Episode 199: Myths of Growing Your Services Business – The 2020 Edition
You can’t grow without a team. Your income will plateau. You’ve heard all the myths of a service business before, and in this new episode, we’re taking a look at these myths and looking how they stack up in 2020.
Back in 2016 on the second episode of this show, we talked about the myths of growing your service business. That episode remains one of the most popular episodes of the Small Business Boss podcast today.
Four years later, I thought it was worth taking a new look at these myths to separate fact from fiction and address any new myths that have emerged along the way.
Before we dive in, I did want to share how this topic gets me just as fired up now as it did when I first recorded it. In fact, it probably irks me even more now, and here’s why. First of all, I feel like since we first dove into this topic, things have course-corrected with more and more people realizing that the online course model isn’t everything it’s cracked up to be. And people are touting service businesses as a stable, viable way forward.
And yes, I totally agree, but I do want to point out something. A lot of the people you see out there who offer trainings and courses for service business owners don’t run a service business. They long-abandoned offering services in favor of a course or passive income-driven business. Which is fine, but I have some questions on how valid what they’re teaching actually is, and how long they can stay relevant.
Back in 2016, I felt like there was a stigma around running a service business and that many of us spent time justifying ourselves and explaining why we were doing what we were doing. It’s actually the reason this podcast exists in the first place as I wanted to have a conversation around what it’s really like to run a service business.
I can safely say that I’ve accomplished that mission and more. And for 2020, I intend to keep building on that message. Because a service business is the fastest path to cash, and the lowest overhead business you can run. But you need to know the tactics and strategies required to make it work, and not confuse things by trying to use methods that don’t fit your audience or market. More on that in a recent post where I talk about how we need a new market that makes the distinction between targeting entrepreneurs and bigger businesses.
With that, let’s look at the three original myths of running a service business.
Myth #1: It takes a long time to build a successful business
While I believe this myth to be true, I do think services are the fastest, easiest way to build a service business. Having a business based on clients will take time, but when you’re trying to attract a handful of clients that pay you hundreds or thousands, it’s much much faster than trying to sell 100s of memberships or courses.
I’m not gonna lie to you. Building a business takes work. It takes sustained effort. But it doesn’t need to take a long time. When I first started my business, I had a four month runway to make it work. And I quickly landed my first few clients. Sometimes it’s going to take longer, but with the right offer and the right market, it will all come together, and with much less effort than other types of businesses.
Plus, service businesses will always be in demand, because you’re giving people the gift of time and expertise. People will always pay for experts and/or to get back time.
Myth #2: Service Businesses are One-Size-Fits-All
This one definitely holds. I see a lot of “systems” out there that teach you a specific way to run a service business, but I call BS.
As I said in 2016, the possibilities are endless in a services biz – it’s not cookie cutter. It can be done in so many different ways. No one system, no one way of doing things is the only way.
The key is to do what works for you and that clients want to pay for.
One part of this myth that I definitely think is key is when people have this idea that a service business has limited revenue potential. That’s not true at all.
For years I’ve seen people decide they need to add a course or program as they couldn’t make any more money from services when they had so many untapped opportunities. So before you make that call, look at your pricing, look at your market and see what the opportunities are. Maybe you need a new offering, maybe you need a signature process, maybe you need new types of clients.
I know I quickly spotted a revenue ceiling happening in my business when we were working with entrepreneurs, and as a result, we’ve pivoted the agency to serve corporate clients. And guess what, we’re making more money with way less effort as we’re able to charge much, much more than before. The combination of price and a different market meant we were able to bust through that revenue ceiling.
And if you’re not convinced…think about management consulting firms. They command top dollar in their industry based on their reputation, process, and experience. They’re not up against a revenue ceiling as they’re a solution to a problem in the market, and the big four firms make billions every year.
To make this shift, you need to stop thinking of yourself as a freelancer and think of yourself and the skills you have to offer as a professional service provider or consultant. And then align your market and industry so there’s a demand for what you have to offer.
Myth #3: You’re indispensable to your clients
This is the final of the original myths and this one I’ll believe in until my dying day. Mainly because I personally held this belief for so many years.
When you’re running a service business, the second you trick yourself into thinking you’re indispensable you’re creating a number of problems.
First, while you want your clients to trust and rely on you, you don’t want them to be dependent on you. Don’t confuse the two, as when you cultivate dependence, you’re quickly going to find you’re not holding healthy boundaries with your clients. Plus, when you do this, you’re creating a JOB for yourself, not a relationship that’s one of provider and client.
Next up, when you think you’re indispensable, you can get too comfortable. Having secure, stable clients is ideal as a service business owner, but don’t ever think they can’t live without you. The second you start to think that, is the moment at which you can get complacent and be caught off guard. Clients make changes due to budget, internal hires and more. No client is forever, so don’t get too comfortable!
And finally, if you work with this myth driving you, you’re going to have a very hard time growing a team, taking a vacation or generally not being trapped in your email 24/7/365. Provide good service, but take steps to ensure things can and will function without you having a death-grip on everything.
With those myths out of the way, I want to add two more to the mix.
Myth #4: An agency is the answer
Yes, I’m someone who works as a mentor and consultant to agency owners, but I want to be very clear. When it comes to scaling a service business, an agency is just one option. Agencies are a proven business model, and it’s obviously one I love as someone who runs one, but they’re not for everyone.
Over the last year, I’ve noticed more and more people (ahem, in my social media feeds) selling agencies as the next version of the passive income dream. And boss, there’s not a single thing that’s passive about running an agency.
You can’t set it and forget it. You’re building a business based on people, and life happens. Systems are great, but they’re only as good as the people on your team, and your willingness to lead. So if you’re looking to the agency model as THE way to make more money, but have zero interest in building that business or managing people, think again.
Myth #5: The business is your personal bank account
Let’s talk about money, and how it’s super easy to get things super mixed up when you run a business. I know for me, for many years, I treated the business as my personal bank account. When revenue went up, my draw from the business automatically went up.
While this worked for me for a while, after a while, especially as I started to grow, it became a problem. As a smart, accomplished professional who was building a business to support my life and replace my salary, this was a tough one to rein in. But once I did, things in my business started to change as I stopped seeing every decision in the business as something that impacted my personal money.
Why? Well, it’s pretty simple. When every cent is seen as being YOUR money there’s a different mindset. When you treat the business bank account like your personal checking account, it’s hard to be strategic and thoughtful in your choices.
I’m not saying you shouldn’t pay yourself well or compensate yourself when things are going well in the business, but rather you need to create a hard line between business money and your money. It’s like church and state, the two shouldn’t mix.
And if you’re struggling with that, take a hard look at how you’re managing your personal money and do what you can to get that in order. I know clearer I got on my personal finance, the easier managing the business has become.
I’d love to hear from you about what myths you think exist about running a service business. Hit me up over on Instagram to keep the conversation going.
The next episode will be my 200th episode, and I’m bringing you an episode like nothing I’ve ever done before. I’ve invited two special guests to join me for a roundtable discussion on what internet marketers don’t want you to know. Be sure to tune in next week.