What’s the fuss about service firms?
Do you run a service firm? Robert Craven has identified common traits - and a system to help you grow your business
The world is full of independent firms that deliver some form of service to their clients. And many of these ‘service deliverers’ offer some form of expertise, some form of professionalism. They are ‘professional service firms’.
Service Firms (SFs) or Professional Service Firms (PSFs) provide professional services to other companies or to the public – essentially they sell time, either on a project-by-project basis, on a one-off basis or on some form of monthly contract and/or retainer – the focus is on people interacting with people and serving the customer rather than transforming physical goods.
The array of SFs is enormous. Everything from an accountant, an artist, an actors’ coach, an advertising consultant through to a Zen Buddhism teacher or an independent zoo inspector. The list is endless. For me the term Service Firm or Professional Service Firm loosely describes these businesses.
While each industry is fiercely defensive about its uniqueness, the extraordinary thing is that the similarities are huge. You can deliver or write a piece for accountants or solicitors or web designers and it can be identical and will be well received as long as you cut and paste the right profession name throughout the piece.
Typically, the independent professional service firm has some common characteristics that give the PSF some unique qualities. The ‘product’ is a service and is intangible which means that…
… It cannot be stored … It gets consumed at the time that it is delivered so it cannot be re-used … It is almost instantly perishable.
These characteristics mean that any business that is a PSF doesn’t quite conform to the standard product model of producing, storing, selling and delivering a product. As a result it has many advantages as well as many disadvantages over a standard product.
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When you combine the characteristics of the service firm with the characteristics of a small or independent business then you create a unique set of circumstances that explains why so many independent PSFs feel that they could be doing so much better. Do you suffer from any of these traits?
… A passion for the business but few of the essential business skills … A willingness to work all the hours that God made but an ignorance about exactly what is the best thing to do with the time … Spending too much time in the business and not enough time on the business…
You are not alone. These traits are typical of a PSF business. Common frustrations, pains and hurts include:
1. Not enough profit. 2. Not enough sales/customers. 3. Business depends too much on owner. 4. Can’t find good people. 5. Owner doesn’t have enough time. 6. Inconsistent operational performance.
Depending on your business, a list of failings might include some of the following:
… Lack of vision and purpose by the owners … Lack of systems and processes … Lack of financial planning and review … Over-dependence on specific people … Poor marketing/sales strategy … Lack of knowledge of the market/competition … Lack of money … Owners working IN the business rather than ON the business … Fear of letting go of financial control … Fear of letting go of management control … Inability to delegate. And so on.
So, are there certain things that the high-performing independent PSFs do? The answer is a big “YES!” A lot of the answer is common to any high-performing businesses but there are some specific activities that relate specifically to the PSF-ness of the firm. What do the great firms do? In general terms, all great growing businesses are obsessed with:
… Planning while being aware of the outside environment (AKA strategy) … Figuring out how to sell their products and services (AKA marketing) … Understanding how to get on with people (staff, customers and suppliers)(AKA teams).
And what if you’re a small/independent business? For small and independent businesses there are two additional attributes that separate the sheep from the lambs:
… A willingness to let go of management control and share the business ownership (because growing a business is like haemorrhaging cash) … A willingness to let go of management control and take other’s advice (recognising that others can help and may even be able to do a better job).
For the small and independent PSFs you need to have all of the above but over and above that you also need to adopt what we call The Expert! model. The ability to have a way of doing business that puts you head and shoulders above your competitors. A way of doing business that takes advantage of your enthusiasm and passion for your topic that will give you the economic gains you also seek.
The formula we are talking about is: Professional service + independent, privately-owned + systems and processes,The Expert! system, that mean that it attracts paying customers = a business making sustainable profits.
Robert Craven is an entrepreneur, businessman and author who has run Mastermind Groups and action-centred learning with Warwick Business School, Business Growth Programme and London’s Accelerated Growth Programme among others. His latest book is Grow Your Service Firm. He is managing director of The Directors’ Centre.