There are so many overlooked benefits to starting a service based side business and why you should seriously consider this model if this is your first time launching a side business.
Video: Benefits of a service side business
If you’re at that stage where you’re looking to launch a side business, but you don’t necessarily have the idea nailed down or you’ve launched it yet, you’re in that stage where you’re sort of wondering what you should start and gathering ideas for potential side businesses you could launch.
You’ve probably come across a lot of different business models.
Including:
- Drop shipping,
- Affiliate marketing,
- Online course creation,
- Amazon FBA,
- Software side businesses, etc..
The list goes on and on and on.
There’s so much information out there about starting a drop shipping business, Amazon FBA or course creation business that it’s beat into your head that these are the paths you should take. And while these businesses can be great to start, I really think you should consider starting a service based side business.
1. Generate a Profit More Quickly
The first reason why you should start a service based side business is because you can generate a profit more quickly.
If you base the service that you’re selling on the skills and passions you already have, you’re able to deliver that service without having to hire someone, and this keeps your overhead costs low.
Similarly, as a side business and in the beginning, you can generally operate this from the comfort of your own home. Then you don’t have to worry about renting out any space in order to hold inventory or spending that five to ten thousand dollars initially on inventory to sell.
With the service, you can develop the offering and deliver it yourself to keep costs really low. And this will allow you to generate a profit more quickly.
2. Decreased Competition Through Specific Targeting
The second benefit is that you can target a very specific audience and have decreased competition.
When you build a service based side business, you’re able to tailor that service to fit the very specific needs of a very specific group of people. Similarly, once you’ve done that, there is usually only few competitors in that area that can offer a service like what you’re offering.
Compared to other business models
However, compared to a drop shipping or Amazon FBA business, there are hundreds, maybe even thousands of people selling the exact same products and they could honestly be buying it from the exact same supplier that you are. Your competition remains high and your target market also remains quite broad as these products aren’t usually very niche specific.
With a service, if it’s based on the skills, knowledge, passion and experience you have, it will be hard for someone else to come into the market and offer the exact same thing, because yours is so highly differentiated on the unique value proposition that you can offer to the market.
3. Build a Name and Reputation For Yourself
The third benefit is that you get to build a reputation and a name for yourself in the specific industry that you’re in with your service.
When you’ve built a service and you’re offering that to a specific industry, that gives you a chance to get out there, start your marketing, meet people and ultimately build a brand and a name for yourself.
Compared to other business models
However, when you’re doing a drop shipping or Amazon FBA company, this is not always the case. While you may be able to dominate a certain market and build a brand, it becomes very hard to do that because you have competitors that can easily enter the market and sell the exact same products and build a brand that’s very similar to yours.
Similarly, you’re not usually out there building a name for your brand. You’re usually just trying to push products through certain ads and through certain channels in order to get them sold and off the shelf. And then you’ll look for another new product to sell that’s trending.
With the service, you’re building a sustainable side business that you can run for the years to come and where ultimately your reputation is going to build upon that and help you grow this side business and service altogether.
4. Focus on Client Results
The next benefit to starting a service side business is that you can really focus on getting your client the results that they’re looking for.
That way, as you go and build your side business over the years to come, you’re building a business that will have consistent referrals from the friends and family you’ve helped, because they get a lot of value over your service and won’t hesitate to recommend their friends that are looking for a similar result.
This will ultimately give you confidence as you build your side business and help other people down the road. And in the beginning, when you’re starting a service side business, the administration and operational side of things is usually pretty low on the amount of time it’s going to take.
Compared to other business models
However, if you look at other side businesses, the administration and operational side can be a massive undertaking. If you think about drop shipping, you have to deal with suppliers, website management is huge, you have to deal with customer success and inventory fulfillment and making sure that whole process is working smoothly. Otherwise, your business can fall apart.
Benefits of a service
If you start with a service, you can really focus on getting that first client, working with them to get those results, making sure they got the results and are happy with that, then you can focus on getting another client, etc.
You don’t have all these complicated things in between you need to worry about.
5. Higher Profit Margins
The fifth benefit is that you’ll generally have higher profit margins.
If you position yourself properly in a niche market, in a market that has consumers that have money to pay for services, and you position yourself in a way that you’re adding some significant more value above your competitors, you’re generally going to have an ability to have a really great profit margin.
Similarly, if you’re starting this service from the comfort of your own home and operating, online businesses typically have high profit margins, combined with a service that you offer with yourself and your own skills, and you can really have a really high profit margin service that you’re offering because you don’t need to worry about the overhead, hiring employees, or buying inventory, etc..
6. You Can Scale Service Businesses
Now, the sixth benefit is that you can scale a service based side business.
Contrary to what other people are saying out there where you can’t scale a service or they think products are the only way to scale, or courses are the only way to scale, you can actually scale a service based side business.
If you set up your business correctly and with a profit margin where you’ve included an hourly wage for someone, you can actually hire someone to perform the services that you’re hired for your by clients. You can work with them and teach them the results that they’re expected to get for the clients that come in. And you can hire them and pay them the hourly wage that you’ve included in the pricing for your side business.
This will allow you to scale your side business as you can hire people to perform those services while you work on bringing more clients or work on other parts of the business.
7. It Can Be More Fun
Starting a service based side business can also be a lot more fun.
You can actually perform a service that you’re passionate about that you have skills and knowledge in and one where you really like working with the clients you’re working with.
As you start your service based side business, especially in the beginning, you’re going to be the one working with those people. And it can be a lot of fun. You can have fun with your clients, and seeing them get the results that you’ve told them they’ll get with your service can also be a really rewarding experience.
One thing awesome about a service is that you can perform it and you can choose a service you’re going to offer that you’re passionate about and then you really want to see the results for your clients in.
8. Pivot or Change Your Business Easier
The eighth benefit of starting a service, is that you can pivot or change your service a lot more quickly and with much more ease than some of the other types of business models out there.
For instance, if you’re offering a service and you notice down the road that you really need to niche down or you want to niche down into a more specific market, well doing so isn’t going to be too difficult. You’ll need to interview that niche and target market and make some adjustments to your service offering as well as adjustments to your marketing and maybe to some of how the operations are setup.
Compared to other business models
If you compare this change to a change that a product based service would need to make, it’s much smaller. With a product based business, you’d have to change all your inventory, your suppliers potentially, warehousing that inventory if there’s certain limits on things, etc., including your marketing and offering. It can be a huge undertaking and you’ll also need to get rid of all the previous inventory you’ve had.
Benefits of a service
With a service based side business, you’d really just need to change your service offering and you’re positioning in the market in order to end up working with those new clients in the end.
Conclusion
As you can see, there are a lot of benefits to starting a service based side business compared to some of the other models you’ve probably read about out there. And well, a lot of those other models can make a lot of money, and they have for others, I really think if you’re starting a side business and this is your first business, you really should focus on offering a service.
It’s really going to help you learn the fundamentals of doing business, how to conduct sales, how to change your offering and positioning, how to market your business properly, etc. So you can really focus on the core things in the business, instead of some of the other admin and operational aspects that are more heavy and some of the other models.
