If you have hung around for a while, you may have noticed a theme of how systems, legal, and good business intersect. This week is no different. This week, we are going to talk about what you do. How you do it. And how to make money while you do it.
If you are in the service business, your business model is quite simple, right? You provide services. You are paid money for those services. Of course, it is inevitable that, at some point, you will not be paid for your services. You may even wonder if you are, in fact, making more money than you are spending.
How do you approach developing a service system that makes you money, allows you to provide a good service to your clients, and ensures you are, in fact, paid the money you make?
In this case, the elements of a good customer agreement can help inform the system of serving your customers. A clear customer agreement, will have the following items to make sure it protects your business for growth and gives your customers enough information so they know how your relationship will look when you start working for your clients.
This seems obvious, but have you thought about what services you provide? Have you thought about how you provide those services?
Do you work with clients on a project by project basis? Or is it more of a task based service you provide?
Making this determination can go a long way into developing a system that drives to a contract that works for you when you need it.
How do you bill your clients? Do you bill by the hour? By the project? By deliverables? On a monthly retainer? What will this look like for your client?
Determining how you will bill your customers is essential to your business and to keeping customers. Developing a system will not only help with your cash flow, but will also help train your customers when they will need to pay you, so they can plan for you in their cash flow.
Your system (and your contract) should outline how you will be charging your clients and how often. This is especially important if it is related to automatic billing. Will you be sending invoices? Will you be automatically billing a credit card?
What happens if a customer fails to pay. Do you charge late fees? Interest? When are payments due? When are they late? You need to know the answer to these, so it can be a part of your sales system (explaining it to your client), your collection system (how you are tracking payments and late fees), and your contract (what you are able to collect if your client refuses to pay).
Refunds are something that is often ignored in contracts. Do you plan to offer refunds. If you do, how do refunds work? What is the system required for customers to request a refund? Is the refund issued in cash or credit? When are refunds issued?
You are providing services for your clients. That is your end of the bargain. You breach your contract if you do not provide services to your client. Your client breaches the contract if they fail to pay you. The issue becomes, if your client fails to pay you, can you stop working?
You can if you put it in your contract. Better yet, include how to start work again. If your client misses a payment, how do they reinstate their account. Do you require a retainer? Does the billing change? What happens when a client becomes a credit risk? Remember, your time is worth something. You are investing time into work for your clients, what happens when they do not pay for it?
Term is always interesting when it comes to service based contracts. You want your clients to use you on an ongoing basis. You want to keep clients for years to come. But, you also want to have the ability to terminate contracts when it is necessary or adjust the terms of the agreement. Often, you can have a month-to-month contract that automatically renews as long as they continue using you. You want to make sure, however, that you include the ability to allow you to modify your terms as you need to. Remember, you are building systems and creating a structure to scale. You need a mechanism to adjust all of your client agreements. You do not want to be left to manage multiple contracts when it comes times to update your client agreement.
If you have a way you prefer to resolve conflict, you should include it in your agreements. You should include it in your sales systems. And you should make it a contractual obligation for your clients. That way, you know how you will deal with issues and you can develop a conflict resolution system for your customer service.
Difficult. Not Impossible
Being in the service business, you may think that systems don’t work for your business. You may think your business cannot benefit from systems. You may even think scaling won’t work. If, however, you begin to think of your service business as any other business and you begin to create systems and develop your brand of providing quality services, you can go a long way in building a brand that is bigger than yourself. A brand that will provide quality services on a scale you could never do yourself.
Creating systems for a service business can be more difficult than in a product based business because, in addition, to all of the systems any business requires to run, you also need a system for how you actually provide services to your client. That, however, can be the difference in creating a legacy in your service business.
Of course, I write this because I am working on many of the items I discussed above. Creating systems in a service business. Finding the patterns in providing services is hard work. But, it is good work. It is work that can create a lasting legacy for those you have the privilege to serve. And, it can help you better serve those who look to you for your expertise.
How are you developing service systems in your business?