people that you have defined very clearly. One example of filling a need for a handyman business would be to specialize in home modifications for the elderly (installing grab bars, easy access tubs, and other devices). Your target market would be pretty clear in this case (the elderly). Now, just ask yourself how you can reach these people with your service, and how can you provide them with exactly what they want.
The best way to get to know your customers is to ask questions. It seems simple, but not enough service business owners do it. Most people just make a bunch of assumptions based on their own biases. This limits their ability to identify new opportunities to differentiate themselves and stand out.
Try to ask good questions. Asking your customers to rate you on a scale of 1-5 will tell you whether or not you suck, but you’re not going to gain any insight on how to improve.
Here are some good questions to ask:
- Why did you choose me?
- What is your biggest challenge when hiring a handyman (or fill in your service)?
- What are the most important things you look for in a [insert service pro title]?
- Can you think of any small ways I can make my service better suit your particular needs?
Ideally, you can ask these questions in person in a conversational way without putting the customer on the spot. But, this can also be done with a follow-up survey.
If you actually do this, it will make a world of difference in your understanding of your customers, and the more you understand your customers, the easier everything in business becomes.
For more on getting to know your customers, here’s an article on targeting the right customers.
Tip #3: Effectively market your services
This is probably the most difficult piece of the equation while learning how to run a service business. But, If you’ve done your research and know your customers, it will be far easier.
In order to effectively market your services, there are two things you’ll want to do:
- Find a mentor
- Test different strategies and track the results
Finding someone else who has already done what you’re trying to do and learning from them is the ultimate cheat code. It will save you immeasurable amounts of time, stress, and effort.
But, taking advice from others doesn’t mean everything things will pan out for you in exactly the same way. As a business owner, you’ll realize that every situation is slightly unique.
This is where testing comes in.
Look at each investment in marketing as a test. Measure how much you are spending and track the results. Don’t just use a rough feel of what’s working, because you’ll often be wrong. Do your best to track where each customer came from.
By testing different methods and then tracking the results, you can improve on the ones that are paying off and drop the ones that aren’t, allowing you to save time and money over the long run.
This can be tricky, however, since some methods of marketing will take several months to start working. A website is an example of this. You may set up your website and do some SEO, and not see any results for two months, then six months down the road, it will be driving dozens of free leads every week. Other methods, such as craigslist or paid ads can bring in customers immediately.
A good mentor will help you to identify when to know if something is working or not.
Also, don’t be afraid to “waste” money on marketing. You can’t expect every marketing method to work. The only way to know if something works is to test it.
Here is a list of marketing methods that I would start with:
- Get some business cards made (too easy not to).
- Build a website and learn SEO.
- Sign up for the free online business directories.
- Pay for leads on Home Advisor, Thumbtack, or Angi.
- Post several ads on craigslist and update frequently.
- Solicit online reviews from customers.
Tip #4: Technology is your friend
While running a service business, you will find yourself doing much more than just the service you intend to offer. There is accounting, marketing, quoting, setting up accounts, payroll, handling legal matters, etc. I think you get the point. There is a LOT to do.
So it’s important to utilize technology wherever possible to automate tasks. If you have a task that you think should be easier, chances are that somebody else has figured out a way of making it easier and will be more than willing to sell you their software.
When I have something that takes me too much time, I go straight to the app store for a solution first. If you still aren’t using a smartphone, you better get one before you try and run a service business. Otherwise, you will be at an immediate disadvantage.
At a minimum, you’ll want some software to manage customers (CMS) and accept credit card payments. But the options are endless.
Tip #5: Build your list
What do you think is the most valuable asset of a service business? It’s not the vehicles or website or even the company brand. In most cases, the most valuable asset of a service business is the list of loyal customers’ information.
Think about it. These people already paid you for your service. They are your target market. This is the group of people that is most likely to hire you again.
If you have their information, you can continue to communicate with them. If business is slow, throw together a quick deal and send an e-mail out to your past customers. Bam, instant business!
Every time you provide a service to a customer, get their name, number, address, and e-mail and add it to your list. Even if you are not ready to send out e-newsletters and continuously market to them, start building a list from day one and protect that asset.
This is one of the best tasks to automate with technology. You can use tools like Aweber or Mailchimp to send emails, or you can use one of the many CMS out there that have the ability to send texts and emails.
It doesn’t even matter which tool you use. You could even call past customers on the phone as a way to fill your schedule in a pinch. I’ve done this many times, and it never fails as long as you approach it in the right way.
Conclusion
If you follow these five tips and work consistently, you will be off to a good start. In fact, you won’t be able to avoid growing your business.
However, the one and only true way to learn how to run and service business is to actually do it. You can read and watch videos about it all day long, but there is nothing like real-world experience.
