Business Magazine

Scaling a Business by Cloning Yourself is Tough

Posted on the 31 January 2012 by Martin Zwilling @StartupPro

Scaling a Business by Cloning Yourself is ToughMany writers have outlined the critical success factors for product companies, like sell every unit at a profit, patent the design, and continuous product improvement. But recently I was asked about success factors for services startups, and I quickly realized that there is very little published to help the thousands of startups that fall in this category.

The distinction between product companies and services companies is easy to see. Products are tangible and can be consumed now or later, while services are intangible and have no shelf life. A product business can usually be scaled with minimal people, which can lead to enormous profits and “making money while you sleep.” Scaling services means cloning yourself.

Obviously we can find many critical success factors, like finding and retaining high-value customers, which apply to companies that are product centric or services centric. Here are a few which I believe are at least most relevant and important to the services arena:

  1. Do what you know and what you love. If your business offers a service, like marketing or management consulting, you are the product. If you or any of your partners really don’t have the credentials, the commitment or the interest, you won’t succeed. Customers don’t like people who don’t show their passion and love for the job.

  2. Make sure your service is innovative. Being the low-cost commodity level service provider is not a recipe for success. It’s hard to make up for a low margin by increasing your volume of work. You need to demonstrate innovative approaches, more knowledge, more productivity and superior results to get the references you need.

  3. Networking and relationships. No expert or consultant can know everything they need to know. That’s why it is just as important that you can fill in the gaps by having the right relationship with people to back you up. Networking is the way to stay current yourself and nurture those relationships.

  4. Clearly communicate the vision, mission, and values. It’s hard to “touch and feel” services ahead of time, to see if you are buying what you expected. Thus it’s up to you to communicate effectively what you are about, to customers as well as your own team.

  5. Attract and retain the highly skilled and motivated people. Services people need to hit the ground running. Customers don’t like to see you learning on the job or outsourcing. Every partner and employee can kill your success potential in a heartbeat, so don’t take shortcuts on your hiring and training practices.

  6. Define and document the service process you sell. You can’t measure, scale, or patent a service process that is not clearly documented. Even if your service is artisan based, like commercial photography or interior design, the principles, vision, and style need to be clearly communicated to your team as well as your customers.

  7. Create and maintain the highest level of customer satisfaction. Customer satisfaction is very important for all companies, but it is everything for a services company. You don’t have tangible product items which can be compared for quality and cost in the value proposition.

In reality, every company has a services business component, if nothing more than customer service. Thus these are the critical success factors that apply to every company, rather than the ones you typically see for product companies. In addition, the statistics show that over half of new startups, perhaps as high as 75%, provide services only (no product).

Another reality is that angel investors and venture capital groups almost never invest in a services-only company. Their perspective is that these entrepreneurs need only to sell themselves, but shouldn’t need capital up front for product development or manufacturing.

You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • Wednesday 12th December - Beatrice Buckstone

    Wednesday 12th December Beatrice Buckstone

    Here we are, half way through Blogvent already! Today's is a bit harrowing, so feel free to have a stiff drink handy. It concerns cute little uber-poppet,... Read more

    The 12 December 2018 by   Kirsty Stonell Walker
  • Sells for $750,000

    Bill Sweetman from NameNinja tweeted out that his company and Sedo completed the sale of Files .com for $750,000. I’m thrilled to announce that @NameNinja... Read more

    The 12 December 2018 by   Worldwide
  • Why Blaming Gay Priests for Catholic Abuse Situation Will Not Help Anything (Plu...

    Blaming Priests Catholic Abuse Situation Will Help Anything (Plus News About Cardinal Pell, Anti-Gay Hardliner)

    I had decided as I posted my posting two days ago with an assortment of reports about the sexual abuse of vulnerable people in Christian churches that I'd do a... Read more

    The 12 December 2018 by   William Lindsey
  • Brain Waves and Yoga

    Brain Waves Yoga

    by RamThe Wave by Edvard MunchNeurons communicate through electrochemical signals that are the basis for motor functions, thoughts, emotions, and behavior. Read more

    The 12 December 2018 by   Ninazolotow
  • Tiki 101 with Jessica Souza and Chief Tiki Tay of Hudson House

    Like many a post-war baby (that war would be World War II, The Big One, WW2, or as it's commonly known, Tom Brokaw's retirement fund), I was introduced to Tiki... Read more

    The 12 December 2018 by   Boozedancing
  • Boeing 747-400(F), China Airlines

    Boeing 747-400(F), China Airlines

    @ San Francisco International Airport, CA June 2018 This 747 freighter, one of 18 747-400 in the China Airlines cargo fleet, is on final approach to SFO. Read more

    The 12 December 2018 by   Htam
  • Frank Sinatra’s Navy Blazer for the Holidays

    Frank Sinatra’s Navy Blazer Holidays

    Frank Sinatra trims the tree during the opening of “Happy Holidays with Bing Frank,” the 1957 Christmas special episode of The Frank Sinatra Show. Read more

    The 12 December 2018 by   Nguzan