9 Things You Should Know Before Starting a Service-Based Business

Starting a service-based business can be one of the ways to monetize your passion/skills quickly. You can often bootstrap the business-- meaning you won't need outside capital.

If you want to start a service-based business, here are nine lessons you should remember.

1. You Are Your Biggest Client

Set aside hours monthly to market your own business. People will notice if you're promoting digital marketing but aren't doing any. When you first start, you'll be so focused on client acquisition and putting all your efforts into what clients you pick up that this will cause you to put your marketing to the wayside. I'd strongly suggest setting up a project and allotting hours to your agency's marketing.

2. Tighten Your Pitch

Then tighten it some more. Being able to tell people what your company does in two-three sentences will allow for people to (i) understand what you do and (ii) tell other people about your business (potential clients!!). 

Many people you pitch will never become your clients, but they can become your best marketing tool.

3. Be Prepared to Grind

Getting a business off the ground is hard work. It means you're always on the clock. Initially, you will be the company's chief marketer, lawyer, head of sales, accountant, and operator in the early days. These responsibilities take time. So expect to have little free time.

4. Keep it Lean

In the early days, losing one client could make or break you. Instead of looking for ways to spend cash, focus on what activities can bring in new clients. There will be time for fancy offices and office perks later on. 

5. Keep a Float

Keep a float of cash. Aim for a starting point of three months' cash flow, and then build toward having a year's worth of money on hand within your business. To get started with this, look into reading Profit First.

6. Figure Out Your Margins

Do this sooner than later. You'll want to aspire for 20-30% margins and not to be under 10%. To figure out your margins, take your topline revenue, then subtract every dollar it takes you to complete a service. When you get the amount left over, that is your profit. 

7. Don't Expect to Get Rich Overnight

Starting a business is often more about creating a lifestyle with time freedom than driving Ferraris. Focus on making your first dollar before considering how you will make your first million.

8. When Hiring, Look for People Who Learn Quickly

Your first employees should be the most versatile and quick learners. In a small team, people must wear many hats while still having expertise. Find employees, who may not know it all today, but can learn. Within the first three months of hire, give your employees several things to master. Photoshop. In that timeframe, they should be billable at whatever skill you've asked them to learn.

9. The Lights Will Not All Be Green Before Starting

The timing will never be right to start anything in your life. At a certain point, you'll have to go for it because if you wait for the stars to align, you'll never start your company.