Starting a Service Business: 5 Considerations

Starting a service business of any kind from the ground up can be both exciting and overwhelming. It can also be very demanding, so it's crucial first to go over all your options, set realistic expectations, and make a logical plan before you dive into business ownership.

Before we look at the top five considerations to help you get started on your entrepreneurial journey, let’s define what a service business is.

What is a Service Business?

Starting a service business is more than finding customers and being your own boss. As its name implies, a service business offers customers a service instead of a tangible product with the primary focus of delivering value through activities, expertise, and processes that meet the needs and expectations of clients. Service businesses exist across multiple industries. One of the most successful of these is the home services industry.

5 Considerations for Starting a Home Service Business

Starting a home service business can be an incredibly rewarding venture, offering the opportunity to provide valuable services to homeowners and renters while building a profitable enterprise. Whether you’re considering launching a cleaning service, plumbing business, landscaping company, or another type of home service, there are several key considerations to ensure your success.

1. Starting a Home Service Business Requires Planning

As you explore your options for business ownership, you should begin by asking yourself some fundamental questions like these: What is my vision for the business?

Do I want to keep it small or eventually expand my staff and even offer multiple service areas? What services should I offer? What unique home service business ideas do I have that can set me apart in the industry?

A sound and effective business starts with a sound and effective business plan that includes the following:

• Basic summary of your business
• Services offered and unique value propositions
• Mission statement
• Short-term and long-term goals
• Description of your likely customer base
• Financial plan and projections
• High-level marketing plan

2. What Home Services or Other Services Should You Offer?

Identifying your niche will require significant soul-searching and market research to determine which services align best with your personality, expertise, work ethic, and goals. Spend an ample amount of time on this step because determining the service focus of your business will define everything from marketing to hiring to training to processes to short- and long-term goals and more.

Once you’ve chosen your service area, make sure you understand it inside and out so you can plan to operate your business well. What equipment will you need? Will employees need certifications or specialized training to perform services? Are there any local or state regulations regarding that service? Becoming an expert in your unique service area is an essential element in ensuring your success.

3. Know Your Financing Options

Getting your finances in order is one of the critical first steps in taking business ownership seriously and being taken seriously as a business owner. That usually means securing initial funding.

When shopping for business loans, do your research. Start by partnering with a bank you trust and bring a well-researched business plan and market analysis to your loan consultations. If you have those documents and a good credit score, you're more likely to qualify for lower-interest loans with better terms. Additionally, if you are becoming a franchisee rather than a solo  business owner, lenders may look at your loan application more favorably.

And if your bank can’t meet your needs, other options may include SBA loans, alternative lenders, and 401K/IRA business financing. Work with a trusted financial advisor to explore your options.

4. Understand Licensing Requirements for Service Businesses

Compliance with local regulations and licensing requirements is crucial in operating a home service business. For example, if you're starting a plumbing or electrical business, you may need a trade and/or contractor's license. Additionally, ensure you have all required permits for operating in your locality and purchase appropriate insurance coverage, such as liability insurance, to protect against damages and lawsuits.

The steps to secure a business license vary significantly from state to state, so start your research early in the planning process. All the guidelines should be laid out clearly on your state’s official website, and you’ll find links to apply for specific requirements. If you have questions as you research licensing, write them down and call the business licensing department for your state.

5. Home Services - Franchise or Start Up?

When starting a home service business, a fundamental and company-defining question you’ll have to answer is this, should I buy a franchise or pursue a start-up? Both approaches have pros and cons, and your choice will depend on your business goals, resources, and risk tolerance.

Starting from scratch gives you the freedom to do everything exactly your own way, but franchisors like Neighborly® respect your independence while offering support and training throughout the entire process.

Other benefits of franchise ownership versus starting a business from the ground up with Neighborly includes:

• Collaborative networking with other owners both locally and nationwide
• Valuable rebates and discounts through ProTradeNet®
• Robust brand and marketing support at both the national and local level

Franchising with the right brand can also soothe many of the major fears and headaches of starting a business alone. These types of perks are responsible for the 90% success rate of franchise businesses.

Start Your Service Business with Confidence

Are you interested in franchising? Neighborly has opportunities near you and all over the country with 19 highly successful Home Services franchise brands to choose from in North America.

Take the Franchise Quiz and see if a home services franchise is right for you. You can also talk to a Neighborly franchise development expert, contact Neighborly today.

Originally posted on the Neighborly website at: https://blog.franchise.neighborly.com/considerations-when-starting-a-service-business