Entrepreneurs’ Guide to Successfully Managing a Service-Based Business

Running a service-based business can be tough because it often requires more work than what is required for products. Service-based industries include everything from professional services like law, accounting, or therapy to skilled trades such as electricians, plumbers, landscapers, Trex seclusions fence installers, and servicing homes. What makes these types of businesses different? The main difference is that the product isn’t tangible so the customer has to rely on intangible things like reputation and word of mouth to make their decision about how you do your job.

Running a service business is one of the most challenging businesses to manage. The challenge lies in the fact that you must deal with an endless supply of customers, and each customer has unique needs. This leads to a lot of time spent on hand-holding and managing your clients instead of doing what you do best as an entrepreneur–running your company.

Here are some tips on how entrepreneurs can successfully manage a service-based business:

Products-Based Business vs. Service-Based Business

For many people, the idea of starting a service-based business is very appealing. After all, it seems like you can just sit back and let your customers do most of the work for you! However, managing a service-based company requires much more than just sitting around and waiting for people to come to you with their problems.

To better understand how to successfully manage a service-based business, we must first look at what makes them so different from other types of companies out there on the market right now. Service-based businesses tend not only to have fewer barriers between themselves and their clients but also require less overhead costs associated with them as well. This means that they tend to be far more profitable overall than other kinds of companies. Below is a comparison between service-based businesses and products-based businesses.

Service-based businesses are different from products-based businesses because they are far more flexible and profitable. Service-based businesses have fewer barriers between themselves and their clients, meaning that they can offer a personalized service for each individual client without having to worry about how it will affect the business as a whole.

There are also fewer overhead costs associated with services because there isn’t any supply involved in them like in a products-based business. Therefore, this means that, unlike products-based businesses, service-based businesses can be profitable without the need for a high markup.

Service-based businesses are more flexible than other types of companies as they have fewer limitations on how their services will be used and how often they’ll be used. This is because you don’t have to worry about how much of the service your client will use because services are not a one-time purchase.

For example, if you’re an accountant and you provide bookkeeping for $500 per month, you don’t have to worry about how many bookkeeping hours the client will use because they’re paying for your service rather than a product. This means that you can charge less for your service because you are not faced with the problem of how much will be used and how that impacts your costs.

Instead, a good general rule to follow is to have a price point where clients seem like they’re getting great value but it also won’t hit them too hard financially if they decide not to use all their hours. The service-based model also has advantages when it comes to how you retain clients, with the whole idea being that they’re paying for your time and expertise rather than a product. If something goes wrong or if there’s an issue, then it’s up to them how long that will take because of how much their own money is on the line.

Service-based businesses are also less vulnerable to economic downturns because they don’t need a large investment of time and capital upfront, which means that the risk involved is not as great as it would be with other types of business ventures.

How to Manage a Service-Based Business Properly


Managing a service-based business properly entails the following:

  • Be clear about how you’ll charge for your services and how customers will be billed. This way, you’ll be able to offer the services you promised and inform clients upfront about how much they should cost.
  • Define how long it will take to perform each service so that customers know what their expectations are and this way, there’s no misunderstanding about how soon a customer can expect the business to be delivered in return for payment.
  • Have clear policies on how and how often you’ll give updates to customers about how the work is progressing.
  • Try not to multitask when working, so that your time isn’t being wasted and your clients won’t be dissatisfied with how long it takes for a project to be completed.
  • Ensure that you have all the equipment necessary or at least access to tools that you will need in order to complete the tasks that have been assigned.

Service-based businesses are easy to manage as long as they’re properly taken care of. There are going to be some differences between how a service-based business and how products-based businesses operate, but there are also advantages that come with running one. In order for it to work well, though, the entrepreneur is going to need clear policies in place so that they can manage their customers’ expectations on how the services will be offered. When managed properly, service-based businesses will grow and become profitable.

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