Your Finances with Stephen Maltby
Here are a few ideas from the folks at CIBC Wood Gundy on starting your own service business.
Who can sell a service? The answer is simple – anyone and everyone. Everyone is qualified because each of us has skills, knowledge or experience that other people are willing to pay for in the form of a service; or they're willing to pay you to teach them your specific skill or knowledge. Selling services knows no boundaries--anyone with a need or desire to earn extra money, work from home, or start and operate a full-time business can sell a service, regardless of age, business experience, education or current financial resources.
What Are the Advantages of Selling Services?
There are many advantages associated with starting your own business selling services. Perhaps the biggest advantage is you become your own boss, take control of your future, and in effect become the master of your destiny. Self-employment is the freedom and independence that calling the shots affords, which can be difficult to achieve when you work for others.
When you work for someone else, there is only you and only so many hours in the day to work for an hourly wage or a salary. When you operate a business, you can duplicate yourself by hiring employees and salespeople to increase revenues; you can duplicate your customers and find more just like them to purchase your services; and you can duplicate your business model and open in new geographical areas to service more customers and earn more profit.
These are all things you can't do when you work for others, and if you do, chances are it will financially benefit the boss a lot more than you.
Capitalize on Your Skills
Don' t worry if you lack business skills and experience in areas such as time management, personal-contact selling, negotiating, bookkeeping and the ability to create effective advertisements. There's no question these are all important skills to have, but at the same time they're also skills that with practice can be learned and mastered. More important is the question, "What skills do you have that can be sold as a service?"
Any skills you possess can be your best, and by far your most marketable, asset. If you know how to safely walk a dog, that's a skill people are willing to pay you for. If you know how to plan and throw one heck of a party, that's also a skill people are willing to pay you for as their event and party planner.
If you know how to care for the elderly, this is a service people will pay you to help them. If you know how to sell products and services online, once again that's a skill that people are willing to pay you for as an online marketing consultant. All are examples of skills that people pay other people to perform, or teach them how to learn.
Selling Services Part Time
The first option is to start off selling your services on a part-time basis, which is a good idea because it enables you to eliminate risk by limiting your financial investment. It allows you to test the waters to make sure that being self-employed is something you enjoy and want to pursue.
If all goes well, you may decide to transition from your current job, devoting more time to your new enterprise each week, all the while decreasing the time at your current job until you're working at your new business on a full-time basis.
There are many advantages to starting off part-time, including keeping income rolling in, taking advantage of any current health and employee benefits, and building your business over a longer period of time.
Of course, if your ambitions are only to generate extra money to pay down the mortgage, save for retirement, put yourself through school, or pay off credit cards, selling services part-time is the perfect choice.
It's important to do what you want to do and what best suits your individual needs. If selling services part-time works for you, then go for it.
Selling Services Full Time
You can also jump in with both feet and start your new business selling services full-time. This option would appeal to people without a current job or people who are confident about being the boss and operating a business.
There's nothing wrong with starting off full-time, especially if you take the time required to research the business, industry and marketplace. You must also develop a business and marketing plan, and have the necessary financial resources to start the business and pay yourself until it becomes profitable.
The main downside to starting full time is risk. If you jump ship and leave your job, you risk loss of current employee benefits and have no guarantee of steady income, contributing spouses or partners excluded.
The upside to starting off full-time is potential rewards, including the opportunity to make more money than you can at your current job, and to gain control of your future. Your decision to operate your new business on a full-time basis will largely be determined by your current financial situation, your own risk-reward assessment, and your goals and objectives for the future.
Jumping in full-time will appeal to the true entrepreneurial mindset – people who prefer to blaze the trail rather than follow behind in the wagon train.
Selling Services Seasonally
Another option is to start a seasonal business selling services, which can be operated with a full- or part-time effort. But most are run full time to maximize revenues and profits over a normally short time span.
Examples of seasonal businesses selling services would include snow removal in winter, yard maintenance in summer, income tax preparation service in spring, and serving as a vacation property rental repair man. Just about any business can be run seasonally or occasionally, but some are obviously better suited than others.
Market and Focus
Spend time looking at your market. What works in Metro Halifax may not work in rural Nova Scotia. Look at demographics, income levels and what is offered locally.
Many moons ago I attended a presentation by David Foot, author of Boom Bust and Echo.
Although the book is now dated it is still interesting reading for a basis in sitting back and analyzing what may work in your area.
Taxation and liability
Get some advise on how to operate. A proprietorship may make sense in the early going. Make sure you understand the rules, forms of business and how an incorporated Company works.
Understand the legal and financial risks as well and don’t be afraid to ask lots of questions. Take time to understand the liability and legal risks you may take on. Asking the questions down the road may be after you are exposed to a liability you did not want to incur.
Stephen Maltby is an Investment Adviser and Chartered Accountant with CIBC Wood Gundy. He has been in the financial services industry for more then 30 years and has held various accounting, investment and management positions with several accounting and investment firms over the years. He is in addition to his Advisor role a First Vice-President and Executive Director Atlantic Canada, CIBC Wood Gundy.