I’m on a bit of a tangent from writing about marketing but hopefully this is something that people will find useful.
Imagine running a business full time selling a product. You have to do all the things that businesses do like marketing, admin, sales, customer service. This is a typical business that requires you to work on it full time if you want to make a good living. Except the product you are selling is not a physical product but chunks of your time that you must honour. This is the case if you offer a service. Even if you don’t bill by the hour if you are offering a service then clients are paying you for your time.
With this type of business your time places a massive limiting factor on your earning potential and on growing your business. Businesses at the extreme end of this spectrum include solicitors, accountants, consultants, web designers, marketers… The further away your business is from at the being a Professional Service the less effected you are by this issue. For instance if you are a tradesman then a portion of the value you provide will come from supplying physical products like materials or products like a new boiler. If you sell financial products then some of your time will be used as an advisor, but some of the value you offer will be provided by the financial products you sell, making it easier to generate income.
This limitation became apparent to me when thinking about all the service based businesses I have come into contact with over the years or know of. Almost every service based business I know that started as a one man band has remained as such apart from 1 or 2 exceptions. Vice versa most of the service based companies that have grown where started by at least 2 people. Most of the businesses that are only partially service based like tradesman and financial advisers seem to have an easier time growing too. Even with a service like recruitment most of the value you are providing is in the new employee you just found so you are still trading something of value on top of your time, making it easier to grow.
Getting to the point where you can take on that first employee seems to be an insurmountable obstacle for most one man bands offering a service. A bit of a catch 22 as having an employee would save you the time you need to grow the business enough to take on that employee. Once you have that first employee you just got an extra 35 hours a week to trade for your client’s money and more time to concentrate on growing the business, making employee number 2 a lot easier and so on.
(see part 2)