How To Start Service Business – Remember when you went to the video store to rent the latest blockbuster movie? You may still find a few video stores around town, but this business model is disappearing fast.
Netflix caused a major disruption in the movie rental industry and many industries quickly followed suit. Even Microsoft started offering subscriptions for Microsoft (formerly Office) 365!
How To Start Service Business
Consumers are getting used to the notion of subscribing to services instead of buying them, a practice known as the Managed Services model. This is the perfect time for a Managed Service Provider (MSP) like you to develop the right model for your business.
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For customers, it’s all about convenience. They can opt in or out of the service whenever they like and adjust their plans to pay for what they use. Companies also appreciate the predictable revenue that comes with a subscription model as well as many other benefits.
Digital Telepathy, a San Diego-based design company, went subscription-only and increased its revenue by 300%!
“Instead of signing a project agreement or monthly retainer with a detailed scope, we simply offer all our services under subscription for a fixed fee. Clients were confused at first, but as they experienced how our new approach improved our alignment on strategy, design output and speed of work, our retention rate skyrocketed.” Chuck Longanecker, founder of Digital Telepathy
But Digital Telepathy is just one example. You need to find the right model for your market, your business and the products and services you sell.
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Wondering how to make the managed services model work for you? We have a few tips to share.
The first thing you need to do is provide exceptional technical support. This will help you get in the door. Businesses rarely look for IT consultants if everything is going well.
IT departments have been using remote control software for years. Although it is effective, it has the disadvantage of disturbing the end user. Choose a non-intrusive support tool so you can troubleshoot problems easily and resolve them quickly.
This will reduce ticket time and help you make money with help desk support. It will also allow you to build recurring revenue with your customers.
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You can get this feature for free, but still charge your customers a hefty monthly fee per user.
The next step is to differentiate yourself from the competition. Before you can develop a clear strategy, you need to define the specific problem you are trying to solve.
Once you understand your market problem, you’ll be able to provide solutions that are specific and worth paying for. This is your unique value proposition and you should spend time developing it.
While your customer’s problem may not fit into all of these categories, you should be able to apply your solution to at least 2 out of 4 of them.
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If you need help building an effective strategy, read our article on how MSPs can write an effective value proposition in 3 steps
The first thing to do is set your price so you can set your break-even cost and your shipping cost. Then, evaluate the difference between the cost of in-house staff and your managed IT services. This will allow you to describe your solution in terms that your customers will understand.
Once this is done, standardize the pricing for your core offering. By knowing your normal and additional costs, you’ll be able to go to market faster with your solution. It will help you decide on a vendor to develop successful pricing and you will shorten your sales cycle. Sales will become easier and more repeatable, allowing you to grow your business faster.
This is the most flexible model. It is designed for businesses that have employees who work with many devices.
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Determine a price per user that covers all possible services. It will help you understand your costs. Don’t forget to factor in your price target and break even price.
This is known as the “cake price”. It offers fixed fees for all your services and focuses on customer experience.
To build value-based pricing, start with the concept of pricing per user and add your management fee. No need to disclose your price per user. Only show one price. Adjust your price for each service to maximize your profit. As we mentioned earlier, be sure to explain the costs for internal staff compared to your services.
Help your customers understand all the cost details related to IT. Everything from lost productivity to downtime is fair game.
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Once your customers see how difficult it is to run their IT department without you, tell them about your managed services. Explain that your solution will have minimal impact on their productivity and that you will be there to provide your expertise.
You can use this model to track specific aspects of your customer’s infrastructure and alert them to issues. The advantage here is that you can charge extra for support.
Evaluate costs and resources to provide three base price points (less than 3 is ineffective and more confusing). Explain how a higher price point offers better service. Otherwise, most customers will choose the cheapest package.
Use this model to create optimized solutions for everyone. You can offer a standard service with hourly blocks for customers who need a more specialized solution.
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Your customers may be overwhelmed by the list of features. That’s why you need to carefully describe each package. Otherwise, you’ll end up with a package that doesn’t meet your client’s needs and you’ll spend more time managing contracts than generating new revenue.
Remember, what works for fellow MSPs may not necessarily work for you. Being flexible will make you more competitive.
Continue working on easy entry points (supports) to display your IT muscles. Explain your unique value proposition in detail and provide a pricing model for it. This will lead you to long-term success.
As a value-added cloud solution provider, dedicated to providing more for its partners, direct customers and extended networks. The blog is just one example of how we do this, and our team members regularly collaborate on content to make sure it’s as useful as possible for our readers. If you like what you see here, we strongly encourage you to subscribe!A: You can start a courier business with very little capital expenditure provided you already own a vehicle and you can run the business from your home. But the cost can vary depending on your approach. For example, you can quickly start a courier business for $10,000 with Amazon-only deliveries in Amazon-branded vehicles.
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As you can imagine, the Covid-19 pandemic has driven the need for delivery drivers, as more and more people have shopped online.
For example, e-commerce sales in the US were 58% higher in the third week of March 2020 compared to the same period in 2019.
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During the same time period, 20% of consumers in the US ordered groceries online for the first time.
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All such e-commerce sales require a delivery driver. Any increase in online shopping has a corresponding effect on delivery requirements.
From January 2018 to January 2020, the number of workers in the “courier and messenger” industry jumped from 690,000 to 850,000 (Bureau of Labor Statistics).
During that two-year period, this was the fastest rate of job growth of any industry (with at least 500,000 people employed).
As shoppers become more comfortable shopping online, it’s fair to say that there are plenty of courier business opportunities available now — and it’s an industry with good growth potential.
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Of course, you need a reliable method of transportation and preferably one with a large storage space, so that you can carry large items and multiple orders at a time.
In theory, you can start your own business from home, provided you take the time to plan and thoroughly budget your business.
Best for big cities, as this is one of the fastest ways to get around dense urban environments. The start-up costs are lower, as bikes are obviously much cheaper to buy and operate than vans or trucks.
Useful for city centers, but also great for wider suburban areas. They can also carry more weight than a bicycle.
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If you are considering sending large packages over longer distances, a van is your best option. You can save by carrying multiple loads in the same vehicle.
This is a very specific and new delivery method, but one that is being tested by more and more providers. There are risks involved with trying to be ‘ahead of the curve’, but the upside is that you’ll also be ahead of the competition.
This requires a solid business plan and a large amount of start-up capital. Logistics experience is also useful.
As more people shop online and get used to buying and receiving items on the same day (think Amazon Prime), more and more demand will increase for same-day courier services.
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Certain industries or suppliers require specialist courier services. For example, medical or healthcare couriers; dangerous goods; or temperature controlled delivery for
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