Productize Your Service.
Customized services take a lot of time and effort. First you need to understand the client’s problem, then design a custom proposal, and finally implement a unique solution. Each step is manual, and when you want to scale your business, it takes more people.
Another challenge with customized services is that a client can’t come to your website and understand what it is they are buying. How can they? You don’t really know yet either.
The more you can productize your offering, the more you can streamline it and deliver it efficiently. Think of taking Henry Ford’s assembly line and applying that approach to a service offering. This allows employees that are less specialized to deliver smaller aspects of the service. The key is to have all the steps laid out, with guidelines for how to deliver everything. When you can hand over the documentation to an employee and they can deliver it just as good as you, without asking you any questions, you’ve hit the mark!
While there are some obvious benefits to streamline your process, namely getting a lot of time back and increasing your business’s revenue, it can hugely impact the value of your company. Here is a quick story to drive the point home.
In 1995 a company was founded, Embanet, that helped colleges take their courses online. At first, it was a very classic services business. Like most consultants/business owners, the founders were very involved in each engagement. Of course they were paid very well for their time – but they were still trading time for money.
After a few years in business, they were approached by an acquirer and offered 3x their annual profit for their business. As this sounded low to them, they decided to productize their service offering.
Instead of offering a customized web design service and being limited by how many hours they could work, they created an online course website and took a share of all course sales. Now they weren’t limited by the hours in the day, as their product was earning even when they weren’t working.
After two years of working to productize their business, they were offered 13x EBITDA!
So, maybe you’re looking to sell your company in the next 12-24 months. Maybe you just want to increase your revenue and get some time back. Either way, it’s a good idea to think about how you can productize your service offering!
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