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My Next Job 5
Starting Up in a Service Industry
A service industry company is a company offering engineering, consulting, testing, legal, accounting, cleaning, and a plethora of other companies that do not produce a physical product although what they produce may lead to physical products. A distribution company is a service company that supports companies that produce physical products. Don't think for a minute this means they are all micro or small businesses. There are very, very large service companies - but many didn't start out large - and you may start up your service company with little outlay of cash and be able to make money in the first week.
When I was about 10 years old, we lived in a small town in Florida. Everyone in the area had a lawn about the same size, about a quarter acre, and pretty much the same type of grass - well at least when we got started. My best friend lived about 2 blocks away and was a year older. We wanted "stuff" like everyone else, so one summer day we pushed my dad's lawn mower out of the garage to the neighbor's house, knocked on the door and asked if we could cut their grass. Sure, be careful was the response so we went at it. We finished in just under an hour and went back to the door. After a quick inspection, $3 came our way. We went to the next house with similar results and another $3. We were in the money.
By about 2 o'clock, we had to walk to the Lil' General store about 3/4 miles down the road and buy another gallon of gas - and a couple of soft drinks, a couple bags of chips, and since we were in the money like adults, a 5 pack of Swisher Sweet cigars. All the men in the neighborhood smoked cigars when they were cutting grass, why wouldn't we? Well, $025 for the gas, another $2 for everything else, and we were back to our neighborhood for the hot part of the day. We started up early the next morning remembering how hot it was at 4:00 the day before.
We were doing pretty well when we made it up to "the old people's house." The lady came out and asked us if we cleaned up after ourselves. We told her we cut grass - that was what we did. She agreed to pay us $5 instead of our normal $3 because her lot was on the corner, and a lot larger. So we went to it and after over an hour - we finished cutting it. We went to the door - she said "you haven't cleaned up after yourself." We said, "we cut your grass, that is what we do?" "But you did't rake it, you didn't edge it, you didn't do what I agreed to so I'm not paying you until you do." We had to find someone with an edger, borrow it for the job, find rakes, a place to put the trimmings, and over 2 hours later we finished up. The lady brought us our some lemonade and and paid us our $5 - each. Her lawn looked great and she said so. Now we were in a predicament. Do we buy an edger, rakes and a wheelbarrow to haul off the trimmings or just stay with our old mower.
That was somewhere near a long time ago. But what a great learning experience. Now, knowing more about business, there were all kinds of things that child's story offers to businessmen. Rent or buy decisions, communications, expectations, pricing, market definition, time/value determinations, all in a short children's story. All very real, all very tangible and all applicable today to just about any service industry company opening its doors today.
Let's go back to something I pound on over and over again. Where is your business plan? You have a business plan for a lot of reasons, one of which is to see just what you are going to have to do to finish up making some money. It also lets you look into the future to see what are the roadblocks to making more money - personnel, legal ramifications, limited resources, economic issues or anything else you can foresee. Keep in mind, it is the one you cannot foresee that is what you also have to plan for.
There are a lot of options for service businesses. We cannot begin to list the variety of companies that fall into this large bracket. The upside is the low cost of entry for many of these businesses. There may be other barriers to entry - training requirements, licenses, certifications, or technology. Barriers to entry aren't always bad - depending on if you are already in or not! They also level part of the playing field to some degree as well.
Real estate sales, insurance brokerage, investment or money management, hair styling, landscaping, accounting, distributing, logistics, travel planning, tutoring, child care, dog walking, house washing are all service jobs that we all use at one time or another. What are you thinking of? Let's take the first step.
What does the company you are going to start do? Better yet, what is your value proposition? In other words, there is probably someone else doing all or part of what you are going to do - so what makes what you are going to do better - a reason to go with you instead of who I am currently using - and for what dollar value? Can you explain your story to someone who knows nothing of the industry you are entering so they truly understand it?
Who is going to do the work. There are a lot of jobs in a new business - and in a bootstrap start-up, a few people where a lot of different hats - but they still need to know what hat they are wearing and that they are responsible for the jobs that come with the hat for the businesses success.
If you are alone - you get everything from buying to selling to accounting and advertising. If you are bringing in partners - either in an equity situation or as teammates - everyone needs to know and understand their own responsibilities. Group common items with one person. If you have one person that can run the office, accounting and inventory control, another person for sales, marketing, advertising and distribution, and another person for human resources, safety, regulatory, training and general office requirements. Of course if there are only two of you - you have to split this last person's jobs up between the two of you. If there is only one of you - well, that's pretty obvious.
Communicate with each other up front. It is very easy for the one in the office all the time to think the guy in the field is just out enjoying nice lunches with clients, spending all the money, playing golf, all while they are trapped in the office slaving away at crunching numbers and making everything work. Of course the guy in the field is complaining that the guy in the office is not doing anything that is bringing anything to the bottom line, sits around in his air conditioned office, and couldn't sell water where a house is on fire. Communicate so everyone knows what is going on and what roadblocks are keeping money from coming in.
For the office, a product like Quickbooks by Intuit is a great option. There are variations on the theme, different levels of expertise or types companies are available as well. Linking the inside office with the outside office with a product like Quickbooks Customer Manager is also a great way to communicate so both of you know what is going on and your customers are taken better care of.
Of course this brings us to what you need in your office. What are the basics now? Desks, chairs, filing cabinets, shelves, trash (after document destruction), so a shredder, power cords with disruption coverage and surge protection, security and of course at least a laptop or preferably a desk top and lap top. Another question is where do you buy all of this stuff? The answer - it depends.
If I meet you in the elevator of an office building and you give me a solid 20 second elevator pitch about what your company can do for me or my company - and hand me a business card so I can get in touch with you, what are the keys to the next step. Well, before we get to that next step, what is on that business card? Beyond your name, an address (home or business), and email address I hope, a website (a must), phone number, fax number (yes), and 800 number, as well as your title, and if applicable, the lines of product you represent (or work you do) and an optional slogan.
High quality business cards cost under $20 for 250. That is 250 company billboards specifically in the hands of qualified prospects for the business - about the most effective dollars you can spend. Why do people limit what they offer on their business card if they are trying to grow a business? Why do they go to Office Supply big box and spend $15 on a package of perforated paper to run through an ink jet printer (expensive ink that runs when wet) to make the impression on their next best prospect? Pay for professionally produced business cards, best money spent.
Make sure the name on the card is yours, the one you want people to call you. Don't put your given name as Almathayzius if you expect them to call you Al. Put Al. If you operate your business from your garage or basement - your home - that's fine. I have a suggestion to consider. Find a "pack and ship" type store close buy that you can rent a post office box at, usually for about $12 or less per month. They can receive your packages for you when you aren't around, ship product for you and will offer you a discount if you show signs of steady business. Plus it gives you a commercial mailing address that sounds bigger than 114 Sweet Apple Lane or Apartment 6.
Most any day of the week you can find someone offering to host a static, 5 page website for under $10 a month. It takes about 20 minutes and the education of a 3rd grader to put together at least a couple of pages including some pictures and contact information and maybe some product information for what your company does. It can look very professional if you take your time - and usually comes with a number of free email addresses. Doesn't it make more sense to have someone email you at Al@mybusinessname.com instead of Al@aol.com?
You can use your home phone number getting started. Not a problem until it rings at home and the 4 year old answers for you. For a little extra money you can have an 800 number added to it and you pay for the incoming calls - usually around $0.10 a minute. Using your cell phone is fine, just be sure you have an unlimited plan including incoming calls.
You must still have a fax number, but that doesn't mean you have to have a fax machine. There are a few services out there such as eFax that offer a great service. For about $12.95 a month or less, you get a fax number that anyone can send you faxes - and with a little manipulation on your part you can receive a fax, fill in the blanks including your signature, and fax a document back without ever printing it off.
As for your slogan or product lines, there is another whole side to your business card. Take full advantage of this space. It really doesn't matter what you do - from landscaping (does that include spraying for weeds, killing bugs, etc) or hairstyling (what products do you have available in the store when I get my hair cut that are hard to find otherwise?).
In that business office, wherever you are starting out, you will need a few things we touched on earlier. Desk - large enough to work from and take notes on, and if a computer is a mainstay in the business, maybe a computer desk makes good sense. May also have either a built in file drawer or be held up by one. Lighting - get a lamp - it is really hard to maintain focus when you can't see.
About computers - what do you really need? Can it all be done on an iPad or do you really need a laptop? Can a laptop do what you need to do or is a full blown desktop really required for design or photo cropping or video work? Be judicious in picking out what you need and always get enough and then some when putting everything together. Ask questions from your computer buddies or experts at specifically computer stores - not big box stores unless they have specialists for your specific need. Then back it up - either using an online company or with a separate hard wired backup, but back it up. We already discussed software, but use a solid product that is business oriented. Get a card reader so when you go to a big show you can come back and scan in all the business cards you get and not have to spend two days typing.
A business license is always required, even for pan handlers. Go to your local authority and find out what you must have. Keep in mind, if you are in the county and not in the city, you may not need a city license. Taxes - find out about paying sales tax if you are collecting it. How to do it and what is required. If you can do it online it is usually easier and faster and less headaches. Just do it and keep up with it. No fudging around this one. Also, keep in mind if you buy something and use your tax I.D. to avoid paying sales tax on it - then you use it - that is the line in figuring out your "sales and use tax" that you show you used it...and now you pay tax on it. A good accountant will be a treasure in keeping you out of jail here.
Now go out there, make a sale, follow up with extremely good customer service and support, handle the billing and receivables - pay your vendors and live in the glow around a profit. Then do it again over and over - you are on your way!
Next time we will get more specific on a invention manufacturing company and what all is involved in getting going there. Make or buy decisions, costs comparisons, China and the far East, quality decisions and so on. Until then, best to you and good luck in your next new job.