What is a Service Business? A Beginner’s Guide
Do you want to be your own boss, develop specialized skills, and serve your community? Then becoming a service business owner might be in your future.
But what is a service business, how do they work, and why should you consider starting one? Learn the ins and outs of service-based businesses in this starter guide.
Learn if starting a service business is right for you:
Service business definition
A service business provides a professional service, personal labor, or expertise to clients and customers within a city, town, or community.
While service providers can sell physical products, their main source of income comes from using their services to help people who don’t have the time, knowledge, or skills to complete the tasks themselves.
For example, hairstylists, accountants, plumbers, landscapers, general contractors, and doctors all work in the service industry.
Because service businesses offer much-needed expert skills to their communities, they’re often profitable and in high demand.
Service business examples
The service industry covers a broad range of professions, from business consultants and financial advisors to housekeepers and childcare providers.
It’s typically broken into seven different service sectors:
- Health and wellness: Dental offices, medical clinics, hair salons, spas, personal training, and massage therapy.
- IT and technology services: Cybersecurity firms and consultants, software development, and tech support.
- Hospitality services: Event planning, catering, and travel agencies.
- Professional or business services: Digital marketing agencies, law firms, accountants, and small business administration.
- Transportation: Ride-sharing services, taxis, airlines, and buses.
- Home services: Lawn care, plumbing, HVAC, etc.
- Personal services: Pet sitting, childcare, or food delivery.
What is a home service business?
Home service businesses are small businesses that offer services in and around the home.
They provide specialized services to homeowners in a variety of areas, including:
- Painting
- Pressure washing
- Plumbing
- Electrical
- HVAC
- House cleaning
- Junk removal
- Appliance repair
Although some service providers, like graphic designers or bookkeepers, can work remotely, home service providers usually work on job sites in defined service areas, like a city or town.
And like other businesses in the service industry, some home service professionals need specific certifications, licensing, and experience, while others only require a good attitude and a solid business plan.
How to start a service business
Starting a service business can be a rewarding experience. Not only will you become a small business owner with the ability to manage your own time and schedule, but you’ll be providing a valuable service to your community.
If you’re thinking about starting a service business, take these steps to boost your chances of success.
1. Choose a type of service business
Before you do anything else, you need to decide what kind of service business you want to start.
To make a decision, ask yourself the following questions:
- What experience do I have? Do you have technical training in a trade, like plumbing, or do you have skills in another area that doesn’t require a license or certification, like cleaning or lawn care? If you don’t have experience in any services, it doesn’t hurt to explore a few different service business ideas to see what piques your interest.
- What niche is open in my area of service? Are there other businesses in your city or town that offer the same services? What does your competition look like and how can you set yourself apart?
- What is my startup budget? Starting a cleaning business costs 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? If you have a full-time job already and want to start by offering part-time, seasonal services, something like holiday light installations or snow removal may be a good option. But if you’re looking to replace a full-time job, a year-round service business is a better idea.
2. Do market research
The next step is to conduct market research to learn more about what starting a service business in your area would look like.
The goal is to learn:
- Who your target customers are
- What your competition looks like
- How to price your services and develop a pricing strategy
3. Make a business plan
Once you have a service business in mind, and you know who you want to market your services to, it’s time to create a business plan.
This is an organizational document that covers everything from your marketing strategy and budget to short- and long-term business goals.
Not only will it give you a better idea of what your business will look like, some lenders, like banks, require a completed business plan to consider offering you a loan.
4. Start the paperwork
Next comes the administrative legwork of choosing a business structure, registering a name, and applying for any permits or licensing requirements.
You’ll also need to think about any legal requirements and what kind of business insurance you should have.
Depending on the type of service business you decide to start, requirements will vary. Talk to other professionals in your niche as well as your city or town’s small business association for industry specifics.
5. Set up your finances
Like any other business, service businesses can be funded with your own money, with a loan, or using grants. How much money you need to start your business depends on:
- Whether you need special tools, materials, or equipment
- If you need to rent an office or workspace
- How many employees or subcontractors you need to hire
- If you need to purchase a work vehicle
- What your initial marketing and advertising costs will be
It’s also a good idea to set up a separate bank account for your business to keep your personal and professional finances apart.
6. Start marketing
After you set up your business and have everything you need to offer services to your community, it’s time to get the word out.
You can reach potential customers through social media, paid ads, branding techniques, promotions, building a website, and more.
For example, a home service provider might explore how to use SEO for contractors or set up a Facebook page, whereas a physical therapist might focus on getting referrals from physicians in their area.
Looking to start a home service business? Use these industry-specific guides to see what it takes:
How to run a successful service business
Regardless of the type of service business you choose, there are some best practices you can follow to increase your chances of success.
Use these tips to make sure your business runs smoothly.
1. Set the right prices
The right service pricing is key to making a profit and attracting your target customers. Price too high and you risk missing out on customers with smaller budgets. Price too low, and you may attract poor-quality clients.
Use Jobber’s pricing calculator to set prices that your customers will happily pay, all while turning a healthy profit.
2. 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 and asking for reviews. Then share them on your business’s website and social media pages.
With Jobber, you can promote your referral program to customers with a professional email campaign that’s ready to send in seconds flat.
Then reward your customers for bringing in new business by offering a dollar or percentage-based credit toward their next service for every successful referral. When a referral is made through a customer’s unique link, it’s automatically tracked.
The next time they use your service, their referral credit will automatically be applied to their invoice.
3. Provide excellent customer service
As a service business, great customer service is one of your biggest considerations. Since you’re providing professional services to clients and customers, their satisfaction is essential.
Build and improve your customer service strategies by asking clients to fill out customer feedback surveys, using software to create a streamlined booking process, and communicating with clients throughout the process.
For example, home service providers can use field service management software like Jobber’s client hub to keep client information in one place, update clients about important job details, and facilitate payments.
4. Train your team
Your employees deal directly with customers, making them the face of your business. Before you hire your first employee or subcontractor, develop a training plan and standard operating procedures for your team to follow.
This keeps everyone on the same page and ensures you’re all working to meet the same standards.
5. Nail down processes
The more repeatable your business processes are, the more efficient your business will be. Especially if you make it easy for your customers to work with you.
For example, using Jobber, home service providers can easily:
- Accept online bookings that are automatically scheduled and assigned in your calendar.
- Create professional quotes that include optional line items and are easy for customers to approve online
- Schedule jobs faster, avoid booking mistakes, and route visits efficiently
- Generate invoices with accurate job details in seconds and get paid faster with convenient online payment options.
6. Focus on growth
As a service business owner, your goal isn’t just to make a profit. It’s to grow your business so it stands the test of time.
By staying on top of the trends, changes, and advancements in your industry, you have a better chance of keeping your service business running for years to come.
Originally published in October 2022. Last updated on October 1, 2024.