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How Do You Scale Service-Based Companies?

How Do You Scale Service-Based Companies?

George Brooks
minute read

Service companies can grow. But can they scale?

Our daily work revolves around helping companies design (and build) technology to help them scale effectively. It’s an especially tricky endeavor for service-based organizations. Often we hear from teams that are struggling to scale fast enough or are handling sudden growth poorly. When your time is the product you sell, you’re inherently limited. How do you scale when your time is finite? The answer isn’t so simple.

Our daily work revolves around helping companies design and build technology to help them scale effectively. It’s an especially tricky endeavor for service-based organizations. Often we hear from teams that are struggling to scale fast enough or are handling sudden growth poorly. When your time is the product you sell, you’re inherently limited. How do you scale when your time is finite? The answer isn’t so simple.

It’s not impossible, but scaling a service-based company requires intentionality at every level. If you’re a director or C-suite leader at a large organization, you may be pressed to find solutions when your people, processes, or technology aren’t taking the business there. Here are some considerations from years of working with firms that overcame growing pains to scale successfully. (👉 skip to answers).

🧠 Gleaned from direct experience working with billion-dollar professional service firms in management consulting, construction, cybersecurity, IT, insurance, and engineering.

Growing vs. scaling professional services

The reality is that most service organizations tend to grow, not scale, by increasing their capacity to say yes to more projects of greater value and profitability.

By design, their work is about providing the skills and knowledge of individuals and teams to another organization that addresses a unique and valuable need. So, they typically grow through headcount or workforce, full time employees or contractors. This is a linear process where the increase in resources leads to an increase in output or revenue.

Scaling a business, on the other hand, is about increasing revenue without a substantial increase in resources. It involves growing the company in a way that the revenue increases at a faster rate than the costs. Scaling is often seen as a more sustainable form of growth because it aims to increase profitability through better margins and operational efficiencies, rather than just expanding the size of the operation.

So how do you identify or seize a moment of opportunity that leads to increased value, revenue, and/or profit at a significant speed (and ideally at a reduced cost)? Take a look at these 5 considerations.

📹 Prefer video? Watch this content in video format.

🤝 Scaling your relationship management

A fundamental distinction exists between services and product (or goods) businesses. Product businesses are centered around tangible items, offering value through the physical attributes and features of the products they sell.

A key advantage here is the ability to maintain consistent quality, as these goods are manufactured to specific standards. The separation of production and consumption processes allows for efficient inventory management and potential economies of scale.

Professional service businesses deal in the intangible, delivering value through the performance of a service, which can range from consulting to insurance. The inseparability of production and consumption in services means that they are created and consumed nearly simultaneously which leads to challenges in quality consistency.

This makes the management of customer relationships crucial. Product businesses can focus on tangible features and demonstrations, whereas services businesses need to emphasize performance and trust-building.

The reality is that services are about people serving others. In the early days of a service company, it was done on a handshake and remembering the person's face and name. But with modern service companies looking to scale, you're dealing with an issue of fault.

Ultimately, you need to create a system and find a set of tools that will help you keep track of relationships with current clients, prospects, vendors, and more. Look at your CRMs (customer relationship management solutions), vendor management solutions, and sales management solutions to make sure they're empowering you to manage a much higher volume of people.

You have to manage the increased volume without increasing the overhead on your team. Technology, processes, and different approaches to managing all those people are really going to help you to do that well.

⭐ Scaling your delivery management

As you scale, it’s crucial to maintain the high level of service that your clients have always expected. Regularly gather client feedback and make improvements as necessary. Getting closer to the client is most difficult as the organization grows, but don’t let this slide.

Build in tools, processes, and solutions that will ensure you properly manage the commitments that you’ll be held accountable to. And that your client can always see the result of that quality work. We are often building solutions that better allow our clients to communicate progress, status, and quality throughout any service engagement. It’s all about providing a clean customer experience.

People, resources, and details get lost in the shuffle of papers, meetings, and spreadsheets. That’s why there are PM solutions for every industry. Invest in buying, borrowing, or building a solution that will help you to never miss a delivery milestone. Especially when your team, contractors, clients and projects become larger and more complex.

💪 Scaling your expertise management

In the early days of any service company, it's all about the founder and crew knowing the secret-sauce of what you do really well. You get the luxury of handpicking each person you want to work with - each new employee, subcontractor, and vendor.

As you scale, growing your workforce and vendor network gets harder with more people to hire, train, and retain. However it’s a crucial part of the process to maintain the high level of service that your clients have always expected. What you'll need to consider is really thinking carefully about the types of recruiting tools you're using.

Are you matching skills to the needs of the organization? Think about your core training programs. Do you have a learning management system that allows you to train a larger workforce with less resources? And HR management platforms that allow you to level up the skills of your existing workforce? Don’t just invest in hiring skilled professionals, but focus on their continuous training and development.

If you’re looking for more guidance on this subject, our leadership team recorded a podcast on finding the right talent, perfecting your hiring process, and retaining your talent (Listen to attract, hire, retain). After all, the quality of your team directly impacts the quality of your service.

💯 Scale your results management

You do good work, which begets good work. People tell other people about working with you because you are able to deliver on the promised results. Hitting the right time, scope, and budget. But ultimately, if you do not track the results and measure on a regular basis, you'll lose that story and it'll get lost in the shuffle of scale.

Find a tool, method, or find approach that will help you to measure your results on an ongoing basis. That means through your account management, through your sales, through your delivery management, find ways to engage with your customer to make sure they understand the value you're bringing over time.

Are they happy with that value over time? When a project wraps up, retrospect to make sure that you know the project went well and you hit the results you were intending to hit. Take that data and apply it back to the flywheel. Look for ways to make sure the flywheel is spinning faster and faster and faster, leading to more efficiency.

🦾 Pro-tip: Leverage new technologies for process

Every leader should be looking for ways to utilize technology to automate and streamline operations. This can include customer relationship management (CRM) systems, project management tools, and communication platforms, (enterprise resource planning) ERP, asset management, billing systems.  The list goes on and on.

When we enter into a conversation with a client that is experiencing scale, we quickly assess how scalable their tooling is. Is it the right toolset?  Are people willing and able to use these technologies? Are they helping or hindering?  If used correctly, this can be a massive advantage to being ready to scale.

Also, consider that technology may be how you productize your services. Finding ways to decrease cost, but increase revenue and value through a technology that serves and scales with your customer base or your market.  Technology and team development will allow you to find ways to automate and standardize processes to share and refine at scale.

A parting word

Look for the cracks in the foundations before you add the weight of scale to your company. Invest the time, energy, and resources in fixing the cracks early so your business can seize the moment of opportunity to scale when it comes, without falling apart.

😣 Struggling to engage customers and employees in a moment of growth? We can help.

Last updated
Feb 2, 2024

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