How to Start A Service Business on A Shoestring Budget
Are you considering starting your own service business?
The benefits of business ownership are intriguing–you get to be your own boss, make your own hours, and work on something you truly love. Plus, no more worrying about having your hours cut or getting fired. Despite the lucrative advantages, to start a service business might seem like an expensive enterprise. Costs can soon mount up and you may find yourself quickly burning through money before earning any from customers. But by keeping a tight lid on expenses and adding a dash of creative thinking, it’s possible to start a business on a shoestring budget. How? This blog is going to spill all the secrets and give you a complete, step-by-step guideline to kickstart your own company. Just follow the lead.
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Before we start discussing the trade secrets, let’s take a look into some of the basics so that you have a better understanding of what you are going to deal with next. Let us start with the basic question– What is a service business?
Service Business: Definition
A service business is a business that sells services directly to consumers or other businesses. Services are intangible in nature, only appearing when required by the consumer, which makes the nature of this type of business very different from that of others. Some examples include plumbing, lawn care, appliance repair, computer support, health care, utilities, business services, real estate, legal services, and so on. The purpose of service businesses, therefore, is to provide customers with required services, instead of a product.
Service Business: Scope and Profitability
Service businesses can make just as much money as the most successful product businesses. If you’re thinking about starting a business, more specifically a service business, you’re part of a growing workforce demographic. Experts disagree on the exact size of today’s gig economy, but current researches suggest that the population of independent, service-based business owners made up as much as 34% of the total U.S. workforce. Moreover, Most service businesses, if run correctly, can generate a gross profit margin of 60–70% which is astounding. But here’s the catch. You need to run the business correctly. That is to say, you need to make a careful strategy and stick to that, ensuring that the strategy is being executed to the T. Currently, there is a substantially high level of potential for entrepreneurs to leave a mark with new service business ideas. The market is valued at an all-time high of $657 billion in the US alone, which is a high-potential area with lots of room for you. So, if you play your cards right, you will start earning profits in no time.
Service Business: Estimated Budget
When determining business startup costs, it’s important to be realistic. Things like office space, legal fees, payroll, business credit cards and other organizational expenses can really add up. According to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000. However, there are various types of expenses to consider when starting your business. You need to differentiate between these costs to properly manage your business’s cash flow for the short and long term
In case this seems beyond your budget, don’t worry. There are still ways to make it happen within your budget. All you need to do is identify the essentials, and spend on things that are absolutely necessary. Here is how you can achieve your goal.
Table of Contents
1. Decide What Type of Service Business You are Going to Start
To start a service business, your first step should be determining what route you are going to take. That is, decide what business you are actually going to do. Start by researching the kinds of business sectors there are, then look at the specific businesses and what they provide. When researching, note the aspects of these businesses that you like and the aspects that you find less appealing.
Market trends are good indicators of what products customers want, but you can also use trends to predict what products or services customers might want in the future. Use online resources and social media to find out which products are currently popular, and then try to predict what similar or new services would be useful to consumers. These predictions can help you decide which business type would be profitable for you. For example, you might consider the following list of service businesses:
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2. Write Up A Business Plan
A clear business plan will serve as the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. To explain, you will figure out the specifics of your business and discover some unknowns with the help of your business plan. More specifically, your business plan will create a mission for your business that how you will go forward and what are the things you must consider for starting this business. It helps you outline your current and future goals. Successful businesses use this as a resource to organize the direction of their company. But most importantly, a clear business plan will assist you in securing funds and applying for loans, if necessary. For this purpose, your business plan must include the following items:
- Executive summary
- Business description
- Market segmentation and analysis
- Sales and Marketing strategy
- Competitive analysis
- Product and services description
- Financial projections
- Pricing Strategy
3. Name Your Business
Before you enter the market, you need to choose a name for your business. Make sure that to start a service business name is both professional and unique, something that stands out from the pack. Try to think outside the box and give a unique, memorable name to your business. This will also help you create your own website going in the future, especially when you try to up your digital marketing efforts. But no matter what name you choose for your business, make sure to look up and confirm that no one else is already using the name. Else, this will be a problem when you try to register your company.
4. Make It Official
Once you’ve worked hard researching your idea and know it has the potential to last in the market, it’s time to take your business to the next level by making it official. First of all, decide the legal structure for your business, i.e., sole proprietorship, partnership, LLC, or corporate. Once you have narrowed down on this, register your business with your state. This gives you legal grounds to move forward using your brand’s name, both online and offline. Then, apply for the necessary licenses and permits. This depends on the nature of your service business, for different businesses require different kinds of permits to operate. But no matter what type of business you start, don’t forget to get a tax ID from IRS. You’ll also need this to open a bank account and a business credit card. Furthermore, if you are planning on hiring employees for your business, make sure to get an Employee Identification Number (EIN) as well. Most of these are available for free, so you don’t need to worry about costs or budget.
5. Brand Yourself and Advertise
Before you start selling your product or service, you need to build up your brand and get a following of people ready to jump when you open your doors (literal or figurative!) for business. For this, however, you need to have a sound marketing plan. And in today’s time, there is no better way to promote your business than digital marketing. Start by building your own website. Many customers turn to the internet to learn about a business, and a website is a digital proof that your small business exists. It is also a great way to interact with current and potential customers. This will increase your brand value.
Another great way to promote your business is to leverage social media. Use the platform to spread the word about your new business, perhaps as a promotional tool to offer coupons and discounts to followers once you launch. The best social media platforms to utilize will depend on your target audience.
6. Buy Necessary Equipment
No matter what service you decide to provide, you will need some equipment. This depends on a number of factors, but the most important ones are the nature of your business and the number of technicians you will have. If you are planning to hire employees, you will need to buy tools according to their skills and specializations. Also, you will need a vehicle to reach the job sites.
7. Automate Your Business
This is the most effective trick for efficient service business management. If you want to make the most of your resources with minimum investment, automate your processes with software solutions. For example, you can systematically schedule technicians for work orders using the scheduling software for service business. These digital tools add transparency and efficiency to your business operations, reduce overhead costs, prevent revenue leakage, speed up cash flow, and improve customer satisfaction.
While there are various kinds of software solutions and mobile applications available to automate your service business, they come with a price. And purchasing all of them will cost you a fortune. A more budget-friendly solution in this regard is to sign up for field service management software such as Field Promax. It gives you all-around automation support for your processes at a very low cost while offering you every useful feature that you might expect from a leading field service software.
For more information on features and pricing, Contact Field Promax.