Starting a personal services business

In today's economy, many folks that are searching for jobs are also looking to create a business to add a little income to their personal bottom line.  One of the relatively easy businesses to start can be a home-based business where you offer a personal service.  I ran across someone that wants to start a pet-focused business where she initially would be the only employee.  On the surface it's a relatively simple business model, yet in our conversation, it became apparent that there are many of the basic business fundamentals in her new business that are common to many businesses, especially those that involve providing a service.  So here are some key points to remember when starting a personal service business:

1. Know your customers - This is beyond critical when determining what is the potential for your business.  Ask yourself these questions: Are you limited by geography?  What is the potential market size in your area?  Is there competition?  If so, what are you up against?  Market research is the answer - find friends, family, anyone you can trust to find out their thoughts.  Also find someone or an organization that aggregates your potential customers - the value of this type of research will save you much time and effort in the start-up phase.
2. Don't skimp on doing a proper marketing plan - Many people go directly to the pricing part of the marketing plan with an idea of how much money they need to make.  Please don't do this.  The basics of your marketing plan needs to have an understandable list of services, pricing, method of promotion/advertising/PR/social media and how you are going to deliver your service.  Only when you have a marketing plan can you start to pencil in some projected revenues and expenses.
3. Understand your capacity - I used to manage a distributorship for a national line of hair care, skin care and cosmetics that sold to local salons in a defined territory.  In the hair business, you can only sell today's time and reserve the future.  Yesterday's idle time is forever gone.  And the price you charge will determine how busy you are.  New hairdressers cannot charge $100 per haircut.  They need to build a clientele then raise prices only when they are at or near their capacity (i.e. how many hours a day do you want to work). This is common to all personal services businesses.
4. When do you hire employees? - This is a question that all business have to address (especially now with all of the uncertainty in the economy).  Usually it before you need them.  Remember that you have to train someone (taking away from your revenue generation) and you need to ramp up your marketing to match your expanded capacity. 
5. Know going in if your focus to create a job for yourself or for others - Your intent when creating the business is critical.  Business creation is typically all about creating systems and jobs that leverage those investments and talents that help create income for you.  If you are all about creating a job for yourself, know that going in, especially when it comes to taking time off for vacations, being sick or other personal time.  Your clients will grow to rely on YOU and if you are not there to provide your now valuable service to them, it's always possible that they could try to find other solutions if you are not there.
6. Business structure, licensing and liability - Now I'm not an attorney, city/county official or an insurance agent, so go to these folks to find out the appropriate solutions for you, your tax situation and your potential risk exposure.  While there is little upside to taking care of these seemingly painful things, the downside can be vast.  All I should have to say is IRS audit or lawsuit to give you proper motivation to make a couple of phone calls to find out what you need in order to avoid a potential catastrophic consequence.  The small amount of time upfront is essential and worth it.
7. Time management - Once you get started, make a commitment to how much time you will spend in revenue generating activity, marketing and administration.  There are many tools out there to help with this, but it is your commitment that will make any of them work.

These are just a few tips that hopefully will get you started in a successful personal services business.  If there's anything else I can help with, just ask.  I'm on Twitter (@mjsalogga) and LinkedIn ( http://www.linkedin.com/in/michaelsalogga).