Business Services 101
Business services are activities that benefit a company without producing a physical commodity. These include marketing, production, safety and cost benefits. Companies often outsource these activities to avoid the expense of employing in-house staff for specific tasks that require specialized expertise or equipment. There are several types of business services, including those for human resources, payroll and IT support.
Service businesses must focus on quality of service rather than quantity of work to be successful. This requires constant monitoring and evaluation of staff performance, especially as their roles and responsibilities evolve with the demands of the business. It also requires a different mindset from manufacturing-based firms, which may be focused on improving productivity and profitability.
In business theory, services are considered the third tier in the three-sector economic model. They encompass the businesses that provide experiences and consultation and those that deliver information or advice. Some services are tangible, such as food from restaurants and utilities that deliver water and electricity. Others are intangible, such as consulting fees or training courses.
Many of the same tools used in product-based businesses apply to service business, but a number of new techniques have emerged that help managers craft profitable service operations. The approach outlined here includes four critical elements of the service model: (1) design, (2) implementation and (3) management. This model, which is being taught to MBA students at Harvard Business School, has proven to be a valuable tool for analyzing and managing service businesses.
The first step in starting a service business is to identify a need or opportunity. Then develop a business plan that will outline how you intend to satisfy this need, who your potential customers are and what your pricing strategy will be. Finally, create a prototype of your service and test it with potential customers. If your prototype is well received, you can start recruiting employees and preparing for the launch of your business.
Business service providers help companies improve efficiencies, safety and costs. They offer a range of skills that are hard to find in-house and have the experience to complete complex tasks quickly and accurately. Outsourcing can also free up employee time for more productive, value-added tasks.
Some examples of business services include:
Purchasing and delivery services help a company receive materials and supplies without the hassle of going to the store, saving both money and time for employees. Tech support professionals help companies troubleshoot problems with their networks, computers and other technology so they can remain productive. Child care services allow workers to maintain a healthy work-life balance by providing reliable childcare while they are at the office.
Business-to-business, or B2B, services are provided for a flat or hourly fee. These help a company run its own operations more effectively, reduce costs or increase output. They differ from business-to-consumer, or B2C, services that provide a personal benefit to consumers. For example, a landscaper could offer B2C services by helping clients design and build their gardens, while a cleaning service offers a personal benefit for the customer by making their homes more attractive.