The starting point of a service business is the fact that there are certain things that people will pay to have done for them. Maybe they don’t know how to do these things themselves. Maybe they don’t have the time. Maybe they don’t have the special tools. Whatever the reason, your business exists because other people are unwilling or unable to do what you do. The focus of a service business is on results. So, from a planning perspective, what’s of particular importance to a service business?
Your appearance and demeanor can be critical if you are engaged in personally performing services. The same holds true if you have employees. You are, in some sense, selling yourself to prospective customers. You are asking them to trust you to do something for them, and there is at least some commitment to an ongoing relationship with the customer. The impact on your plan may be something as simple as planning for the expense of a uniform service and for regular cleaning of service vehicles.
Another issue service providers face relates to billing and collections. When goods are sold, there is a clear event that triggers the need for payment. For a service provider, the event that should trigger payment might not be so clear. For example, a contractor may feel that he should be paid when he informs the homeowner that the job is complete. The homeowner, however, may feel that he has a right to have the work inspected before tendering payment. One way to reduce the possibility of this type of problem is to seek progress payments as a job proceeds. Another is to plan cash flow requirements realistically, providing for the chance that a certain portion of what you are owed might not be immediately forthcoming.
If you personally are responsible for getting new customers and also for providing services to them, it is critical to manage your own time well. Many personal service businesses require the owner to spend substantial time doing presentations, preparing bids or estimates, or doing other sales-related activities to acquire future business. To the extent that your time is spent on these activities, you aren’t currently working on your present business.