How to Grow a Service Business

You've started your own business, offering a great service to your customers. Now you want to go to the next level. The idea sounds reasonable enough, but before you go after your goals, you have to define them. You also need some way to look at the strategy behind how you'll grow. You need a plan.

Entrepreneur and instructor Beth Hagan compares the situation to a woodsman who refuses to take the time to sharpen his axe, despite it is slowing up his work. "Stop, sharpen your axe," Hagan says. "Get your plan on paper and then proceed because life will be much simpler once you've got a plan."

Hagan, owner of Bonita-based Marketing Program Management, is one of several instructors who teach workshops for small business owners at Florida Gulf Coast University Small Business Development Center. The current range of classes covers topics from advertising to taxes, the Internet to franchise planning.

Hagan, a business instructor for more than 20 years, says there are systematic, proven ways to grow a service business. They involve looking at the big picture and writing down a realistic approach to achieve results.

Characteristics of Service Business

Understanding how a service business is unique will give an idea of how to customize your business plan. Take a look at how your service fulfills the following characteristics:

Services have a complicated nature of distribution -- A service business can have many different and complicated channels of distribution. Customers may come from many different places, including word-of-mouth referrals. A speech pathologist for example, could get referrals from a doctor, a hospital or another speech pathologist who specializes in a different type of customer.

The trick, says Hagan, is to target one particular source. "You got to find a way to zero in and make it chewable, and then move on."

You can not stockpile services -- A grocer can keep an extra amount of tomato soup on hand in case there's a sudden strong demand for it. A service provider, however, can not keep a stockpile of services. There are a finite number of hours you can perform your service.

Services are intangible -- You can not see or touch your service, because you are in reality selling an expertise or a feeling. "Clients hire you because you're competent," Hagan says. "They feel they can trust and work with you."

There is a range of how tangible a business can be. At the very tangible end is a good like salt. At the other end, very intangible, is consulting and teaching. Intangibles can be subdivided into services for people (massage therapy) and for things (repairing computers). In either case, though, what the client really is looking for is skill.

There is no comparative measure of service quality --There are few standardized ways to measure how good a service is. That reality becomes important when considering your clients. Unhappy clients may not complain but they may go elsewhere and will usually complain to other potential clients. "It costs 10 times more to acquire a new customer than it does to keep an existing one," Hagan says.

A way to show customers you're interested in quality is to make a quality of service guarantee. The guarantee need not be formal - it could be a sheet of paper on the wall signed by yourself and your staff. The message is that you will make up for what the customer is not satisfied with.

Determining prices is relatively easy -- You can price your service on what other service providers charge. But you can often charge more than the going price if you specialize in a type of service. A personal trainer, for example, may command a higher price if he or she specializes in middle-aged women who want flat stomachs.

The Plan

Once you've considered the characteristics of your service business, it's time to write a plan. It's wise to allow six to nine months for it to begin working. Then evaluate how well it is working and what may need to be changed.

First you have to choose your target client group. This can be accomplished one of several ways --you could segment your business based on geographical boundaries a specific type of industry or demographics. You can also look for a niche, something that captures a segment of the market. Hagan says she found her own niche when she started a marketing service for attorneys. "Nobody else was doing it except me," she says. "And in six weeks I had a full practice."

You'll also need to size up the competition, which could be in the form of primary (businesses that perform the same type of service), secondary (businesses that perform slightly different services or infrequently as part of another service) and indirect (businesses who provide different sources). Another aspect to consider whether or not your business is likely to be as strong in five years as it is in two. Every industry has a life cycle. Some are just longer than others.

Consider what the p's are in your business. Product, place, price and promotion all go hand-in-hand with how you go about selling your service. Customers are looking for the right mix of the factors for the service they get. Crest toothpaste and Close-Up toothpaste, for example, may be very similar in function. Their targets are not. Crest, geared toward family use, markets with factors like reducing gum disease. Close-up, geared towards young singles, is marketed with the claim of whiter, more attractive teeth.

Once you get your pen to paper, make out a specific list of objectives, the goals you want to obtain. How many months do you want the plan to cover? What is the primary objective, and what goals do you need to meet to achieve it? What are the secondary objectives and their goals? A Realtor, for example, may want to establish 12 new foreign accounts within six months. A specific goal to achieve the objective would be to participate in a minimum of 10 organizations to network.

You also need to choose the tools for achieving the goals. There are several options including announcements, direct mail, personalized letters, open houses, seminars and parties. Make sure to carefully choose the tools and become educated how each works. Direct mail, for example, will take six repeated mailings before potential clients begin to pay attention.

Then you must choose what tactics to use. The first is interaction. Make up a planned schedule of when you are going to invite a contact to lunch, attend or sponsor meetings and send notes. Include specific times, the names of those who might attend and the cost of the event.

Clubs and organizations are a great way to network and should be included on your list. There are hundreds of opportunities in Collier and Lee Counties, thousands in the state and nation. And if you can't find a club tailored to your needs, why not start one?

The next tactic is participation. Put each event on your personal cal