What Is a Service Business?

A service business provides a skilled service, personal labor, or expertise instead of a physical product. This includes hairstylists, accountants, plumbers, doctors, and many more examples.

These services exist to help people who don’t have the time, knowledge, or skills to complete the tasks themselves. That’s why service-based businesses are often profitable and always in high demand.

1. What types of service businesses are there?

Service businesses can fall under many categories, including:

• Health and wellness (e.g., doctor’s office, dental office, hair salon, nail salon, spa, massage therapy, physical therapy)
• Business services (e.g., information technology consultant, law office, marketing agency, software engineering, real estate, financial adviser, graphic design)
• Transportation (e.g., bus, taxi, airline, ride sharing)
• Home services (e.g., lawn care, cleaning, plumbing, dog walking, junk removal)

READ MORE: Quote services fast with our free estimate template

2. What is a good service business to start?

Starting a service business can be rewarding. You can be your own boss, work flexible hours, and help customers solve problems they don’t have the skills to do on their own.

When you’re deciding what type of service business to start, ask yourself questions like:

• What experience do I have? Some regulated services require you to have a license, like HVAC or plumbing. Others are easy skills to pick up and don’t need certification, like lawn care and cleaning.
• What niche is open in my service area? If there’s a service gap in your area, you can be the one to fill it. For example, if all local cleaning businesses are booked months out, or no pool cleaning companies in your town offer maintenance, that could be your niche.
• What is my startup budget? You can start a cleaning business for roughly $685 (USD), while starting a pest control business can cost upwards of $6,000. Consider how much money you have available in your small business budget and what kind of funding you can get.
• Do I want year-round or seasonal work? You might want to only work a few months of the year, especially if you already have a full-time job. If so, try offering a service that’s only in demand for part of the year, like holiday lighting or snow removal.

Check local regulations to make sure you have the required training before you start a business. Read our guides to appliance repair certification, HVAC certification, and plumbing certification.

READ MORE: Check out our up-to-date home service salary guides

3. Service business best practices to follow

Running a home service business is very different from running a product-based company. Instead of focusing on product quality, you’ll be focusing on the quality of your customer experience.

Follow these best practices when you’re starting and running your own small business:

• Set the right prices: The right service pricing is the key to running a profitable and successful service business. Use our service price calculator to determine a price that a new customer will happily pay—while also turning a profit.
• Use word-of-mouth marketing: When customers share their positive experiences with your brand, it encourages potential clients to invest in your business. Take advantage of word of mouth marketing by setting up a customer referral program, asking for reviews, and sharing them on your business website and social media.
• Offer excellent customer service: As a service business, great customer service is one of your biggest considerations. Ensure quality service with a client self-serve portal and by communicating with customers before, after, and during the job.
• Train your team: Your employees are the face of your business and deal directly with your customers, so their actions and standards need to be top-tier. Before hiring your first employee, create a training plan and standard operating procedures for your team to follow.
• Nail down processes: The more repeatable your business processes are, the more efficient your business will be. Build systems for accepting online bookings, quoting work, scheduling jobs, invoicing clients, and getting paid.

Originally published August 2020. Last updated on October 18, 2022.