How to Start a Service Business: A Complete Guide

The gig economy will account for over 50% of the United States workforce by 2027. The demand for on-demand services is rising, and different individual contractors and small business owners are leveraging the opportunities.

But if you want to earn decent profits and serve a specific section of the country, you must start a service business with the utmost passion and commitment.

So if you want to know how to start a service business, you’ve come to the right place. 

We will dive deep into the nitty-gritty aspects of starting and running a successful service business but before that, let’s understand the basics of service businesses.

What is a Service Business?

A service business is an organization that provides professional service support to customers. The key difference between a service-based and product-based business is whether you offer your clients something tangible or not.

If you offer your customers something they can’t touch, then it’s a service-based business. Different service-based businesses like delivery, HVAC, plumbing, construction, etc., are highly popular amongst the audience because of the evolving customer requirements and needs.

Offering quality professional services and establishing foolproof business planning can help you stand out from other successful entrepreneurs or service-based business owners and strengthen your presence in the industry.

To establish a successful service-based business, you must follow a few basic steps to help you unlock your true potential.

Step-by-Step Guide to Start a Service Business

1. Establish a business plan

Prepare a business plan to start a service business

Creating a business plan is imperative for your service business strategy. It outlines the path to your business’ success and reveals how aspects like working capital and branding contribute to a steady growth strategy.

A service business plan assists you in persuading business partners and financial institutions to back your venture and scale it to new heights.

Choosing the right business structure is a critical decision that should include a few basic sections.

  • Executive summary

    An executive summary contains an overview of the business plan of your service company. It includes the crux of different sections of the business plan like finances, marketing, hiring, services, market research, etc.

  • Company summary 

    The company’s goals and the different services you will offer to your clients.

  • Market analysis

    Here, you determine your service niche and work on your service offerings. The market analysis includes the market trends, forecasts, competitor research, and multiple other factors related to your service industry.

  • Strategy

    In this part of your service business plan, you strategize your sales strategy and set your business budget. It helps you set the foundation for future operational strategy and ensure that you follow a dedicated path to avoid troubles and confusion.

  • Personnel plan

    Within the personal plan of your service business, you outline how to hire service professionals and a management team.

  • Financial plan

    The financial plan helps you outline your financial projections, including your cash flow and projected business profit and loss. You also set your fixed rates, overheads, and profit.

For different sections of your service-based business plan, you should perform in-depth research and ensure that you cover all successful business aspects.

Understand the capital required to launch your service business and expand it. Besides the capital, check the vehicle and equipment costs,  advertising costs, and the overall business expenses for informed and better decision-making.

2. Get the required license

It’s important to acquire the required license to help you run a successful service business. You should ensure that you have a legal certification to operate a service business.

It can help you avoid legal troubles and establish a strong presence in the industry. Based on the niche of your service business, you might require different certifications.

You must research the basic requirements to establish a business from plumbing to HVAC, from electrical to construction service businesses. 

Also, the licensing requirements differ from state to state; you must check the relevant governmental agencies to start a new service business. Other requirements might include a bond amount and proof of professional liability insurance besides a business license or certification.

Check your state’s service business tax laws and choose the type of business you want to register with the established city government. You have multiple options like a sole proprietorship, business partner, or LLC to set up a solid foundation for your operations.

3. Analyze the price and profit 

An important aspect of running a successful small business is setting the right price and profit margins. Your service business idea can differentiate you from the business leaders if you have a competitive price.

Analyze your competitors’ business models and finalize the best pricing for your service business. Different niches and service requests have varied average prices; calculate your business expenses and add a genuine markup percentage to drive decent profits for your service business.

Choosing an effective pricing strategy while operating your own business. Analyze the pros and cons of choosing hourly-based or fixed pricing for your service business and calculate the overall expense for your business operations.

From operational to salaries, from overhead to insurance, you must cover all the expenses that can impact your business.

4. Purchasing the essential service equipment

You should avoid going to the hardware store whenever you need to handle a customer service request. You should equip your team with the required service tools to help them deliver the best customer experience. 

Also, control your equipment expenditure and don’t run out of funds to fuel other business operational sectors.

Based on your service business, you require different basic tools and equipment to help you scale your business operations. 

If you want to target the commercial sector of your service business, you need heavy and professional equipment, but if you target the residential sector, the tool and equipment requirements change and shrink.

5. Discover your target audience

Spend time analyzing the marketing conditions and your target audience. Focus on how your competitors interact with your target audience and what’s making them successful in catering to the audience.

Break down your target audience and focus on a targeted approach. Don’t go for the wider pool of potential audiences that requires a large ecosystem and operational cost.

Consider the potential clients who can be your primary source of income and understand their desires, wants, and pain points. It can help you compile your long-term and short-term marketing goals and strengthen your business ecosystem.

Understanding your target market minimizes the issues while engaging with your customers or converting your potential audience into leads or long-term customers.

6. Plan your financial budget

Service companies make generous profit margins, but having poor financial management, they can end up making losses. Your business needs to ensure that you set up a professional financial management ecosystem to help you achieve better business cash flow, revenue, and profits.

You must analyze the business startup costs, new tools, equipment, software investments, and other operational expenses. 

Integrate a professional financial management software that can create professional estimates, invoices, and purchase orders for your service business.

Strong financial management can balance funds outflow and in-flow and ensure that you run a sustainable long-term service business.

7. Spread the word in the market

Once you have strengthened your basics, you should focus on promoting and marketing your service business. Use a wide range of options and strategies that can help you attract potential customers and help you stand out from other small businesses.

  • Referrals and Reviews

    Being a service provider, you should focus on delivering quality customer service to your clients. Once done, don’t forget to ask for their reviews. Integrate a referral program that can incentivize your existing customers to onboard new clients.

    It can help reward your existing customers for positive word-of-mouth marketing that can help scale your business operations and build strong relationships with your clientele.

  • Creating a Membership Plan

    Create a membership plan for your business and offer great service discounts and offers to special membership holders. It can help you create a special community and increase the value of your service business.

    A membership program can be a great starting point for your current and potential customers to get special access to your business services. A membership plan can help you retain your existing customers and minimize the cost of client retention.

  • Follow-up Calls and Emails

    Ensure that you follow up with your potential clients after the first interaction through different marketing channels. Train your sales and marketing team to try different things to entice the cold or warm target audience into becoming long-term clients.

    Many new entrepreneurs and businesses avoid following up via email or a call, which can result in losing the potential client and a lucrative business opportunity.

  • Networking Groups

    You can join different networking groups, which can help you attract more clients and business revenue. Focus on building a strong community and business presence in your service industry that can help you scale your business to new heights.

  • Collaborations with Local Contractors

    If you have minimal office space, startup funds, or other limitations to handle different large-scale commercial projects, you should focus on associating with different local contractors that can help you handle the desired requirements.

8. Strengthen online presence

Set a professional online presence using the same business name as your registered business. You can ask for financial investment from different financial institutions to fuel your online presence marketing efforts if you don’t have the budget.

Starting a service business and establishing its strong online presence requires shortlisting different effective digital marketing strategies like search engine optimization, online reviews, social media, Google Adwords, professional website, etc.

Create quality content, invest wisely and ensure that you can improve your online presence in the digital era to achieve your desired business goals.

Once you implement different online marketing strategies, you can cater quality service to clients who want to avail of your services.

You must ensure that your team delivers excellent services to new customers that can cover expenses and drive great profits.

Integrate professional field service management software to help you manage your team and control your service operations. Professional software can boost your service business efficiency and strengthen your new business.

You can schedule service requests, dispatch your team, and get their real-time information for better business operations. 

But choosing a quality field service management solution for your service business can be overwhelming and time-consuming. Our team has selected the best management software for your service business to help you bypass the break-even point and build a business worth millions of dollars.

Manage and Grow Your Service Business

Go with FieldCamp or Waste 100’s of $$$ on Service Software with features that you don’t even use.


A service-based business focuses on assisting a customer in solving a problem by either physical or virtual means. A product-based business focuses on manufacturing and providing customers with a particular product based on their requirements and needs.
Successful service business requires establishing a business plan, acquiring the required licenses, understanding the industry, competitors, and audience, and marketing the services with finesse. Apart from these key aspects, other factors are also important for a full-time business to stand out from competitors and succeed.
A service management software helps to automate the service operations and helps to deliver an on-time, professional service to your first customers. The software provides access to a powerful dashboard that offers multiple features and options to enhance service efficiency and achieve new business heights with finesse.

FieldCamp Can Simplify Your Service Job Processing

A professional scheduling service software, FieldCamp, streamlines your service business operations and helps you automate the management ecosystem. 

You can schedule the service requests based on your team’s availability and create a robust communication link between the on-ground and management workforce.

You can also manage a segment of financial management by creating quick invoices for your clients to help improve the customer experience. 

Access the FREE 7-day trial and transform your service business. 

Author Bio

Gaurang Bhatt

Gaurang Bhatt is a techie in himself with an ability to solve problems technically and present solutions in the form of a product. He is one of the pioneers to curate FieldCamp with his 15+ years of knowledge and expertise in providing solutions to home service industries. Gaurang aims to overcome challenges faced by service business owners through software solutions and blogs.