5 Tips for Creating a Scalable Online Services Business

October 31, 2016

9:15 am

Ask any agency owner what the hardest thing about their business is and one theme that’s bound to come up time and again is growth.

In agencies, as with any human resource intensive business, revenue typically goes hand in hand with expenses. You sign on new clients, work starts piling up, you hire more people to deal with it and the cycle continues.

And if you’re not careful, this can lead to paper-thin profit margins, even at scale.

So here are a few tips for getting around those limitations and creating a service business that becomes more profitable as it grows…

1. Productize Your Services

Doing custom work for each client is a hard operation to scale. Because it requires a highly qualified team, which is expensive to hire and slow to train. Not to mention all the time that goes into dealing with quotes, proposals and negotiations.

That’s why right now more than ever agencies are narrowing their focus and using a different approach – the productized services model. It boils down to solving a specific problem for a certain target customer in a repeatable way, and at a fixed price. So customers can see exactly what they’re getting and at what cost.

It is less overhead for agencies and a better deal for buyers, because instead of working with a few large clients, the agency is delivering the same service to many smaller customers in an optimized way.

2. Leverage Software and Automation

If you’re getting a lot of orders you don’t want to be spending hours on end copying and pasting data to a spreadsheet. Here’s where investing in software can really help automate some of the management tasks and streamline your agency.

There’s dedicated software for selling productized services, or you can use a combination of standard project management and billing tools like Basecamp or Trello.

Either way, setting up right at the beginning will save you pain and headache later down the road, in case you need to switch software for example.

3. Create Templates and Procedures

Agencies that thrive in the productized services environment rely on written operating procedures because it lets them handle more orders with a smaller team (and enjoy healthier margins).

A few of the things you can include in your documentation are:

  • Checklists for delivering services
  • Templates for reports and client updates
  • Processes for team communication and tracking work

Keep in mind, this is not something you can set and forget. Any time a new team member goes through your operating procedures, it’s a great opportunity to evaluate what can be improved and updated to keep the documentation fresh.

4. Outsource Tasks to Contractors

Having all this detailed documentation is extremely helpful when it comes to hiring and onboarding new team members and contractors.

Not only can you get them up to speed much quicker, it also enables you to build a remote team by hiring people from all around the world.

Digital marketing agencies have been using remote teams for years, and it also works great for productized services, for example, if each team member is responsible for a specific task.

5. Provide Ongoing Services

Building momentum with one-off purchases can be slow as you’re essentially starting each month from scratch with zero revenue. A subscription based business, on the other hand, only needs enough new customers to cover churn.

Of course, not all services can provide value on an onging basis. But if you’re solving a problem that your clients are going to have more than once, consider adding a subscription service to your offerings.

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