Service Business Start-up Strategies

What Makes the Service Industry Unique?

The service industry is different from product based industries, such as manufacturing, wholesaling and re­tailing. for two basic reasons:

1) service based businesses are in the business of selling results not products i.e. when clients buy your services, they are buying a promise that you will deliver

2) the standard or quality of service from a service based businesses is inseparable from the seller of those services.

Both above characteristics are explained in more detail below:

The Intangible Nature of Services - Services are elu­sive abstract and conceptual in nature, meaning that it is impos­sible for consumers to taste feel, see, hear or smell a service before they purchase it. This makes it difficult for people to compare and evaluate similar offerings. Advertising and sales staff must therefore emphasize the benefits of the service, espe­cially tangible benefits, rather than the service itself.

The Problem of Providing Standard­ized Services - You can design one product to be the same as the next but you can't provide exactly the same service to different clients. Services cannot be stored or warehoused. And they cannot be separated from those who perform them or who personally contact the customer. Because of this fact alone, standardization of services is nearly impossible.

To help resolve part of this problem, the need for capable and well-trained contact personnel should be quite evident. It is also important to establish, wherever pos­sible, minimum standards of performance for routine operations, and perhaps intro­duce a few mechanized processes to pro­vide some kind of normalization.

NOTE It should also be noted that unlike products, services cannot be produced or performed at one place and then delivered to another. This means that the service provider needs to open up branch offices at a number of different lo­cations.

STRATEGIES FOR EXPANDING INTO SERVICES

USE THE following start-up and operating strategies to help you expand into services.

Service Business Start-up Strategies

1) Choose a good location.Just like in retail, a service business should be located as close as possible to its customer base. Make it easy for customers to get to you or for you to get to them. A location should also be affordable for as long as you need it and convenient for your staff. You want to attract the best people possible for your service company. Customers also appreciate ease of access, and safe affordable parking.

NOTE Service businesses that depend on high volume walk-in traffic (like dry cleaners & beauty salons) must be located in highly visible areas of the community.

2) Create a professional im­age. Image is everything in a service business. Although, it is true that how you conduct your business also goes along ways to influencing what peo­ple think of your business, there's no getting around the fact that if people visit your establishment, they will look at the floors and your furniture. And if

you visit them in person, they will look at your shoes and your tie.

Three more strategies to help you develop and maintain your pro­fessional image are:

• Design your company's image to appeal to your target market. Service businesses are generally more specialized and personalized than retail businesses and must therefore be more aware of customer expectations and perceptions for their type of service. For example, health care facilities should look soothing, legal firms must appear solid, and consultants and engineers must appear successful.

• Gather presentation materials. Just as aproduct's packaging helps create its image, presentation materials help create an image for a service business. When you present your service to potential clients, they want to see how committed and qualified you are. They also want to assure themselves that you will be sticking around for a while. To a large extent, they will judge you based by the amount and quality of your preparatory work.

• Preserve your professional image as much as possible. If a meeting in a home office would detract from your professional image, tell your client you'll be in his or her neck of the woods around noon and propose lunch. Of course, you will pay.

3) Do as much of the work yourself, at least initially. Initially, a service business will require less cash be­cause it will not have high Inventory and equipment costs. However, don't use this as an excuse to hire a secretary or assis­tant. Needlessly increas­ing your overhead may make you feel like you are in business, but won't help you generate any profits. When starting out, it is better to sweep your own floors, empty your own garbage, answer your own calls and write your own let­ters. In fact, contribute as much of your own time as possible to keep costs down.

Date: 2015-12-24; view: 550