For entrepreneurs, service businesses are a very enticing way to break into the world of business ownership. You don’t have to handle inventory, shipping, suppliers, returns, and more because you don’t have a physical product.
But just because service businesses have a lower barrier to entry, that doesn’t mean they are effortless to grow. Many service business owners hit a wall at some point. They have grown their company to a decent size, but struggle to scale it no matter what they do.
In this post, we’ll look at 4 strategies for how to scale a service business. First things first, though. Let’s make sure your business is actually ready to scale up to the next level.
How To Know You’re Ready To Scale
Often, we find out it’s time to scale just a little bit too late. You’re so overwhelmed with work that the thought of trying to expand further seems impossible. But it can be done, and it will be worth it. Here are a few signs that your business is ready to scale.
- You have more work than you can handle. If you are receiving so many orders that you can barely keep up, that’s a good indication that it is time to think about growing your team and streamlining your processes.
- You have a steady stream of work. Before you think about scaling, make sure that your flow of new customers is steady and predictable. You don’t want to go to the effort of scaling only to find it wasted when work slows down and you suddenly have built up a team and established processes that you can’t actually use.
- You have a strong desire to push to the next level. Finally, don’t neglect to consider your mindset. Are you ready to tackle new challenges? Are you ready to see your business transform? Are you ready to step out of the day-to-day tasks and focus more time on strategy?
4 Strategies To Scale Your Service Business
Okay, if you’re sure that now is the time to expand, here are some of our most important tips for how to scale a service business.
#1 Think Like a Product Business
In other words, package your service as if it were a product. Customers are going to be buying a tangible set of outcomes rather than just hiring a professional. This can work for pretty much any type of service:
Instead of hiring a writer, customers are buying monthly blog management.
Instead of paying a plumber $40 an hour, customers are paying $200 to get their leak fixed.
And so on.
By packaging your services as a complete “product” you can focus solely on delivering that specified package to customers. This will cut out the amount of time you need to spend creating custom quotes, reduce back and forth communication before orders, and make it easier to develop procedures and hire staff to take care of the work for you.
#2 Charge More (Or at least re-evaluate your pricing)
You might be thinking, “Raising my prices is going to make me LOSE customers!”
And you aren’t necessarily wrong. But you aren’t necessarily right either. There are generally two results that come from raising your prices (if you do it correctly):
Outcome 1: You lose some of your customers, but your revenue remains about the same because of the higher prices. This is a net gain because of all of the time you have won back.
Outcome 2: You don’t lose many customers, and your revenue skyrockets. All of a sudden, you have a lot more cash flow that you can use to hire staff.
The less common result of raising your prices is that you lose so many customers that it is a net loss. This typically will only happen if you are trying to charge far above the market average without providing the value to justify it. If this does happen, you just need to experiment with pricing options until everything evens out.
So why is raising prices a part of scaling your service business, anyway? Because it cuts dead wood. You’ve already got a steady supply of customers, hopefully many repeat ones. Raising your prices gives you a chance to get rid of the clients who aren’t devoted to the value that you have to offer. You’re left with a strong, supportive base that you can grow as your business expands. And the new customers you attract in the future are far less likely to be tire kickers.
#3 Outsource The Right Way
Scaling your service business means you are likely going to bring on more hires and contractors. By outsourcing tasks to freelancers on a trusted platform like Legiit, you are freeing up your own time and increasing the total number of new customers you can take on.
Scaling is all about creating systems for growth. So if you have a foolproof system of hiring staff as your business expands, you’ll never need to worry about drowning in too much work again. Here are some tips to keep in mind when outsourcing work:
- Don’t scrape from the bottom of the barrel. Your employees are worth more than five dollars. If you want quality work, you need to pay top dollar. As long as you are still making a good profit in the end, it’s in your best interest to employ experienced freelancers and pay them well so that they will stick with you for the long haul.
- Don’t let your staff grow stale. Sometimes, business owners struggle with getting the same quality work from their outsourced staff over time. New hires produce top quality work to stand out. But as the months go on, their work grows stale. So be sure to create systems for evaluating work and encouraging growth. Ideally, your staff’s work should get better over time, not worse.
- Treat outsourced staff as part of the team. Just because they are contractors doesn’t mean they aren’t a part of your team. Invite them to company events and meetings, get to know them, and form a relationship. At the same time, make sure you don’t overstep your bounds by expecting too much from them outside of the work they are contracted to perform.
#4 Develop Solid SOPs
Your standard operating procedures (or SOPs) are what let the business function smoothly without you micromanaging every little task. Good SOPs are generally written down in step-by-step order (with examples). Often, you’ll also want to create training videos to illustrate particularly technical steps. You might employ checklists, spreadsheets, or project management software like Trello in order to track progress on various procedures.
Solid SOPs let you create a well-oiled machine in which every single member of your team knows exactly what to do and when to do it. Depending on how big you are scaling, you may also employ managers who are in charge of overseeing these procedures so that you aren’t even involved in assigning tasks.
Don’t Fear The Scale!
We’re not talking about losing weight here. You don’t need to be afraid of growing your company to its full potential. And now that you’re equipped with these tips for how to scale a service business, you have everything you need to get started.