5 blunders all new service-based businesses need to avoid
Launching a service-based business is so appealing to entrepreneurial folk, as they are the easiest to start with no capital. Any person can launch a service-based business simply by creating a website outlining their offerings and promoting it for free on social media. On the other hand, product-based companies must invest a ton of money into purchasing materials from vendors to create their items, manufacturing equipment, shipping supplies, and more.
Are you finally ready to launch the service-based business of your dreams? Congratulations! You are probably so excited to spread the word about your company, build your customer base, and see what the future holds. In my 10-plus years as a software developer and as the co-founder and operating partner of CiteMed, I have discovered some of the top problems that can hurt the progression of new service-based businesses. Ensure that you take heed and avoid the critical mistakes outlined below so that your new venture can thrive in the long run.
Not confirming there is a concrete market for your service
Wouldn’t it be a total bummer if you spend a ton of time getting your business ready to launch, only to find that no one is actually interested in buying your service? Yes, it sounds simple enough, but I’ve come across a number of entrepreneurs throughout my journey who wasted years creating a service that ended up not attracting any customers because there was no real need for it. So, trust me when I say this — do your research!
One way to do that is by reading any negative reviews that may exist about your service company’s potential competitors. The review writers may bring up issues they experienced and/or changes they wish your competitors’ services had. For example, maybe they wanted more reasonable price points, quicker replies to email inquiries, or a way to make reservations online. You can then use these critiques to ensure your service answers all the target customers’ needs and doesn’t have any of the highlighted issues.
You will know then that your service has a market, as these review writers shared what they desired in your service category in their reviews.
Underestimating the time needed to find leads and close deals
We get it — as a new entrepreneur, you want to see immediate sales right after launch. However, it is paramount to understand that it can take a lot of time and countless follow-ups to finally close your first deal. Also, a lot of service-based companies’ business is built upon referrals from peers and existing customers, so it is vital to put forth the time and effort needed to provide a top-tier service, make new contacts, and build relationships with those you would like to land as clients.
This can be a full-time job in itself! A lot of new service-based entrepreneurs give up on their ventures early simply because they get discouraged when the sales and client contracts don’t immediately start flowing in. You may need to attend networking events, ask friends and family for referrals, or join an online mastermind group for entrepreneurs who can direct you to new leads — this will take time!
Not being proactive in asking your customers about their needs
To really excel as a service-based business, it is pertinent to have a solid grasp of each one of your customer’s individual needs. After confirming there is a market for their service, many entrepreneurs make the mistake of just devising a one-size-fits-all service model. However, to really over-deliver and amplify customer loyalty, be proactive in asking every customer about the exact problem they are hoping to solve with your service. Then, see how you can tweak your service to better accommodate their needs.
You can do this right at the start of your service and then later, on a continual basis, by sending out a monthly email to your customers to see if they have any questions or need anything changed. It is so much better to be crystal clear on the problems you are solving and proactive in trying to help your customers instead of sitting back and waiting for them to reach out to you. They will really appreciate you going the extra mile to help them!
Not hiring staff soon enough
When you first launch a service-based business, you may think that you want to do it all to cut costs — you want to handle all the social media marketing, cold calls, website copy, customer inquiries … the list goes on. I did this myself in the early days of my entrepreneurial journey. However, looking back, I have realized that taking on all the various tasks only slowed our overall progress in exchange for barely increasing our short-term profit margins. It would have been much more optimal to focus on hiring and growth much earlier.
So, don’t make this same mistake! Right after launching, make a concerted effort to hire others who can answer general inquiries, do cold calls, and handle other time-consuming administrative duties so you can put a lot more energy into growth initiatives like following up on promising customer leads.
Not providing free value to attract new customers
Another way to attract new customers is by sharing helpful content and providing free value in addition to your paid services. This can be such an effective initiative for marketing and amplifying customer loyalty! For example, we invest heavily in producing in-depth white papers and guides on the regulations that anyone can benefit from, not just our current clients.
Leading with value is always the best way to build a brand relationship and recognition with potential customers. You can also provide free value in the form of informational newsletters, a YouTube channel with how-to videos, etc.
To wrap it all up
Now that you have your business plan all mapped out, ensure that your service-based company is nothing short of successful by avoiding make-or-break mistakes. These include not confirming there is a promising market for your business, underestimating the time needed to acquire new leads, and not hiring staff soon enough. Avoiding these big mistakes will be key in maximizing your company’s overall growth and success in the market. Now go out there and be great!
Ethan Drower is the co-founder and operating partner of CiteMed, which streamlines and optimizes literature search and review for medical device companies in the European Union.
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