How To Start a Service Business [7 Actionable Steps + An Expert Tip]

Starting a service-based business requires a different approach than launching a product-based business. You have to decide which services to include, what charges to keep, managing finances, team building, and event marketing.

In this blog, we have shared a step-by-step guide on how to start a service business from scratch. So, let’s get started.

What is a Service Business?

A service based business offers professional support from a team of experts for delivering the best services to customers. Such a business does not include any product as a physical one, but it’s helping third-party in different areas.

The service businesses are associated with physical activities, but with the invention of new technologies, services are now delivered in the form of web-based systems or mobile apps.

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How to Start a Service Business? – A Quick Guide

7 Steps on How to Start a Service Business

Step 1: Provide Services That People Will Pay For To Your Company

The foremost step for starting a service-based business is to analyze and enlist the list of services you want to include in your business.

Generally, there are a considerable number of services available in the market for service businesses. Some of them are:

  • Pest control
  • Physiotherapy service
  • Plumbing
  • Roofing
  • Snow removing
  • SPA & salon
  • HVAC
  • Landscaping & lawn care
  • Automotive
  • Beauty service
  • Car wash service
  • Cleaning
  • Electric service
  • Fitness coaching

In the initial stage, you can make use of any of the core services mentioned above to start your new service business.

An alternate solution is to do market research on the local areas and understand the customer’s requirements. Then, based on the information collected, you can start your business by concentrating more on that service.

One of the facts is that there is no limitation on services you offer; the only thing that matters the most is that the services must impact your customer’s needs. So, take your mind to do detailed research on your idea to ensure a robust market and financial services.

Step 2: Come Up With a Business Plan

For starting a service business, proper and detailed business planning is a must. You will have to analyze the industry and competitors to understand their working environment.

Once you know the requirements, you need to search for the missing factors and include them to find the best for your service business ownership. Then, ask the following questions when creating a successful business plan:

  • What are the costs involved in opening this service business?
  • What are the ongoing expenses?
  • Who is the target market?
  • How much money will this business generate?
  • How can you charge customers?
  • What is the plan to grow your service business?
  • What name will you pick for your business?

By answering such questions, you can quickly initiate your service business.

You can avoid common mistakes by taking help from someone already running the service business for a long time. By doing this, there are more chances of saving both time and money.

You can even browse the internet to look out for the local shops and identify your expertise area. You can eventually change your business plan depending on how you want to be top against your local competitor.

Step 3: Create a Budget

One of the most significant benefits of starting a service-based business is to deal with the management of the cash flow.

You need to perform proper market research to identify the exact amount you need for your business. Besides, you must be ready to deal with the following aspects:

  • Startup costs: You can quickly start your business with no money on hand, but you need some sort of money if you have HVAC requirements. So, it’s better to make a list of upfront expenses like insurance, office space, business vehicle, and purchasing essential equipment.
  • Equipment costs: Next, you need to identify the type of equipment you already have in your company. The advice is to make a proper spreadsheet of equipment that you have and need to purchase. So, it will be relatively easy for you to bifurcate the tools or equipment.

Apart from these costs, you need to identify the cost for yourself if you are operating your business alone. On the other hand, if you have a team of employees, you need to consider the employee costs.

Step 4: Select a Business Name and Register It

It’s a time for you to opt for doing some legal formalities by registering your business. This step is solely responsible for converting your business plan into reality.

You need to make sure that the checklist you create should contain all the essential metrics necessary for your business. Also, you need to be aware of keeping track of every step involved in your business plan.

The best idea is to keep all the critical information in one place, and you can even consult with an investor or auditor. During the registration process, you need to provide the legal business name and business structure type. Also, you need to give a tentative list of services along with their pricing structure.

When registering a company name, we recommend researching your business name by checking:

It’s essential to secure your domain name before someone else does.

Here are some resources available for brainstorming names:

To register your service business, please refer to this website.

Step 5: Apply for Required Licenses, Insurance, and Bank Account

Not acquiring required permits and contractor’s licenses can result in hefty fines or even lead to the closure of your business.

State & Local Business Licensing Requirements

You will need specific state permits and licenses to operate a service business. To learn more about licensing requirements in your state, check out SBA’s reference to state licenses and permits.

To get information about local licenses and permits:

Labor Safety Requirements

Service industry involves tools and machinery. Hence, it is essential to abide by labor safety requirements. Here is the link for you to check out.

Get Business Insurance

Your business needs insurance to operate safely and lawfully. Business Insurance protects the financial wellbeing of your company in case there is a loss.

Go with general liability insurance if you are uncertain about the types of risks your company may face. It is the most common coverage that small businesses need.

Another insurance policy that many companies need is workers’ compensation Insurance. There is a possibility that your state will require you to carry compensation coverage for the workers if you plan to hire employees.

Step 6: Fulfill All The Legal Requirements

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

LLC or corporation protects you from being held personally liable if your service business gets sued.

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Step 7: Market Your Business

Now it’s high time for you to develop solid marketing strategies for getting new customers. So, you need to deal with the promotional activities and increase customer experience.

A repeat business plays a significant role in getting the first customer to your company for service businesses. To gain expertise in marketing strategies, you can start asking questions on different topics and analyze whether the first customers are happy with your services or not.

You can even opt for referral programs where satisfied customers can share their experiences with the services. The customers you get during the initial stage are much more valuable for your business enhancement.

With this first customer’s help, you can get feedback, referrals and make their customers happier.

For marketing your service business, having an online presence and approaching a marketing agency is something that attracts your customers in the local area. You can also use social media platforms like Facebook, Instagram, and even Google My Business. These social media platforms will increase your reach.

The aim that you must have is to make happy customers by sharing positive feedback and online reviews.

Get some business cards made. Set up a website and choose a good domain name. Sign up for the free online directories. Pay for leads on Home Advisor or Thumbtack. Post several ads on craigslist and update frequently. Solicit online reviews from customers. These methods of advertising will also expand the reach of your business.

Here Is An Expert Tip For Running Service Provider Business: Use An FSM Software

An FSM software like FieldCamp lets you assign jobs to your workers. You will be able to manage and share all the work details in one place. Track the task allocated to the workers. Moreover, FieldCamp will automatically provide an update of their job status.

With FieldCamp, you can send emails to the potential clients if the invoice payment is due. Also, you will know which worker is performing the best, the one who needs fewer jobs or more hours. Which person in the team might not be pulling their weight. You will no longer have to guess any of it, as FieldCamp will share accurate reports to answer these questions.

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According to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start for service based business owners, while most home-based franchises cost $2,000 to $5,000. So, you must get an answer to your question of how much money does it cost to start a service business.

To determine the pricing for the services, add together your total costs and multiply them by your desired profit margin percentage. Then, add that amount to your expenses.

Consider your costs, the market, your perceived value, and time invested. It will help you come up with a fair profit margin.

To grow a service-based business, you need to take care of the following things:

  • Niche down your target audience
  • Create a professional website
  • Build authentic relationships with other service entrepreneurs
  • Enhance sales and marketing strategies
  • Build a strong relationship with customers
  • Keep it simple

So, starting a service-based business is a simple task if done with proper measures. Herein we have come across the essential steps that will help you to start a new business from scratch. Take your valuable time to view the complete details of a service-based business and make a decision to start your new business by including the best services to your business.

Once your business is ready, you can adopt FieldCamp, a field service management software that helps you quickly improve the productivity and efficiency of your service business. The software solution automates and streamline your business operations with ease.