Two months ago I started a design-as-a-service startup that grew to $15k/month and I thought it was time to sum up my learnings in a post and help fellow Indie Hackers out here. Basically this posts contains all the learnings and steps I wished I had known before I started.
I have always been interested in services because of two reasons:
- I always had an immense drive to start and run a business but do not have real technical skills.
- Building or selling physical products require upfront investment or capital which I did not really have at that time.
Building a service business just requires you to invest your time, learn how to deliver that service (or find someone who can) and find people who want that service and pay you (marketing)
Now the problem with service businesses is: They are incredibly hard to scale.
So how do you fix that? You create a productized service business. A productized service is a done-for-you service, packaged neatly with a defined scope and price (Usually as simple as : We do X for Y per month or for service). Since it is extremely focused it can thrive extremely well and do a better job than software or freelancers.
In total I started three productized service businesses during my entrepreneurial career: a web radio server rental company (the company basically was: Pay us 10 dollars a month and we will help you start your own web radio), a relocation service for international students (Pay us $500 and we will find you a home, making up to $250k a year at its peak) and currently an unlimited design-as-a-service for startups (Pay us $159 to $279 a month and we will offer you unlimited design services).
This post will help you do the following:
- Find and evaluate what to work on
- How to build your MVP
- How to market it and leverage distribution channels (free and paid)
- How to scale your service and create service blueprints
Step 1: Finding and evaluating an idea
My framework is basically the following: I try to find problems other people have or I look at something I have been paying for that I wish was done better.
Next I ask my questions:
- 1. Do people want this and are ready to pay for this?
- 2. How will I market this to people? Which distribution channels will I use?
- 3. How can I be better than the competition?
- 3. How can I build defensibility?
- 4. How can I be unique compared to what there is on the market? How can I be better than others? (It can be: Better service, better pricing, more adapted service to what is currently available on the market, etc…)
- 5. Do people need this on a recurring basis? Some productized services can be one off (for example: 1. I will write one blog post for you for $100) vs recurring: “I will maintain your server for 30 dollars per month). If it is recurring you have more chance of building a passive income and can delegate easily since you can predict future sales and costs. You can also predict user acquisition costs since you will know the LTV.
Step 2: Building a MVP
Now building the MVP (in this case: Minimum Viable Offer since you do not really have to build a product): Keep it simple! This should not take more than a day to launch. Do it yourself. Hire a designer or a programmer if you want to have a nicer homepage but generally this is not necessary.
What people want to see on your MVP:
- 1. Value: This is the most important stuff. You do not need to have a fancy landing page (actually my design service used to have a landing page that sucked). People need to see value in your service.
- 2. Trust: Show your work. For example if you are a copywriter, say that your publications have been featured in Tech In Asia, in The Guardian, etc.
- 3. Communication: In service business people will have a ton of questions since it is more customised than a product. Put a FAQ with any questions you can imagine, put a chat on your page.
- 4. Offer clearly articulate what you do, for how much, and why people should buy it. Why should people use it? Show why people benefit from your services and why you vs. the competition.
- 5. Payment Put a payment system. You can either put a simple Pay me Paypal link or use other services
Step 3: Marketing your service and leveraging distribution channels
Once you have set up your MVP you have to market your productized service. You have a couple of ways to do that (in my opinion, by order: It is best to first experiment direct sales and then ads at the very end, because talking to your customers will teach you what to refine on your service offering or website)
- 1. Direct sales: Find where your customers are and tell them directly about your service.
- 2. Content marketing: you have a ton of platforms such as Facebook, Reddit, Hacker News, Indiehackers, … If you are running a productized service doing SEO for accountants also go niche and search for forums for accountants. You can also try to find local forums or Facebook groups to market your service
- 3. Referrals / word of mouth
- 4. Affiliates
- 5. Advertising
Step 4: Scaling and creating service delivery blueprints
Now, a very important step for you is to decide whether you want to build yourself a job or a business. Do you want to have a lifestyle business with a laptop on the beach or a 200 person company? Or something in between? After you have hit 2 to 5k$ per month and doing the service all by yourself you will realise you need more hands or cannot scale. Do you want to make a $100k per month business, $1 million business? Then you need to delegate, but also automate (more on that later)
Delegation in productized service business
A good way to delegate is to see your business as a machine. This is the first step and this is why so few people are good at delegating: Those who do have an excellent machine in place. People just need to push levers or press buttons and this results in profits for the company.
Think of your business (machine) as multiple little workers that create value for your clients that they pay you a % of the value they receive. Your role is to be the architect of that machine and make sure your little workers know what to do, how, and that you know how their work is measured / tracker.
In the case of my design-as-a-service business my machine consists of the following parts:
- 1. New business pipeline — Do we have enough clients coming our way? How should we do it (contact X number of companies per day? Write X blog post?) and how should it be measured?
- 2. Designers - Do we have designers to complete the work? How do they do it? How should we measure their work?
- 3. Happy customers that get us more customers - How do we keep clients satisfied so they get us more customers? Do we have customer service in place? How do we track their satisfaction?
Then when you know exactly how your machine works: create service delivery blueprints
Write for each step of the machine (Sales/Customer service/ …) what you need to do to make sure the machine runs at its maximal output. Think also of some ways on how you can automate things to make your life easier. For example if you are running a customer service team, use canned responses on Gmail to make their life easier and more efficient.
Your goal essentially as a product service business owner is to: 1) Talk to your existing customers to understand what they want 2) Test and explore new ideas (as an entrepreneur I still do a lot of experimental sales to find out new distribution channels) 3) Set vision and expectation with the team and push team
A few additional thoughts:
- 1. On finding an idea: My advice is: Do not attach any ego to any idea. I perhaps have tried 50 business ideas. I tried to create a million dollar homepage copycat, I tried running a blog, I tried a cleaning service, I tried to create an app similar to Airbnb. Only two of my business ideas really worked: An online letting agency and a design agency. I know I will fail with many more ideas. It does not matter. Just keep launching as fast as you can and see what works. Just think of it as throwing spaghettis on the wall and see what sticks.
- 2. On discipline: The only rule I set to myself when I decide to pursue an idea is: ‘OK, you want to do this? Then you have to finish it and launch it to the point where it is monetisable’. This mentality of ‘Finishing stuff to the end’ will be good because too much time we have a bias of getting distracted by the next big thing just because it’s fun to start but not fun to finish. I am always excited when I have a new idea, and always super biased. But be used to the pain of launching, of talking to customers and making sales. This is real. Just launch fast and FINISH your projects.
- 3. On building a defensible productized business: What I am really interested in building a business is: How can I really create the most value. Valuable businesses are by nature defensible (they have moats and are hard to replicate). To build a valuable productized service business, here are the type of moats you can have: Unique brand with loyal fans, unique distribution channels (for example focus on creating your own blog which keeps on attracting users, or your own Facebook group or Intagram page). In addition you can also think of having high switching costs (Let’s say you are running a Wordpress development as a service but own the code), or simply having relatively high barriers to entry (let’s say you are a lawyer and need to pass the bar, this already excludes quite a few people to replicate what you do or doing a productized service that requires a special permit)
Ideas of productized services
Right now a lot of companies are offering design, copywriting, video making, virtual assistants etc but there are much much more ideas than that. Services are a HUGE market! If we were to account for everyone who is running a service business business, this perhaps accounts for trillions of dollars.
My advice is the following: Go niche! If you go niche you can really speak to users and reduce risk (since you will know exactly what users want and they will know you can deliver since your service will be tailored to their needs) and get a transaction as as result. This is it.
So how do you go niche? Some examples:
- 1. Targeting to a niche geography: Do you want to offer translation services for French startups that need to expand to Spanish markets?
- 2. Targeting to a specific vertical: Do you want to do translation for apps or websites? Do you want to run a productized service in the translation industry? Travel industry? Food industry?
- 3. B2B or B2C?: Do you want to design landing pages for startups? Or do you want to help students in your city find great travel deals / weekend deals?
- 4. Small or large businesses?: Do you want to offer live chat service for startups or powerpoint redesign services for big corporates?
Here are a few quick napkin ideas (most of these exist already but see how you can tweak them and make them unique):
- Lead generation as a service
- Customer service (live chat) as a service
- Student weekend getaway as a service for your university town- Content research for startups as a service
- Short explainer videos for startups as a service
- PR as a service
Bonus: I also started a Facebook group for those interested in running a productized service. We will be exchanging ideas, and maybe partnering to launch our productized services there.
UPDATE 13/02/2018: Someone hunted Manypixels on Product Hunt, Feel free to give us a feedback 👍