The Three Biggest Challenges to Scaling Up Your Personal Services Business

I’m looking here at one of the contest essays we got for the BIG Business Contest from Beth C.

Beth shared about how she started up a personal concierge and lifestyle management company but now faces the challenges of have a mid-Level Two business that revolves around her.

She dreams of scaling it larger.

Today I thought I’d talk about this challenge of scaling up a personal services business and help by laying out the three challenges Beth or any personal services company faces as they work to grow.

First, you’ve got to deal with the staffing issue and find great people. This will probably actually be the easiest of the three challenges for most services businesses, especially in today’s climate, but can be a real challenge.

For example, a good friend of mine owns a mid-sized CPA firm. His number one challenge is getting great CPA talent (or keeping it at least!)

How are you spreading the word? Do you have a detailed and clear written “ad” or description of exactly who you are looking for so that other people can easily refer you great people?

Next, you’ve got to deal with the cash flow issue and maintain the right balance of “capacity” (read “staffing”) to utilization. You need the people to handle the work, but you need the work to pay for the people. If this is out of balance you’ll either have too high of overhead from staff salaries, or you’ll have too little capacity and loose business or have real problems getting the work done.

Of the two sides of the equation, I recommend you error on the side of caution—be lean and perennially under staffed. I built a company to a 50 person team, but when our sales dropped by 30% due to the market conditions I didn’t let any staff go. This cost us over $100,000 per month in bloated payroll. I certainly learned my lesson—you must keep a clear eye on cash flow and while you can ride out a rough month or two, if it persists you must adjust your staffing levels.

Finally, you’ve got to have systems in place to make sure your staff’s work really is up to par since you are selling a service. This means key metrics in place to monitor work and the most important indicators of quality for your service. And it also means you have simple systems that people actually use to get your clients consistent results.

The payoff is so worthwhile to make the leap and grow your business beyond yourself.

Remember, most businesses that are truly Level Three businesses (i.e. independent of the owner of the business) are 10 times or more valuable than a Level Two business that revolves around a business owner.