The Startup Chat with Steli and Hiten
257: Scaling a Services Business (Challenges)
Nov 10, 2017
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In today’s Startup Chat, we talk about the various challenges involved in scaling service businesses. It is common for service businesses to fold when faced with certain challenges—like maintaining consistent quality and client churn. However, if a service business is able to work through these challenges and scale up, you can achieve success and healthy profit margins. Tune-in as Hiten and Steli provide insights into how you can rise above these seemingly insurmountable challenges and take your service business to the next stage.
Time Stamped Show Notes:

00:05 – Today, we are going to talk about the various challenges involved in scaling service businesses
00:51 – This topic is particularly relevant since quite a few people are either shutting down their service business or are considering starting a new one
02:20 – It is incredibly hard to find good people that meet client expectations
02:50 – Often businesses run into challenges as experiments fail, data is not conclusive and investor pressure mounts up
04:08 – Over a period of time, a client may build an internal team and choose not to work with you
04:54 – Like any other business, you need to focus on sales, delivery and repeatability
05:56 – Instead of experimenting and pushing through, most people tend to give up
06:42 – Discuss the possibility of the client migrating services in-house and build it into your contract

07:42 – Be mindful of missed revenue opportunities
09:14 – Client engagement will continue; bring value to the table by carrying out key, critical tasks for the client
09:33 – Service companies look at the total revenue and do not consider how it evolves over time
10:16 – Think about the entire lifecycle of the service business instead of just focusing on the beginning

10:32 –  Achieving quality consistency

11:21 – Quality suffers as the founders are no longer the ones managing a client
12:01 – People who start a service business are not conscious of this problem
13:39 – The person who is in charge of business development is often not the one managing the account

14:52 – Pay attention in a way that you used to, especially if your service business is running poorly
15:06 – Accept the fact that your job is to solve problems; scaling a service business will yield incredible rewards

3 Key Points:

Discuss the possibility of your client migrating services in-house and build it into your contract with your employees—it’s common for service companies to miss out on revenue opportunities.
Quality suffers as the founders are no longer the ones managing the clients.
Scaling up is one of the biggest challenges faced by service businesses today; if you can solve this problem, you will reap rich rewards.

Steli Efti:

Hey everybody, this is Steli Efti.

Hiten Shah:

And this is Hiten Shah.

Steli Efti:

And in today's episode of The Startup Chat we're going to talk about the challenges  of scaling a services business. So, here's why I wanna talk to you about this,  Eaton. Beyond the fact that both you and I have run services businesses before and  had run software businesses, so hence lots of people come to us with the question  of transitioning and we recorded an episode about that prior and people can search and  find that. I've had, I have had a number of cases recently where either friends  of mine are shutting down their services of consulting business or their currently pondering or  considering starting one. And, I've heard myself repeatedly talk about some of the challenges that  people should anticipate and they are always surprised by those challenges. And I realize we  never talked about A) these challenges and B) ya know, ways to deal with them. Right? As you wanna scale it. So, here's the deal. Like, a year ago,

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