How To Pivot Your Service-Based Business’s Revenue Model and Profits

One of the biggest challenges faced by small service-based businesses is that their success heavily depends on the skills, talents, and time of just one person. In contrast, product-based businesses can grow more easily by exporting or expanding their offerings. However, for a service-based business, there are limits on the number of hours you can work and the amount you can charge per hour or per job without pricing yourself out of the market.

This limitation means your service-based business can only generate a certain amount of revenue, which may not meet your financial needs. So, how can you make your service-based business stand out and increase profitability? The good news is that you can change the way you generate income, allowing your profits (and salary) to no longer rely solely on you.

Add to Your Product Offering

There’s no rule stating that a small business must exclusively provide services. In fact, it often makes sense for small businesses to sell products that complement their existing services. Consider hairdressers who sell everyday hair care products or veterinarians who sell pet food. The key is ensuring that the goods you offer align well with your services to create seamless sales and strengthen your brand.

Recruit and Train

While one person can only generate a limited income, a team can achieve much more. By training others to deliver your service offerings, you can establish a lucrative income model. For example, if you're a plumber, hiring additional plumbers allows you to service more clients simultaneously.

Change Your Market Appeal

Examine the market you currently serve to identify potential pivot opportunities. You might increase your revenue by moving to a higher price point. Consider shifting from a business-to-consumer model to a business-to-business model, as B2B clients often understand the value of your services and are more willing to pay accordingly.

Put Yourself in a New Box

Similar to how different markets have varying price points for the same service, so do professions. For instance, would you prefer to be a public defender with low pay or a well-known defense attorney with high hourly rates? Repackaging your identity can significantly enhance your perception and profitability. A personal shopper can rebrand as a stylist, a masseuse can become a massage therapist, and a writer can transition into a content creator. Titles matter, and a higher perception of your skills allows you to charge more.

Sell Both the Service and the Maintenance

Think of ways to encourage customers to use your services on an ongoing basis rather than just once. For instance, as a web creator, instead of building a website once, you could offer a monthly maintenance package for updates. By creating a maintenance program that alleviates your customers' current or future burdens, you provide them with an easy sell.

Sign Up for a Franchise

Franchising can be a lucrative option if you have a successful business model that can be replicated. Research franchising opportunities to determine if it’s suitable for your business. Selling a franchise means you're offering your business system, not every business is a good candidate for franchising. Test this approach by opening a second branch yourself to ensure your business plan is solid before scaling.

The Bottom Line

You don’t have to accept a lower income simply because you are bound to an hourly rate and limited on time. Service-based businesses can generate as much revenue as product-based ones. By rethinking your revenue model, repackaging your services, and breaking through the profit ceiling, you can significantly grow your business. If you're ready to elevate your small service-based business in the next 48 hours, contact Merchant Capital today.

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