How to start a Service Business; It's Easier Than You Think!
Gather Your Tools and Pick a Name for Your Business
Service type businesses are very easy to start. You don't need inventory; just the tools of your trade, so start up costs are relatively low. First you must decide on a name for your business and if you will need a commercial location. My first business was as a mobile groomer. I didn't need a building, just my mobile grooming van, which I parked in my own driveway at home. If you are doing landscaping, or handyman type jobs, or mobile notary, or some other mostly mobile service you won't need a commercial building to rent. If you do need a location, think about if you need it just for storage and office space or if you must have foot traffic coming in.
Location, Location, Location
Location will be a huge factor if you need foot traffic and are hoping to benefit from walk-in's. For my second business, I bought an already established grooming shop, and we must have clients coming in with their dogs! Check with the landlord to make sure that your business type will be acceptable for their building (not everyone wants a hairy, noisy dog grooming shop as a tenant) and sign the lease/rental agreement after you have read and agreed to the terms. For a new business venture, try to get as short a lease as possible, or even a month to month, so you are not stuck in a long lease if the business should fail.
Get a City Business License and a FBNL
Next, apply for a business license in the city you live. This is so easy! Go to your city hall, fill out the simple form and pay a fee (mine is $50) and wha-la! You have a business! Well, on paper at least. The next step is to go to the county recorder's office and apply for a fictitious business name license (FBNL). This is also relatively easy, and also requires a fee (mine is $35). You only need a FBNL if the business name you have chosen does not include your first and last name as a part of the business name. If it is a part of the business name, you are exempt, because it's obvious who owns the business and is therefore not a fictitious name. For example, "Sarah Johnson's Sewing Service" would be exempt. But if she called the business "Sewing Service", it would not. Type your chosen business name into their searchable database to make sure no one else in your county is using the same name and then fill out the forms. The next step they will require you to do is publish your filing in at least one local paper in the legal notices section once a week for four weeks. This must be done within a certain time frame or you will have to start over again. They usually make it easy for you though with a list of acceptable publications in your area. Whichever one you choose will already know how to publish the required information, so its not like you have to figure out the wording, it's all done for you. Again, just have to pay a fee to the publisher. At the end of the publishing, you must send the recorder's office proof from the paper that it was published and then you are legit! Your FBNL is good for 5 years before it will have to be renewed. Your city business license must be renewed yearly in most cases.
Set Up a Business Bank Account
Now with all this paperwork in hand, go to your bank and open a business checking account in the business name. Most large national banks won't give you a business account if your business is not already established, so try going to a credit union or small local bank. If you order checks make sure to also put your own name on the checks to make it easy to verify that you are an authorized user of the account. Also, don't forget to put any a.k.a.'s on the account especially if you have done business before in a different name. For instance if you recently got married or divorced, put your former name down as an a.k.a. so there will be less problems when clients inadvertently put the wrong name on your check.
There are several good reasons to have a business checking account.
1. How else are you going to cash checks made out to your business name?
2. It is the best and easiest way to keep track of your earnings for things like taxes, and anytime you must produce a profit and loss to prove income.
3. It is easier to keep track of business related expenses if you are paying for them out of your business account, which also helps at tax time.
4. It makes using Quickbooks or other accounting software easier if you are not combining personal and business transactions in one account.
If you set up any other businesses not related to your initial one, set up a different bank account for each one! Have your banking records and all other business mail sent to your business address; whether that be your new location or your home. Record keeping is essential to any business so make sure you keep any and all receipts, copies of bills, licenses, and invoices. If everything is in order from the very beginning, you won't be kicking yourself at the end of the year!
Business Liability Insurance and Vehicle Insurance
Next, you must get business liability insurance to protect you from lawsuits. This is a relatively small cost for most types of service businesses and will potentially save you a lot of worry and heartache in the future. Contact an insurance agent to discuss what level of coverage is right for your business. Your discussion should also include any insurance you will need for business use of your vehicle, if you use it to drive to clients homes, or like me, groom dogs inside my van. Your standard vehicle insurance will not cover you for accidents that occur while you are using your vehicle for business purposes.
As a sole proprietor, you are liable for almost anything that can go wrong. If you have set up a corporation then you personally don't need as much protection, but then you wouldn't be reading this article either because you'd already know this beginner stuff! My advice is don't leave home without insurance, and pay your premiums by automatic withdrawal so that you will never forget a payment.
You Don't Exist Unless You Advertise!
Finally, start advertising. Come up with a catchy logo and advertising slogan that people will begin to recognize you by. Print up business cards to hand out to everyone you meet, and pass out fliers anywhere you can. Word of mouth and reputation are the best forms of advertising, but also the slowest. Ask your friends and family that live within your service area to help your word of mouth advertising efforts and stir up a buzz about your new service.
Most importantly, learn how to use social networking sites like Facebook and Twitter to promote yourself with a business page. You can run ads that fit your budget while having control over the demographics that will see your ad based on their preferences. The analytics from Facebook ads in particular are very insightful as to who is actually paying attention to your advertising.
Next, put an ad in the online yellow pages as soon as possible. As for printed yellow pages ads, a small ad will pay for itself if it means the general public can find you. If you aren't in the yellow pages (print or online), you don't exist. You can also use your local cheap classifieds, like The Nickel, or Penny Saver to publish coupons and print ads about your business. Avoid using your local newspaper, as ads in them are usually expensive and rarely deliver much traffic. These kind of print ads are probably the least effective nowadays, but you know your customer base, and sometimes it doesn't hurt to have ads in print.
Other in-house advertising to consider is using loyalty stamp cards where so many services will result in a free service for your client. Send postcards to current clients on their birthday. Hand out pens, magnets, or calendars with your logo and business info. All these things help customers remember you and create a relationship that you need to stay in business!
Look for advertising opportunities in your community. Give gift certificates for free services to charities for their event auctions. It's a great way to get an introduction to a new client and most of the time they will come back. I have gotten several loyal clients this way. Also, visit small locally owned businesses and ask if you might benefit from each other by trading referrals. For instance, if you are an expert fish tank cleaner/care person, go to an aquarium supply store and see if they may be able to give out your card and in exchange you can refer clients to buy supplies from them. Be creative and you will start seeing opportunities to promote yourself everywhere.
Get it, got it, good to go!
Remember, create your name and logo, obtain a business license, FBNL, and insurance, open a business bank account, advertise, and be creative. If you follow these simple steps, will have sucessfully set up your business and hopefully be working in no time! Good luck!