So you're running a service-based business and your interested in creating a scalable startup?
Well, you've come to the right place - this article discusses how to turn your service-based business into a scalable startup. If you don't know what a scalable startup is, read this post entitled, What is a scalable startup? first.
Example of a NON-scalable Service Business
Before we look at a scalable business model, let's look at the counterexample of a non-scalable business.
Let's take the extreme example and say you are a freelance massage therapist. You have a foldable massage table in your car and you can drive around and meet clients at their homes. You charge $100 per hour. So let's say you do a 60 min massage, and it takes you 30 min to drive to your client's home and 30 min back to your residence and another 15 or so minutes to set up your table and break it down post-massage. All together the 60 min. massage takes about 2 to 3 hours with commute and setup time (this isn't taking into account laundering the sheets!).
Let's say you are a very popular and talented therapist and you build your business over time through word-of-mouth referrals over a few years. You even luck out and find a few clients who live close to each other so you can see 4 clients a day since your commute time between clients is reduced. Well, given a 5 day workweek and 4 clients a day with $100 price point, that's $400 each day or $2000 per week. Now that's a full week for a massage therapist - I doubt that any therapist could or would want to do that for very long. Putting aside the problem of joint pains and how hard repetitive motion and physical labor on the human body and the fact that someone couldn't keep doing this for very long, you will also come up on the problem that there are simply only so many hours in the day.
Whenever you are delivering a one-on-one service, you will come up against the inherent problem of trading hours for dollars and the fact that there are just so many hours that a service-based provider can provide services. This is true if you are a massage therapist, or a psychiatrist, a plumber or an educator - trading dollars for hours will eventually paint you into a corner because every new customer you add creates a another new demand on your time!
You have to find a way that adding a new client doesn't make a demand on your time in order to create your scalable business model. Well, how are you going to do that? I'll give you some ideas.
One option to consider is incorporating a group model. Well, you can't do massage on two people at once (although some acupuncturists have found a way to move between clients so they can see multiple clients in one hour). That's one of the reasons why being a massage therapist isn't scalable. But, you could do something that works off your expertise. Ever wonder why there are so many massage schools - running a school is a potentially very lucrative group model. One teacher can teach to a group of 10 or 20 or 200 paying students all looking to learn the modality. This is why many yoga teachers and yoga studios offer teacher trainings some which are in the many of thousands of dollars. Offering a workshop, lecture, teleseminar or anything you can deliver to a group is a great idea to create a more scalable business model.
Think of the difference, instead of performing a massage for one hour for $100, you could charge $100 for an hour class and deliver it to 10 or 20 people at once, making yourself $1,000 or $2,000 for the same hour. Now you'll have to find a hot topic that people are willing to pay $100 for, but that's possible.
Create a Product
Moving your business model from a service-based business to a product-based business can be done by creating a product.
Want to take your specialized, expert knowledge and put it into a product? How about a set of video tutorials delivered on your website or delivered via email autoresponders? How about using an LMS (learning management system) to take your teaching and put it into an online learning program which you can charge a fee to take online. These are all great ways to turn your service-based business into a product and escape from trading hours for dollars.
Imagine being on vacation in Bali and having people buy your online product while you are enjoying a massage. When you look at your email account back at the hotel, you'd simply see an email notifying you that the funds paid to your through your website will be deposited directly into your bank account! Now, I can tell you from personal experience, that when you receive your first email like that it's a very thrilling experience!
Create an App
Have you heard of SaaS - Software-as-a-service. Now, service delivery by a human isn't scalable but what if the service you are delivering is a software application. Software applications don't need paid-time-off and don't take two hour lunches. One of the coolest things about technology is that it can help you build a scalable business model. This is what allows Facebook to serve hundreds of millions of customers while earning billions of dollars - Facebook's product was a web application (now also a mobile application) - the application serves the customer and the staff just manage and optimize the application. Now, you don't need to have a team of developers build a web application for you to leverage technology - you can use other SassS applications like AWEBER and WEEBLY to put together an application that delivers YOUR custom content to your users.
So I've mentioned a few of the many ways to start thinking about moving your one-on-one service based business model into a more scalable business model and there are many others. Our series of courses will walk you step by step through the process of creating a scalable business - an automated website. If you want to learn more, check out my blog on The Four Hour Workweek - Myth or Reality? which includes a great diagram that will allow you to stop managing your customers and start optimizing your business so that you can escape 9-to-5, live anywhere, and build a scalable business model that allows you to serve more and more customers without making more demands on your time!