20 Tips for How to Make Money with a Service Business
A year ago, I started a web video production service. In that time, I’ve turned it from an idea in my head into a profitable and quickly-growing business.
Below I’ve compiled what I’ve learned – 20 tips based on my worst mistakes and biggest triumphs. You can learn how to run a successful service business much more quickly than I did by reading on.
People like to do business with someone they know.
My company’s first client was someone who I had met a few times through our shared publishing company. Since he knew me, he was willing to take a chance with us even though we had never made a commercial video. Fast forward a year and our most recent client is someone I met through a small business development group.
In fact, nearly every single client I’ve landed has come from my personal network.
If you’re having trouble finding work, you could double your marketing efforts, redesign your website, or reconsider your sales tactics. But it would probably be a lot easier and more effective to change your networking habits. It’s as simple as becoming more involved in your community, going to events, or joining an organization.
#2 Recurring Work is the Best Kind of Work
If you keep landing one-time jobs, you’re always going to be looking for new clients. That’s fine when you’re just starting out, but it makes growth very difficult.
Recurring business is a foundation that allows you to hire full-time employees and spend less time pursuing new accounts. So start thinking of ways that your clients could benefit from receiving your service month in and month out.
#3 Under Promise, Over Deliver
Good companies meet their clients’ expectations. Companies destined for greatness so exceed those expectations that their clients jaws hit the floor.
That means pulling all-nighters to put on that last coat of polish and add features that your client never paid for. That’s the type of service that earns you repeat business and word of mouth referrals.
#4 Get a Contract
A company contacted me last fall through the contact form on my website. Over the course of a few emails, we discussed a video for their home page and agreed to terms. But I didn’t get a contract from then.
Long story short, this was a big mistake. Trust me when I say that if you can’t get somebody to agree to a contract, then you don’t want to work with them.
#5 Don’t Overpay Yourself
You start a business to make money, but if you’re personally taking every penny of profit then you’ll have nothing left over to invest in your business.
Think of your business as a hard-working member of your team who needs to get paid just like everyone else. My partner and I divvy up our earnings 1/3 for him, 1/3 for me, and 1/3 for the company. This policy has allowed us to invest in better equipment and pay contractors for projects up front.
Obviously, you need a salary that pays for the bare essentials. But the more you invest in your company, the sooner you’ll be able to make a salary befitting a CEO.
#6 A Good Partner Can Be Your Best Asset
Taking on a business partner means splitting the ownership of your company in half. But the right business partner will more than double the company’s profits, so it won’t matter.
#7 Ask Questions
I’ve developed a list of questions that I ask all of our new clients: What’s your company’s story? What are the biggest objections of your prospective customers? What is the specific action that you want a viewer to take after viewing your video?
The more you know about who a client is and what they want, the better you’ll be able to help them get it.
#8 The Customer isn’t Always Right
Don’t get me wrong. You should bend over backwards to make your customers happy, even when they’re being a little bit unreasonable.
But often the customer is wrong about how you can best help them. When your client thinks you should do something that you know isn’t in their best interest, it’s your duty as an expert in the field to put your foot down.
Don’t tell them that they’re wrong. Take their idea into consideration and then explain the way you envision doing things. They’re hiring you for your expertise. After they hear all of the well-informed benefits of proceeding your way, they’ll forget they ever had a different vision to begin with.
#9 Do Something You’re Willing to Stay Up Late For
Last week, my partner and I were finishing up a video project on a limited schedule. Looking back on it, I realized we had been working 10-14 hour days.
But we hardly noticed the long hours while we were putting them in because we were so thoroughly immersed in all the creative and technical challenges of producing an animated video.
It’s a tired point, but it’s true: do something you love and you’ll actually be able to put in the necessary work.
Examples of service businesses: Photographer, graphic designer, web designer, portrait artist, video producer, marketer, social media specialist, content creator, freelance writer, copy writer, app developer, digital marketer, personal trainer, consultant.
#10 Choose a Growing Industry
With a commitment to excellence, you can start a thriving service business in any industry – even if it’s on the decline.
But why not choose a fast-growing industry? Starting a company in a growing industry is like running downhill. There are more clients and fewer competitors.
#11 You’re only as Good as Your Portfolio
When you’re trying to land a client, it doesn’t matter what you’re capable of doing for them. It matters what you’ve proven you can do. So the more impressive and diverse your portfolio is, the easier it will be for you to get lucrative work.
Think of each project as an opportunity to enrich your portfolio. You may find that this influences what type of work you take on and the quality of the work.
If you’re looking for your first project, then you’ve got nothing to prove your value. So you may need to work for free just to get started.
#12 Get Feedback
Have you had someone tell you that you’ve got a piece of food stuck in your teeth?
It’s an awkward moment, but my guess is you were happy they let you know so that you could do something about it.
The same concept applies to a service-based businesses. You could be making an embarrassing mistake with your clients or letting them down in an important way, but you won’t know unless they tell you.
That’s why you ask. I have a ‘Client Feedback Survey’ that I ask companies to fill out after I’ve worked with them. One of the questions is, “How could your experience with this project have been improved?”
#13 Ask for Endorsements
Our ‘Client Feedback Survey’ kills two birds with one stone because another question on it is, “What would you tell a friend who’s thinking about employing our services?”
The answer to that question usually makes for a great endorsement. To a prospective client, there’s little more persuasive than reading a hearty recommendation from someone who just worked with you.
#14 You Don’t Need an Extravagant Website
A website is a huge asset for any business. It’s both a place to provide helpful information for your current clients and a virtual salesperson that works 24 hours a day.
But for most service businesses, a fully-featured and robust website isn’t necessary.
Ideally, the site would have a blog, a login area for clients, and rank at the top of Google for ‘video production company’. But for now, it’s serving our purposes elegantly. It’s a place people can go to learn more about our service and it garners unsolicited leads every month.
#15 You’re Always Looking for New Clients
It’s good to feel a sense of satisfaction when you land a new client.
But don’t let that fool you into a false sense of security. If you stop pursuing more clients just because you have a project on your hands, then you’ll have no work when the project is complete. That means you’ll probably have costly dead time before you get another contract signed.
Always be looking for your next client – even if your company’s next availability isn’t until six months out.
#16 Don’t Expect to Earn a Full-Time Income Right Away
I don’t think any entrepreneur should expect to make living wages their first month of business. Or their second. Or their third.
It’s possible, but it also puts a ton of unneeded pressure on you and your business. Worse still, the desire to make lots of money up front could cause you to skimp on essential investments or rush through projects that deserve your full attention.
I recommend that you start a service business when you either have another source of income, like a part-time job or a healthy nest egg in your savings account. That way you can give your business room to grow at its own pace – and you won’t go hungry if a client is unexpectedly late on their payments.
#17 Your Primary Job isn’t Providing the Service
I run a video production company, but I spend less than half of my time making videos.
I spend more time meeting with current and prospective clients, developing business materials, establishing systems, and doing the million other little things that come with running a successful business.
If you want to spend all of your time providing a service, then you should become an employee. Only start a business if you’re ready to be a business person.
#18 Always Be Learning
Whatever your service, you can – and should – be doing it better.
Don’t take your improvement for granted. Actively get better by seeking out training videos, reading relevant books, and challenging yourself with each new job.
#19 Hire Character, Train Skill
There’s nothing more important to the growth of a service company than the quality of the people that you bring on board. But while it’s a good idea to hire people who are technically great at what they do, that shouldn’t be your number one priority:
“Over my years in business, I have had a saying when it comes to hiring: Hire character and train skills. Everything worth doing is done on a foundation of integrity and honor.”
Ross Perot, Founder of EDS
Integrity, honor, reliability, work ethic, adaptability, passion, and the desire to learn cannot be taught.
#20 Nothing’s More Important than the Quality of Your Work
There are no small contracts, only small companies.
If you treat each $1000 project like a $1000 project, then you’ll keep getting contracts for $1000. But if you start treating each $1000 like a $10,000 project, then pretty soon reality is going to catch up to the quality of your work.
See each new project as an opportunity to make a statement. Nothing will accelerate the success of your service business better than excellent performance. You never know who may see your work or when you’ll get a big break.