How to grow your service business ? Some insights for service business growth.

How to grow your service business ? Some insights for service business growth.

In 2010 at the age of 25, with a 10K loan from my father we started our service business. Fresh out of university with an engineering degree in Robotics I knew little about running a business.I, with my co-founder, started a business to provide other companies web services. Websites, SEO, PPC and web hosting.

2009-2010 was a period of recession. As I was fresh out of my university, I had no idea how to run a business. My co-founder who is five years older to me was probably wiser but with zilch entrepreneur experience. In the following 5+ years, we scaled the business , clientele and the total team size. We now have a 10 people on the payroll, have worked for some great clients and are learning how to scale the business.

We have never raised money. We are capable of building our product but we have decided to stay in the service business for now.

I have learned to hire, fire, read people, motivate people, sell to clients, do the accounts, forecast and even fix my client’s printers.

My father used to say that work on your business for 1000 days. That time is enough to be successful. 1000 days teach you a lot about your business and yourself.

Here are some valuable lessons I wish I knew when I started.

Money is infinite.Time is finite.

My number one principle and I hold it higher than most sacred knowledge of the business.

I meet at least three exciting prospects every year. These candidates eventually turn clients and bring in over half the revenue for that year. The key is how I identify such clients

Typically, these clients follow a pattern

  • A business owner or a key stakeholder looking to maximise returns on their business.
  • A client who is looking for someone to understand their business then just delivers web services.
  • Customers who will never negotiate on the rate. They will pay you whatever your rates are.

Whether you are a freelance charging $25/ hour or a person providing service for $500/hour, you will never see these clients negotiate the rate.

Over time you realise that these customers have two requirements

  • On time delivery
  • Exceptional quality

If you could meet these, provide sound advice and an implementation strategy and be able to deliver on your promised scope, then they will turn into high volume clients.

For such customers, money is a commodity with unlimited access. Time, on the other hand, is a scarce resource.

“Time is money” is an age adage. Let me rephrase this for you if you are running a service business.

Never compare time with money. Time is a sacred resource not easily available with money.

This line of thinking has also helped me identify clients that will be a good fit for me. Work with people who value time over money.

This also applies to your employee time. If your employees work on outdated computers then the computers will be slow. This leads to increased frustration and time wasted for an employee. This essentially makes the business worse off.

Giving your employees the best tools to do their job empowers them to do a great job. Money is infinite.Buy them new computers. Time is finite. They can only work 50 hours a week.

Don’t be overconfident.

Most clients have similar problems. Very rarely I come across a novel problem that requires thinking beyond the usual. The problems usually go

  • PPC too expensive.
  • Not enough search traffic.
  • The conversion rate is poor.
  • Money is not well utilised.
  • Companies have misled them or have engaged practices that are questionable.

I do not use a sales pitch. Listening to these clients and just trying to “really” understand their problems is enough to move the needle in my favour.

Be confident at this point. Confidence in telling people that you have handled similar challenges before and that you can solve their issues as well. However, a lot of decision makers have an excellent bullshit meter.

Confidence is good but being over confident can also sometimes ruin the development for you.Enter the Dunning-Kruger effect.

The Dunning-Kruger effect is a cognitive bias in which relatively unskilled persons suffer an illusory superiority, mistakenly assessing their ability to be much higher than it is.

A person with a sense of curiosity and humbleness in my books will do well. Be that person.

The following might be anecdotal evidence, but people who show a willingness to learn and are happy to accept that their knowledge is limited in a subject are real experts in that field.

Network > time and money.

Networking is critical to running a successful business.There are two rules to networking.

  1. Be genuinely helpful. Don’t be mean.
  2. Don’t be selfish or selective about networking.

It is such an exciting aspect of the business.

I use a nice little app called recurrence that keeps a track of who I need to contact in a specific week. Just keep in touch with your network. Don’t bug friends often about new business. Keeping in touch and meeting your network people often brings about the discussion about work.

I have friends that have helped me capture some great prospects. Don’t ignore anyone.

Being nice and not being mean takes care of making the other person feel good about themselves. Friends will remember you if an opportunity comes up. Be in other people’s good books. Do a favour to them first. Networking is about offering help to others without them asking.

Action points

  • Network with people from different backgrounds
  • Keep in touch with each prospect
  • Use app reminders to remind yourself to reach out to your network
  • Be nice. Help others.
  • Provide a favour to someone else without them asking

Customers are your salespeople.

Word of mouth (WOM) has been our number one referral source.

WOM was a key thing we never appreciated and even today asking for referral seems very obligatory.

Here are my rules for asking for referrals

  1. Offer clients some unique perspective on their business that is positive or one they may have overlooked.
  2. Hand hold them while they implement a solution or provide a solution at a lesser than your regular price.
  3. Offer a fantastic service. Make the client feel paramount and go beyond expectations.
  4. Have them declare the process complete and let them thank you.
  5. Ask for a referral.

Follow up for a referral two times a year. I have yet to optimise asking for a referral, but so far I have observed that reminding people every six months gets them rethinking about the topic.

This strategy may be different for your business type, but you will always see existing clients referring their network to you if they are relatively happy with you.

Beware impulsive clients.

Impulsive clients have been a hard lesson to learn. Such clients get hung up on what is productive “right-now”. AngularJS has just come out, and we need to be on top so let’s work with AngularJS. Let’s dump our old system and rebuild a new one because I have read somewhere that MySQL is slower than PostgreSQL so let’s dump

  • AngularJS has just come out, and we need to be on top so let’s work with AngularJS. Let’s dump our old system and rebuild a new one because I have read somewhere that MySQL is slower than PostgreSQL so let’s drop MySQL and head to postgreSQL.
  • Let’s dump our old DB system and change to a new one because I have read somewhere that MySQL is slower than PostgreSQL.
  • I need the new banners to be done “now” so that we can capitalise on these opportunities immediately.

Consider this anecdotal evidence but they are also the sort of businesses that far exceed invoice payment dates.

Furthermore, with impulsive decision makers, business does not have a long-term strategy. If you do SEO or Web work for some, you will know that both of these work on medium to a long-term growth strategy. You cannot expect results to flow in overnight, and the impulsive people make it hard to deliver on expected timelines.

Charge more.

I wrote about how we won a 60k client. This year alone I have had tremendous success by following some methodologies that I have developed. However, as a developer first and then a consultant people often disregard the value of their time.

Charge more for providing a solution. The solution has to make the business better. It has to give value to the firm and help solve a problem.

A lot of developers/managers are also poor at estimation. Pricing should reflect value provided as opposed to time used.

You may think you are only making a website. However, the client is going to get enquiries that are worth millions of dollars to their business. Should the cost of the site be at least some way related to the value it will provide? Think about it.

Often you will also come across clients who will not value your time because your charge is cheap. What would you pay to meet Warren Buffet? Or Bill Gates? Would you arrive late if you were paying someone a thousand dollars per hour? So by charging more, you demand respect for your time. The cost of your time requires higher priority from other people. You are also afforded the respect and can deliver with the highest quality.

Charging more also means that you value your time more than you value money. Remember, Time is finite. Money is infinite.

Never work by the clock.

I am a mentally curious person. If I come across any issues, I do not give up until I solve the problem. It is a typical behaviour you can expect from an entrepreneur. I see many people around me that give up on trying to solve a problem.

Sometimes I end up working on a problem for hours before it gets resolved. My clients will receive emails from me at 8-9 in the evening.  If you do not enjoy your work, then it becomes difficult working on a problem.

People who often do not care provide sub-standard products. They are clock watchers. To them finishing the day is more important than finishing the job. These people are devoid of curiosity and that what kills them inside.

Be curious. Solve problems and never watch the clock. Make sure your goal is to please the client by maximising on the opportunity they provided. Aim to improve and do better every time.

Often times customers are only frustrated with their existing service providers because they feel a lack of communication. The lack of communication often makes the customer feel that the work is mismanaged. Value is half the work and half the communication. A process that ensures effective communication with the client will generally prove successful for client hapiness.

Follow up. Don’t give up.

Having worked for a call centre through my university days, I have learned that follow-up calls are the key to success. So how do you know if you are following up enough?

Business owners are people at the end of the day. They may be going through internal business issues, family issues or personal issues. Dealing with you may not be the top of their priority. However, remember that everyone appreciates a person who is keen to work with you which is evident by continuous follow ups.

If I am interested in a prospect, then the follow up never stops. For an example after, 12 months of my initial contact and having gone to another provider for web services I snapped a client for SEO services.

Following up has helped me catch some great prospects. Establish a process for follow-up. Use Google calendar to remind yourself. Never give up. This behaviour is key to sales.

Follow-ups should also feel natural to the other party. Imagine how the other person feels when they receive your call. What do you have to offer in this follow-up that will make this a valuable call ?

Here are some simple steps for a follow-up

  • First interaction. Thank them and ask for appropriate time to follow up.
  • Next day drop and email and thank them again for their time. provide value if you can in the email.
  • Follow up again if they require information or to see whether a decision has been made on your proposal.
  • Establish a weekly follow-up process.
  • If the prospect isn’t captured follow-up monthly.

Communicate effectively.

Communication can make or mar the business. I have personally observed that enthusiasm coupled with regular communication will turn many clients.

A lot of our meetings and discussions happen on call. This means that we usually end up writing proposals in emails. If the proposal is boring then the chances of the customer converting reduce. Effective communication hence becomes necessary to improve the odds of winning a client.

Communication is an evolving skillset. Practising various types of methods of communicating can help a person deal with all types of situations.

There are a lot of ways improving your communication. There are even tools to improve your writing styles. Here are some key things to consider when trying to improve your communication

  • Read. Almost all people I know that communicate effectively are avid readers. Reading almost always improves your ability to craft great sentences.
  • Write. Writing at least 1000 words per day can help you improve your writing skills and also hone your business communication.
  • Set reminders to reach out to your clients that are non-active. Almost often non-active clients have some work that needs to be taken care of.

Communicating clearly can help you achieve goals. if you business sponsors training then giving your employees ability to communicate effectively should be on the top of the list.

Bad things happen.

Disputes and scope disagreements are a part of business. Service companies usually rely on client satisfaction and hence dispute are higher in a service business.

If your sales promise too much, and your delivery is poor you will have a dispute.

The best case for a service business is to look at having a solid understanding of work before you begin the delivery. Ensure that you understand what is required restructure the requirement according to what you will deliver and then provide a quote.

Do not quote because you are trying to win business or trying to hit a milestone.

Dispute happen even after careful considerations.Try and mitigate the issues quickly and by offering more time. If you think you cannot salvage the situation then here is the course of action.

  • Write the project off as bad debt. Stop work if you can. Avoid going further into dispute and give the client what they want.
  • Return the money if you haven’t delivered. If you are too deep into the project, see if you can mitigate in other ways. The default stance should be to expedite moving away from this situation.
  • Don’t let your ego or “principles” hold you hostage. Opportunity costs are greater with a prolonged fight, and you only have a short life. Move on
  • Analyse what went wrong. Put some checkpoints at places where you think you went wrong.

Hire great people.

Service business depends upon people to deliver. If you hire ordinary people, the output of your organisation is average. Service companies rely on the quality of the service provided.

Great people are hard to find. It is even hard to hire them. The hardest of them all is to retain great people in your company.

The culture and the output are directly proportional to the people of that company. People of the company are the building blocks that make the company. If you want to provide exceptional service hiring great people is key.

Hiring great people is not easy. To know a great person is even more challenging. So how do you know?

Identifying the right people takes a lot of practice.

  1. Look for people with interesting stories. The interesting ones usually stand out with great stories.
  2. Ignore the formal qualification if your business does not demand it.
  3. Look for people that are curious by nature.
  4. Look for candidates that are brutally honest. Ones that will accept that their knowledge is limited.

If after you hire someone, and you realise that it is a mistake be quick to fire them as well. Hiring should be meticulously, but firing should be faster. Don’t waste your time to work with people that do not see their growth with the growth of the company.

We have been lucky enough to get some great team members. The work delivered by the enterprise reflects the work culture and the team output.

Another note with great team members is that although it may seem that people are motivated by  money that is rarely the case. Great people are more interested in job satisfaction and appreciation. Great ideas and innovation generally come from a culture that places emphasis on open environment. An environment where a team member can provide output without thinking about the repurcussions.

Establish processes.

Processes sometimes kill the speed with which the business can deliver. However, once you want to scale the business without appropriate processes scaling becomes a nightmare.

Processes in the businesses should be well thought out. Each process should serve a specific purpose and deter common mistakes that happen during that work.

Processes have been the key in the 4th and the 5th year of our business. When you are doing the job yourself then processes are not critical because you make the final decision on most things.

However, if delegation starts to occur then the processes begin to become increasingly important.

Often times we send clients SEO reports. One of the most common mistakes people make when sending out the report is to not explain the highlights of the report. The client may not necessarily understand the report that we send out. Hence we established a process of creating 4-5 main highlights from the report which serves as a health TL;DR

This has worked wonderfully well for most clients. This also adds a personal touch from the reporter.

  • Establish a process for the most common repetitive tasks.
  • Ensure that the process adds value and not workload for all involved.
  • Ensure that the process is designed to deter errors for the job involved.
  • Ensure that the process is followed.
  • Rethink the process depending on the order of importance at a regular interval.
  • Get feedback from all involved as a part of this process.
  • Rinse and repeat.

Automate, Automate, Automate.

Everything that happens in your business that needs to happen a second time should be automated.

Service businesses will rely on processes. Some of these processes will happen again and again.

Classical examples – repeated emails. We email clients proposals and quotes about services they require. Some of these services are fairly standard and we write the same emails again and again. Now we have a list of templates that we utilise to ensure that the clients have their quote quickly.

Automate your reporting. Automate your appointment scheduling. Automate your proposal and quoting. Automate your accounting. I have seen too many businesses retain people to do jobs that could be completely automated. Automation prevents errors at least in those things that required human input.

Automation also had the added advantage of helping you fix costs on your outcome. If you can automate coffee making, then it is very easy to evaluate employee time saved. Each business will have its set of things that could be automated. As a business owner, your first job should be to work on the automation aspects of the firm that is most fragile. Start with the part that is most complex. Simplify and automate. Rinse and repeat.

We have built quite a large number of tools in-house to improve our output.With the ability of the modern tech world to provide open source tools there is no excuse for not being on the forefront of the technology.

Automation is also essential for scaling.

  • Review each task you do and find a way to automate it.
  • Ensure that there are review processes to ensure automation is working as expected.