Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their service businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a service business plan template step-by-step so you can create your plan today.
Before we get into how to write a service business plan, here are links to several service business plan templates:
- Beauty Salon Business Plan
- Car Detailing Business Plan
- Car Wash Business Plan
- Catering Business Plan
- Cell Phone Repair Business Plan
- Child Care Business Plan
- Cleaning Services Business Plan
- Computer Repair Business Plan Template
- Construction Business Plan
- Consulting Business Plan
- Day Care Business Plan
- Dog Daycare Business Plan
- Dog Grooming Business Plan
- Financial Advisor Business Plan
- Hair Salon Business Plan
- Indoor Playground Business Plan
- Insurance Business Plan
- Janitorial Business Plan
- Landscaping Business Plan
- Massage Therapy Business Plan
- Nail Salon Business Plan
- Photography Business Plan
- Plumbing Business Plan
- Salon Business Plan
- Spa Business Plan
- Staffing Agency Business Plan
- Tutor Business Plan
What Is a Service Business Plan?
A service business plan provides a snapshot of your service company as it stands today, and lays out your growth plan for the next five years. It explains your goals and your business strategy for reaching them. It also includes market research to support your company plans.
Why You Need a Business Plan
If you’re looking to start a service business or grow your existing business you need a good business plan. A business plan helps you attract investors to satisfy your funding requirements, and plan out the growth of your entire business in order to improve your chances of success. Your service business plan is a living document that should be updated annually as your company grows and changes.
How to Secure Funding for a Services Business
With regards to funding, the main source of funding for a services business are personal savings, credit cards, bank loans, and angel investors.
With regards to bank loans, banks will want to review your service business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable, but they will want to see a professionally written plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan.
How to Write a Business Plan for a Service Business
The traditional service business plan format includes these 10 key elements:
Your executive summary provides an introduction to your business plan in 1 – 2 pages, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the type of services business you are operating and the status. For example, are you a startup, do you have a services business that you would like to grow, or are you operating a chain of services businesses?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the service industry trends. Discuss the type of service business you are operating. Detail your direct competitors and your competitive advantage. Give an overview of your ideal customers. Provide a snapshot of your marketing plan. Identify the key members of your team, and offer an overview of your financial plan.
In your company description, you will detail the type of service business you are operating.
In addition to explaining the type of service business you operate, the company analysis section of your service business plan needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the service business.
While this may seem unnecessary, it serves multiple purposes.
First, researching your specific niche of the service market educates you. It helps you gain insights and understand the market in which you are operating.
Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards more eco-friendly services, your company might want to emphasize its environmentally friendly initiatives.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your service business plan:
- How big is the service business (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market? What is your market share?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your service business. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section of your service business plan must detail the target market you serve and/or expect to serve.
The following are examples of customer segments in the service industry:
- Businesses in need of a specific service, such as computer repair or consulting
- People who have a need for a service that is not currently being met
- People who are price conscious and are looking for the best deal on a service
- People who want to support businesses with social responsibility values
As you can imagine, the customer segment(s) you choose will greatly depend on the type of service business you operate. Some of your clients may want different pricing and product options and would respond to different marketing promotions compared to other target customer segments.
Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most service businesses primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your existing clients.
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other businesses that provide similar services.
Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes businesses that provide an alternative solution to the services that you provide, but not the exact service. Think do-it-yourself and public options for similar services. You need to mention such competition to show you understand that not everyone who needs the specific services will engage your service business.
With regards to direct competition, you want to detail the other service businesses with which you compete. Most likely, your direct competitors will be service businesses located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What products and services do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to stand outside your competitors’ locations and ask customers as they leave what they like most and least about them.
The final part of your competitive analysis section is to document your competitive advantages. For example:
- Will you provide superior services?
- Will you provide services that your competitors don’t offer?
- Will you make it easier or faster for customers to book your services?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a service business plan, your marketing plan should include the following:
Product: in the product section, you should reiterate the type of service business that you documented in your Company Analysis. Then, detail the specific services you will be offering. For example, in addition to a lawn care business, you may offer to trim trees, bushes, and hedges.
Price: Document your business’s pricing strategy including the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place: Place refers to the location of your service business. Document your location and mention how the location will impact your success. Discuss how your location might provide a steady stream of customers.
Promotions: the final part of your service business marketing strategy is the promotions section. Here you will document how you will drive new customers to your location(s). The following are some promotional methods and marketing materials you might consider:
- Advertising in local papers and magazines
- Reaching out to local bloggers and websites
- Social media advertising
- Local radio advertising
- Pay per click advertising
- Banner ads at local venues
Your service business plan should discuss not just how you will find clients, but how you’ll hold on to them and discourage them from switching to one of your competitors. After all, it should be much less expensive to keep a client than to market and sell services to a new one. Some methods of retaining customers involve creating the perception of switching costs; that is, that they will lose money and time when switching to a new service company. Others involve fine-tuning your customer service skills into a system designed around retention.
Creating a loyalty program is a positive way to retain customers. This could involve a punch card system where customers receive a free service after a certain number of visits, or it could involve a points system where customers accumulate points that can be redeemed for discounts or free services. Other loyalty programs offer exclusive deals and privileges to members, such as special access to new services before they are made available to the general public.
Premium Customer Levels
Another related retention strategy is to reward the frequency and/or the amount of money that customers spend with your service business. This is often done by creating different customer levels and providing perks to customers who reach a certain level. The higher the customer level, the more exclusive the perks. Common perks include discounts on services, express service, access to unique services or products, and early notice of promotional deals.
A referral program is a great way to keep customers happy and encourage them to refer their friends and family members. This could involve rewarding customers with a discount or free service for every new customer they refer, or it could involve giving customers a set amount of credit for each referral. Either way, the referral program should be designed to be as simple as possible for customers to participate in.
Finally, customer testimonials can be a powerful retention tool. As potential customers research your service business, they will likely come across your website and online profiles. Seeing positive customer testimonials on your website and across the internet will help convince them that you provide outstanding customer service. You can create a separate page on your website that is dedicated to client testimonials, or you could set up a separate social media profile that features client testimonials and allows customers to provide feedback through a special email address.
Simply tracking the numbers and percentages involved in your customer retention can yield valuable information about what you’re doing right or wrong and how successful new initiatives are over time. Statistics to track may include client complaints, the average speed of complaint resolution, the percentage of customers in a given month who were using your services last month, 3 months ago, 6 months ago, a year ago, etc, and so on. When your staff is aware of these statistics and is given targets to work towards, the message that customer service and retention is a priority is heard loud and clear.
While the earlier sections of your service business plan explained your goals, your operations plan describes how you will meet them. Your plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your service business such as serving customers, procuring supplies, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 100th client, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch in a new city.
To demonstrate your service business’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in the service business. If so, highlight this experience and expertise, but also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in a service business and/or successfully running small businesses.
Your plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement: an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you serve 20 customers per week or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets: While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $50,000 on building out your service business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement: Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say a company approached you with a massive $100,000 damage restoration contract that would cost you $50,000 to fulfill. Well, in most cases, you would have to pay that $50,000 now for supplies, equipment rentals, employee salaries, etc. But let’s say the company didn’t pay you for 180 days. During that 180 day period, you could run out of money.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a service business:
- Cost of equipment to perform the service
- Cost of maintaining an adequate amount of supplies
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include any insurance company affiliations or remediation licenses.
Service Business Plan Summary
Writing a business plan for your service business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the service business, your competition, and your potential customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful cleaning services business.
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Service Business Plan FAQs
What Is the Easiest Way to Complete My Service Business Plan?
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Service Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of service you are providing and the status; for example, are you a startup, do you have a service that you would like to grow, or are you operating a chain of service locations?