Business services are a broad category of non-financial businesses that provide support services to other companies, including office administration, human resources, security, travel arrangements, and waste management. They offer a wide range of services and have many different career opportunities, and can be very rewarding and exciting to work in.
The service sector is a growing global industry, and one that TPG supports through our operational capabilities and growth strategies. We see a growing need to help service providers to deliver value, take advantage of attractive opportunities and develop innovative business models that outperform their competitors.
Unlike goods, which can be produced or stored for future use, services must be provided immediately. This means that they can’t be stocked and sold for future consumption; they must be delivered when demand is high.
A service is an intangible asset that a person cannot physically touch or experience. Examples of services include teaching by teachers, doctors’ treatment to patients, and the services provided by hospitals or other medical facilities.
Intangible products are distinguished from services because they can’t be manipulated, altered or destroyed. They also can’t be patented, which limits their ability to compete with other businesses.
There are four critical elements that managers must pay close attention to when crafting a successful service: design, price, customer value and experience. If any of these critical components are ignored or mismatched, the entire offering will be fatally flawed.
Designers of a product are concerned with the characteristics that buyers will pay for, while service designers focus on the experiences that customers value most. For this reason, service-business managers must undergo a crucial shift in perspective when thinking about their offerings.
It is important for service companies to have a strong brand, and they need to focus on delivering a positive and memorable customer experience. That means developing a clear strategy for how the company will communicate with customers, and ensuring that it offers a quality product or service at a fair price.
Pricing for business services is typically based on an hourly rate, and the business owner may need to set prices to cover costs and generate revenue. These prices are typically based on a cost of sales calculation, which considers all expenses related to the delivery of the service.
The cost of services includes direct labor and materials costs, as well as any other overhead or operating expenses that are associated with the provision of the service. In addition, indirect costs such as taxes and insurance must be accounted for in the cost of services.
Depending on the type of service, direct labor costs can be significant, but they are usually less important in most cases than other costs. For example, in a service business that provides marketing or design services, direct labor costs may account for more of the overall cost than in a manufacturing operation where employees are more likely to be involved with the production process.
Increasing competition for business services is expected to grow in coming years as more companies seek to outsource non-core tasks and reduce fixed costs. TPG’s cross-industry expertise and deep sector insights will help our clients to deliver on their service offering objectives.