Starting your own business can be incredibly gratifying, but is also full of challenges. Based on my experiences over the last 10 years, I’d like to share these additional five lessons learned on what works and what doesn’t work to help manage and grow a successful services business. (For the first 5 tips, see is part 1 of this article.)
- Be prepared for legal issues: You will need a good lawyer, at least part time, on a consistent basis. There’s a myriad of legal and evolving issues of importance in a service business, including how one handles non-standard Master Service Agreements, Non-Disclosure Agreements, partnering agreements, sales agreements, etc. Additionally, with a good attorney on your team, even part time, serving as your general counsel (think “consiglieri”) – one can leverage expert legal advice in handling difficult or unusual contractual issues. Seek out an attorney who is tough (you want a staunch defender in your corner) yet focused on scenarios that support building the business, while respecting the client.
- Manage your staff’s billable hours: In the services business, your staff’s time is the “product.” While long term continuous relationships and retainers are ideal, the mix will vary as will project size. At the same time, you want to provide an engaging, safe and secure environment for your staff. Unless one has very deep pockets or a war chest of cash to get through the inevitable downturns, the business needs to be very focused on managing staff billable hours and head count. One way to provide operational flexibility is to build a direct staff team for the baseline level of work and supplement the team with thoroughly vetted and trusted contract staff that can be moved in and out to manage the billable hours and head count. To make this approach successful, be on the lookout for talent for the present and the future (in both direct and contracting roles) to enable the company to rapidly grow in response to business opportunities -- without compromising quality.
- Good communications skills are essential: While every company says it needs staff with good communication skills, in a services business this is more than just idle talk. In most services companies, virtually everyone on your team is “customer facing.” As such, you need team members who can communicate clearly and concisely. Your staff needs to be adept at handling delivery of messages in a way that is embraced and welcomed by the clients. Bullish behavior and blunt language isn’t acceptable. Great customer service requires nuanced communication. While 100% of the team need not be expert public or written speakers, your senior staff needs real skill here. In many large product companies, where the engineers are not necessarily customer facing, interpersonal skills that are “sub-optimal” can be tolerated in order to leverage talent (especially when the talent is not customer facing). In a services company, one individual can literally “poison the well” with a client if that individual is perceived as rude or insensitive.
- Your team (even the engineers) need to be salespeople: Among those of us who are engineers, being perceived as a salesperson can be frowned upon. Perhaps some have had bad experiences with salespeople who were disingenuous or lacked knowledge. In a services company, almost every individual has a potential direct impact on customer satisfaction and landing new business. Importantly, a company benefits when every staff member is seeking new opportunities for new clients, new projects, etc. Finishing up a successful project? You want your senior staff to discretely ask “What’s next?”, for example. Does that make your engineers expert salespeople - or sales people at all? Yes and no. No, in that the primary role of an engineer is rarely as salesperson. Yes, in that everyone can help engage with clients in the never-ending search for “the next big thing.”
- Promotion and marketing can involve a range of team members – not just your marketing communications staff. Consumer products companies might need broad and ubiquitous campaigns to introduce products to customers, with a specialized staff focused on communications. In a services business like IPS, marketing and communications efforts are also important. The channels of communication, however, are very different from a consumer products company. A services company must identify its audience -- a narrower target than for consumer product companies. An effective marketing campaign can be created focused on media and events targeted toward reaching prospective decision makers. In a properly structured effort, many of your team members can help “row the boat” by writing an article for a trade journal or blog, or speaking at a conference. In addition, staffers can help create visibility for the company and promote the firm’s unique value proposition with technical articles, expert advice or, when permitted by the client, creating and sharing successful case studies. Most importantly, you will need an experienced marketing professional on your team to manage these efforts to be effective.
A services company needs to learn to continually and evolve its processes. The discovery and refinement of process and messaging never ends. It is crucial to continue meeting or exceeding your customers’ expectations, remaining relevant to real client needs and driving operational efficiency. Once again, good luck to you!
Mitch is the President and Cofounder of Intelligent Product Solutions (IPS). He honed his deep knowledge of product design on the strength of a 30-year career with companies that manufacture commercially successful products for the consumer, industrial, and DoD markets. Prior to launching IPS, Mitch was VP of Engineering at Symbol Technologies. He holds numerous US and international patents, as well a Bachelor of Science degree from Hofstra University, a Master of Science in Mechanical Engineering from Columbia University, and an MBA from Fairleigh Dickinson University. He can be reached at firstname.lastname@example.org.