Episode 224: YES, You Can Scale Your Service Business
If you’re listening to this podcast you’re either tired of the hype in the business world about growing your business, or you’re looking for ways to grow in a healthy, sustainable way. Or maybe a bit of both. In this episode, I’m tackling how to scale your service business without the hype or BS.
A few weeks ago on social media I shared a post about how I was so very over people trash-talking service providers. And let me tell you, that post hit a nerve. It was one of the most popular posts I’ve ever shared on social, and that got me to thinking about why people reacted the way they did.
And then I realized that as service providers we’re constantly being fed a diet of lies about our business, and it grates on us. As an industry, thanks to how things are marketed, service businesses have been cast in a role of “less than” while course creators, big name coaches and those running group programs are exalted.
The lies we’re told are many, from trading time for dollars is wrong (newsflash: that’s what work really is) and my favorite, “you can’t scale a service business”, which I want to tackle in today’s episode.
If you’ve been listening to the show for more than a few episodes, you know how I feel about this. The short version of this is that it’s BS.
The truth is that, yes, you can scale a service business and today we’re going to dive into your different options.
But first, before we go any further, I want to call out the fact that I’m using the word scale as that’s the term used in the industry as shorthand for “growth”. Scale is actually hypergrowth, and that’s not necessarily what most of us want. What we want is steady revenue growth and we’re not trying to 10x our business in the next 12 months.
Now that we’re on the same page about what scale is, and that scale really equals revenue growth, we can dive into talking about your options for scale.
And get ready, you’ve got a lot of different options which I’m going to talk you through right now.
Business Model: Solo or Micro-Agency
First up, I want to tackle one of the biggest elements of being able to grow your business, and that’s your business model. This is really the structure of your service business, so it’s whether you’re doing this on your own, with a team or building an agency-driven approach.
I often hear from highly successful service providers that they feel stuck as they don’t want to build an agency. And I’m here to tell you that building an agency is really only one way to do this.
As someone who mentors agency owners, I can tell you point blank that this business model isn’t for everyone. So if you’re not feeling called to do it, don’t do it for the sake of growth. There are other ways to reach your goals.
This is really important to understand as there’s definitely been a lot of hype about the agency model as the way to build a “hands off” service business. And yes, that can be done in time, but spoiler alert, it’s going to take work! There’s no blueprint you can buy from a Facebook ad to make it go faster.
So, let’s say you want to stay a solo show. If that’s the case, you’ll want to listen carefully to the other options for scaling a service business that don’t require a team to execute. And that definitely doesn’t require you giving up services either.
It’s also worth noting that this isn’t an all or nothing proposition. You can stay solo and have a small team to support you without going into a full blown agency model. I did that for a couple of years before I started Scoop, and truthfully, it was a solid stepping stone as I got more and more comfortable with delegating and managing.
If you’re going the agency route, a lot of your growth will be driven by client demand, and your team’s capacity to fill that demand.
Most agency owners are bound by one of two things. The first is not enough client work to do, so growth is stalled, meaning there needs to be a bigger focus on acquiring clients.
Or they’re flooded with potential clients, but don’t have the capacity within their team to fill those requests, which is a sure-fire sign it’s likely time to add to your team.
A couple episodes ago, I briefly touched on service offerings as a way to pivot your business, and I wanted to go deeper into that here in this episode.
Once you have your business model nailed down, it’s easy to feel like you’ve done everything you can to grow. And the reality is that there are always ways to expand or change your service offering so that you can increase your revenue.
First, there’s the format of your service offering. Maybe it’s retainers or project-based engagements, and you’ve got that working really well. Carefully look at those and find the opportunities and identify the threats.
For example, a common threat to retainers that comes up is that they’re too short. Many times we’re stuck in a cycle of uncertainty with clients as they need to renew periodically. If your clients need to renew every three or six months, you’re creating a vulnerability in your business, and cutting off potential revenue. Instead, what if your retainers were for a year, or used a “minimum” of six months and then were open ended after that?
On the flip side, if you rely completely on project-based engagements, you may find yourself having to hustle to fill spots every month. Is there something you could be offering that’s an ongoing service to have steady revenue month over month?
Next, get ready to get creative, and this is especially important for those of you that prefer to stay as solo business owners.
What premium service offerings can you offer that provide revenue lift for a limited client engagement? Typically, these will be strategy-driven engagements, but trust me when I tell you that you need to stop undercharging for strategy and turn it into a premium offering. This could be something like a brand or content strategy, a VIP consulting session or similar offer that you can deliver over and over again, but has high perceived value for your client.
Speaking of premium offerings, do you have a signature service? Every service provider should have an offer that you’re known for and that people will pay a premium to work with you on. This may be your strategy engagement, it may be a specific process you do for clients, or something completely different. But if you want to make more money, you need services that you can charge a premium for.
Finally, with your service offering, consider how you can take the services you’re already doing and supplement them. Small add-ons can add up over time and they’re typically a no-brainer for our clients.
A great example of this is offering graphic design to go with the content we create for clients. While we’re not a design agency, we do have those capabilities in-house and it’s a major value-add to our clients.
In all of this, get ready to challenge what you think you know. Pay attention to what your clients ask for. What the market asks for. And most of all, be patient. These changes take time to execute, and for everyone else to catch up with your vision for your services.
Small Changes, Big Rewards
You know what’s super exciting to me as a business owner? When small changes can reap big rewards.
In my stage of business, this is where my real victories come in, as our business model and service offering are pretty much set. So if you’ve ever felt like you simply can’t grow anymore, this is where I’m going to challenge you as there are always some opportunities for growth if you want them.
First and foremost, pricing is one of the biggest opportunities every service provider has in their business. Most of you listening likely need to raise your prices and stop undercharging. Raising your prices incrementally over time can lead to big gains in your revenue and profit.
Another pricing related win, is increasing the dollar value of your minimum client engagement. It’s really hard to grow when you have 20 clients all paying you $500 a month. While, yes, you’re making $10k a month, I’m willing to guess that you’re working double time trying to keep all those clients happy.
You’re not cake. It’s not your job to make everyone happy.
In the above scenario, what if:
- You only had 10 clients but they all paid you $1k a month. By raising the minimum engagement and your prices, making that $10k just got much easier.
- Or if you had five clients at $1500 and 5 clients at $1k per month. You’re still serving half the number of clients, but you’re now making $12.5k.
- Now, let’s get wild, what if you only had eight clients, but three paid you $2k a month and the other five paid you $1.5k a month. Now you’re making $13.5k a month and you’re way less stressed out.
You get my point. This is applicable to your project or any other pricing. You need to have a minimum amount you’re willing to engage with a client for. Think of it as a “I don’t get out of bed for less than X” fee.
One of the reasons so many service providers end up burnt out and with bad boundaries with clients is because they’re simply working with too many clients. Our brains have a max capacity and serving too many clients is a recipe for disaster.
Both of these are ways that I’ve been able to grow my revenue in the past two years, and there are a few more that I’m going to talk about in-depth in an upcoming episode this fall.
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