How to Grow Your Service-Based Business
If you are a Caribbean entrepreneur who is in the business of selling services–not products–and are finding it difficult to grow your business, you are not alone. The majority of enterprises operating in the region fall in the services sector, and in some countries as much as 75%-80% of all entrepreneurial activity is service-based. Yet, few of these businesses have figured out a formula for steady, sustainable and profitable growth. This is not surprising, given the limited export focus, small population size, low economic growth, and modest consumer purchasing power typical of most Caribbean economies. Significant enterprise growth is still possible however, once focus is directed on four basic preconditions for growth:
- Growing demand
- Robust target market (s)
- A healthy business environment
- The internal capacity to manage opportunities, threats, and challenges
Oftentimes entrepreneurs make the mistake of becoming overly consumed with their passion and ambition to grow the business, while neglecting to validate whether or not there are external opportunities on which to capitalize. An unwavering drive and audacious growth objectives simply are not enough. Only when you have indisputable evidence of substantial and increasing demand for your company’s services should you take steps to expand. Be as far-reaching as possible in your evaluation of demand, looking at the local, regional, and international appetite. In particular, you want to consider and evaluate the historical, present, and projected trends as best as possible.
Robust target market segments
Even when it’s clear that there is growing demand, it’s important to properly segment and assess the market in order to determine where the greatest demand is, the value of each target market segment, and how long demand may endure in each segment. It’s also critical to understand the trends, dynamics, and needs of each target customer segment. When it comes to services, the key to profitable growth is focusing on the segments where there is adequate demand and where you can get the highest and best value for your services.
A healthy business environment
Growing your business is exciting and when it actually happens, is incredibly positive. The process however, is highly risky. The right business environment and the right timing can be the difference between resounding success and dismal failure. When considering the business environment focus not only on your business locale but also the markets in which you operate and in which you plan to expand. Some of the key indicators have to do with government bureaucracy, taxation, access to finance, labour market fundamentals, inflation and exchange rate security, crime, security and justice, political security, among others. Assessing the complete external environment and determining the right time for expansion is one of the most critical success factors for growth.
The secret sauce in the growth recipe is undoubtedly your internal capacity to take advantage of the external opportunities, threats, and challenges that you have carefully researched, analyzed, and documented. Internal readiness typically depends on the business model, financial resources, human resource capacity, technology and equipment, and most importantly capable leadership and management to propel and control every step of the growth process, manage the threat of competition, drive innovations to meet market needs and adapt to environmental and technological changes. Service-based businesses require compelling value propositions to make intangible services more tangible.
Productizing your service is a great strategy that makes it easier to expand a service business. For example, one way to ‘productize’ training services a business provides, would be to create a standardized online course offering that customers can purchase and access remotely at their convenience. The more standardized, accessible, and convenient the service, the easier it will be to scale.
Finally, service-based businesses need robust revenue models to support expansion. Again, using a training enterprise as an example, the business could offer a series of courses which it could upsell to customers instead of a single standard course; or the company could provide a subscription service where clients pay a small monthly fee for unlimited access to existing and new training courses as well as resources and online technical support.
Developing the internal capacity for growth has many diverse, moving parts that need careful planning and management. While profitably and sustainably growing a service-based business is complex it certainly can be achieved with the most precise balance of external opportunity and internal readiness.