The Ultimate Guide to Starting a Service Based Business

WARNING: This post is very direct. But it all comes from the heart. Don’t tell me I didn’t warn you…

Let me start off by saying, YOU CAN DO THIS! It will be hard work but it’s NOT IMPOSSIBLE. Suspend disbelief for once in your life and let’s focus on how you can take the steps forward to starting your business already! Every successful service based business that I respect started with one person with the desire to make it happen.

I know this is going to be hard to believe, but I will ACTUALLY tell you what you need to do, right now. It doesn’t matter if you are a graphic designer, wedding planner, a coder or a yoga instructor, this guide will get you started properly and I’ll leave you with the next steps as well. I’m going to go straight into it and give you the goods you need, and then you can thank me later. Crazy right? Let’s jump right into it.

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Step 1: Get Your Head Right

Do you know how to do your thing, your service, better than most of the people around you? If you answered YES, you got something people want. That makes what you do, worth money. Granted, your skills may be beyond this level but the point is you don’t need to be on the cover of Time magazine to start charging for your skills. You just need to be better than who you are charging.

Many people don’t ever go pro with their craft because they never feel they’re good enough to charge money for their skills. At the very least, your time doing any kind of work, is worth money. There are all kinds of budgets out there. Just get started. We’ll talk about your rates later on but if you haven’t charged for your skills yet, DO IT NOW. I’m serious.

Step 2: Put Up A Website. Have one? Take Another Look.

Having an effective website is critical when starting any business. And yes, if you are freelancing you are still running a business. The keyword here is EFFECTIVE. You need to clearly communicate who you are and what value you offer quickly and concisely. The most important thing about any website is the content- what and how you communicate to your audience. The job of design is to augment that message.

Make sure your opening headline on your website captures your visitor’s attention. If you are someone that is great with kids as a photographer say something like “Getting a decent photo of your kid can be torture. Let me put you out of your misery.”

If you are confused about the tech or the design side things and you’re on a limited budget, just go with a Squarespace site. Pick a clean and simple theme and start building. They are actually a sponsor of The $100 MBA Show and offer our listeners a 10% discount if you use code MBA at checkout.

If you already have a website, the above advice goes for you too. Take another look at your site and see if you are communicating effectively.

Step 3: Add Value

On your website, you need to offer something your audience will enjoy and find valuable. That’s where your blog comes in.

Remember your visitors will be people who need your services and the best way to show you are good at what you do is to share your experiences. Share a story about how you were able to take on a demanding project with a short timeline. Or how you discuss new projects with new clients.

Share tips on how they can use your service. Explain the rational behind your advice.

By creating great content and sharing stories and tips, your visitors get to know you, like you and start to find reasons to hire you. If you’re worried about people finding you on the web, writing useful posts will also help you rank well on Google and other search engines, as others may be searching for topics you write about.

Step 4: Build A Portfolio And Get Some Testimonials

At first, if you have no work to display on your portfolio, you will need to approach 5-6 potential clients and offer your services for a heavily discounted price, to build your portfolio. This is also an opportunity to get feedback from clients on your process of working with them and how to improve it.

You can ask these clients for testimonials in exchange for this incredible deal. They can be written or even video testimonials which you can display on your website. Cool huh? This is just to get you started, you’ll get more testimonials as you take on more clients. Here is an example of a video testimonial we got back when used to do lots of service work at Business Republic.

If you already have work to display, you’re good to go, but make sure you have some testimonials. If that means contacting previous clients, go ahead and do that.

Step 5: Set Your Rates

There are 2 basic ways to set your rates.

1. Use a market rate.

Look at another business that has similar services and experience and use a similar rate. A rate can be an hourly rate or prices for service packages. List 3 businesses similar to yours and note down their rates.

2. Use your “need to make” rate.

First, how many hours can you dedicate to your service-business every week? Divide that by 2. Half of your time will be spent on actually running, marketing and building your business. The other half will be dedicated to your actual service work. This may come as a shock to some- “half the time?!” But yes, you need to factor this in so that you are not setting your rates too low.

Second, how much money do you need to make a week to cover your personal expenses? Everyone is different. Your weekly number may be $1000, $800 or $700.

Third and finally, take your weekly amount of money needed and divide it by the number of service work hours a week. That’s your hourly rate. For Example: $1000 / 25 hours = $40 per hour

Step 6: Knowing How To Deal with Clients

Client work is just like any relationship in life. After your first conversation, each party will have already formed an opinion about the other. The client already has imagined what working with you will be like and that’s just human nature.

The good news is that you are in control of how that all happens. The bad news is that YOU are in control of how it all happens- not a typo. Here are your 4 MUST DO’s when dealing with clients:

Must do #1: Discuss Why They Are Hiring You

Sometimes clients forget when they hire you, they are not your boss. And you are not their employee. You are a business owner offering a service they need.

Let me state that again. They need you. That’s why they are speaking with you. They are not a pro. You are. That’s why they took the time to find out about you and contact you. Whether they actually state it or not, they probably need you badly.

Setting the tone of the nature of your relationship doesn’t have to be mean or condescending but it does need to be done. Here is an example conversation:

Client: I really need my website to look professional and to show what we are all about.

You: I completely understand and you’re completely right. As a business owner myself, I know how important it is to convey my brand. Your reputation is at stake.

Client: Exactly! It’s essential.

You: That’s why I like to take the time to understand you and your business very well before I begin work. My clients don’t work with me only because I’m a great web developer. They hire me mainly because I know how to communicate their message to their audience creatively.

Client: That sounds exactly like what I need.

The point of this whole conversation is to do a few things:

– You establish the nature of your relationship. You have something they need. Not the other way around.

– In this example, you are not just a technician that can create a website. You possess skills and talents they don’t, some might not even comprehend.

– It communicates you know your stuff.

– It’s understood you’re not an employee. You’re a business owner just like them.

Must do #2: State Your Rates or Decide on a Budget

At some point in your first conversation you have to talk about money. You may prefer to save that until the end of the conversation but it needs to be done. Delaying this will not only potentially waste your time, it also conveys to your potential client, your not sought after and you have no real qualifiers.

If you’re a person that will work on any project, of any size, for any given amount of time, for any price, it basically means that you are cool with slavery. I’m not trying to be dramatic here but even 9 year-old Bobby down the street clearly states his rates for shoveling snow. Ever hired anyone and not know how much they cost?

It’s only fair to both parties. Some clients will try to milk you and try to get 2-3 meetings out of you. They will attempt to discuss their plans for dominating their market and the world in the near future (writing this out of experience) before even discussing money. You are in the services business. Your time is money. It’s your responsibility to have this conversation with them. State your rates or decide on a budget they are OK with before you move on to your meeting number two.

Must do #3: Only Start Work with a Deposit

Unless you have worked with a client in the past and you had a great experience with them, you have no evidence they are committed to you in anyway without a deposit. That’s just reality speaking, not me. A deposit can be whatever you agree on- 25, 50, 60 percent, whatever. Some money needs be put on the table before you roll up your sleeves. Beginning work without a deposit is just flat out asking for trouble. TRUST ME! I didn’t get all my gray hairs for nothing. A deposit is standard and it’s what professionals do.

Must do #4: Agree on a Timeline

You are running a service-based business so time is money for you. So agreeing on a timeline early on is essential. They are looking to you for guidance on this one, so propose a timeline. This timeline includes any payment schedules as well as any given revision cycles if applicable.

Make sure you frame this conversation in a way they know you are doing this to make sure everything is transparent and they know when and what to expect. This also makes things a whole lot easier for you. This is especially important when it comes to work that needs approvals during the process. Make sure clients know there is a deadline for that too.

Another benefit of setting a timeline is it lets your clients know, you got other clients and you’re not just working with them. You are happy to be working with each other but you are a sought after talent.

Step 7: Getting Your First Clients

In the beginning you just need to get the ball rolling. Here are some tips to get your first regular clients:

1. Make sure everyone and their cat knows you are now offering professional services. Contact everyone on your contact list and in your social media circles. You can even offer a referral fee for friends and family.

2. Go to some local shops you frequent and tell them what you can offer them. Let them know their business or brand will be displayed on your website and their business’s website or Yelp link will be hyperlinked. What business doesn’t like free marketing?

3. You can also use some freelance online services like these to get some clients:

4. Team up with someone that shares your audience and agree to have them refer clients to you. For example, back in the day when I ran a small web design business, I got my first clients from a content creation service business. They wrote articles for blogs and some of those blog owners asked if they knew anyone who could redesign their site. I was that “anyone.”

5. Go where the action is! Go on Eventbrite or sites like it and find out what local events are going on in your area and meet some people that can potentially be interested in what you offer.

Let’s Wrap This Up

I’m here to say your art, your craft, can be your business. Your actual livelihood. With that said, understanding and doing business properly is probably going to be the defining factor in your success in going pro. That’s just the truth. But just like you’ve learned how to do your craft, you can learn how to run your business properly as well. This guide doesn’t cover every single aspect of building your business, but these are ultimately, the essentials to get you started. You can learn the rest as you build. The point is to start TODAY.

Wow! You made it to end of this post. You are obviously serious about going pro and starting a service based business, so I don’t want your learning to end here. We have a full course inside The $100 MBA called Building a Service Based Business and you can dig into it for only $1. Yup, just a buck. It’s includes 14 video lessons, a workbook and even downloadable templates for invoices and receipts. Here’s the intro video for this course:

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And you’ll also have access to all of our other courses and workbooks inside The $100 MBA too- Over 180 video lessons and a whole lot more.

Thank you for reading this post and letting me share what I love, showing others that business is not rocket science and that you can do this!