How to Start a Service-Based Business or Side-Hustle Part I

Over the past few months, I have come across an influx of articles, webinars, masterclasses, and podcasts all tackling the topic of “How to Start an Online Business.” While starting an online business in which you are selling a product or providing services exclusively online is the popular end goal for many, I wanted to research and create a guide outlining the steps for those wanting to start a business or side hustle for the first time.

This article will explore starting a service-based business as a solo provider or freelancer.

We will take a step back and start from square one before you even consider diving headfirst into the online business world. Square one for most people is starting with a purely service-based business by doing client work.

For the sake of clarity, we are defining a service business as a business that uses one (or more) person’s time and skills to resolve or clear another person’s various challenges or problems.

In this guide which will be split into two articles, I’m going to give you practical steps for helping you start a service business whether it’s full-time or as a side-hustle.

Who this guide is for:

Anyone who wants to go into business for themselves or start a side hustle and doesn’t know how or where to begin.
Those who have just begun running a service-based business full-time, as a freelancer or as a side-hustle.
Anyone who has a specialized skill, trade, or merely an idea for a service-based business or at least wants to start doing side gigs.

Our plan of action:

Here’s what I’m going to be focusing on:

Understanding why a service business is the most logical and best type of business to create when you are first starting out.
The 2 most important steps that cannot be skipped when starting a successful service business which includes:

1. Clearly defining the service you are offering and the problem it solves for others.
2. Clearly defining the target audience whose problem you are solving in the previous step.
Coming up with a plan for how to find people who need your service and nailing down that first client. This is in Part II of this guide.

Please Note: This page may contain affiliate links. Meaning I receive commissions for purchases made through those links, at no cost to you.

Benefits of Selling a Service

Before we start laying out a plan, l think there is value to understand why starting a service-based business (a.k.a. doing client work) is the best way to get started when starting a business.

The most glaring misstep I see people make who want to start some sort of business is they jump right into trying to create it online first. They will spend time and money trying to create an over the top website, an eCommerce store, or some grandiose digital product or app. In most cases, it takes time to build these types of services and products online. Success in this manner requires having an existing following in which you are seen as an authority or expert. Expertise is built up over time and there is no better way to accumulate it than by providing a service.

Here is why starting a service-based business is the first logical step when starting a business:

There is a low barrier to entry and minimal startup costs if any.
Doing client work will make you better. It takes time to become good at a skill and get to an expert level. This will allow you to get paid while you grow your skills and refine the service you are offering. This process buys you time to expand and grow.You will learn basic business skills such as having to deal with clients, invoicing, communicating and articulating ideas, networking, basic marketing, etc. These skills will serve you very well beyond this service business.
Like most things in life, you have to pay your dues and take your lumps. By operating a service business you will learn some valuable lessons which will be critical to your future success.
Doing service work helps you start building an audience and customer base. You are building your reputation and getting your name out there.
Once you start to build an audience you begin to create trust and people will start to look at you as an authority and subject matter expert. This increases their likelihood of buying future services and products from you when you do expand your business.
Building an audience and garnering trust will allow you to build your email list which is crucial for future growth especially if you are serious about eventually expanding your business online.

If you are thinking about starting an email list, the best tool to use is ConvertKit. Their FREE plan allows you to manage 1,000 subscribers

3-Step Process to Start a Service-Based Business or Side-Hustle

The 2 Most Important Steps for Starting a Successful Service Business

Clearly define the service you are providing which solves a problem that other people have. This means you know exactly what you are offering and how you are going to offer it.This step answers the question: what problem am I solving and how am I solving it?
Clearly define the audience you are providing this service for. This means you know who your target market is. In other words, this is anyone that has a problem you can solve. This step answers the question: who is buying what I’m selling?

Step 1: Determining your service.

What problem are you solving and how will you solve it?

The holy grail rule for all businesses is to solve people’s problems. Plain and simple, all businesses exist to solve problems. Therefore, you as a person in business are a problem-solver.

So how do you know what problem to solve?

The service you plan on providing should answer this question. Determining this is a very important part of the process that requires self-reflection. You’d be surprised how many people start a service-based business without fully understanding the problem they are solving for others. This step may seem trivial, irrelevant, and blatantly obvious for some people, but don’t skip this step.

Start by answering these questions to generate ideas for choosing a service for your business.

Do I have a specialized skill, training, or certification?
What do I do better than others?
What are family, friends, and colleagues asking me for help with consistently?
What do I enjoy doing?
Who do I want to work with?

Answering these questions should get the juices flowing. A good exercise to do is to free write the answers to these questions in a journal or on your computer. The goal here is to just empty your brain with any ideas and insights that come to mind. Spend a day or two reflecting on your insights but go with what feels right and comes easiest and natural for you.

Here are some tips while you are coming up with ideas:

Simplicity can sell. Simple is better especially when you are starting out. Avoid complexities and trying to create the perfect offer. Focus on one singular service you can sell that solves a unique problem.
Humanize your offer or service. Don’t get caught up in creating a brand by coming up with the perfect company name or even designing a logo. People purchase from real human beings and not from faceless, nameless people in the ether.
Pay attention to problems. Take note of inefficiencies and issues in existing services that you have used. By being a consumer of services within your niche or field you have insight on how to improve them. Find your unique viewpoint that you can offer to people.
Don’t look to be groundbreaking or reinvent the wheel. Forget “brand new” and think “better new.” People always want better, so give them better.
Consider budget minded alternatives to must-have services. Is there an existing service that you can offer that can be geared towards the budget-minded audience?
Specializing is king. Specialization of a certain skill, talent, or trade within a certain field can create a competitive advantage. If you have a specialized skill, consider how you can sell it to others.
Find unique connections between ideas. If you are considering multiple different ideas for services to provide and don’t know which one to choose, see if there’s some kind of unique connection between them that you can come up with. Sometimes singular ideas aren’t all that interesting on their own but when combined you might land on something of value.
Most importantly, are you excited about the idea? Will you enjoy providing this service? Are you passionate about this?

Step 2: Determining Your Target Audience

Now that you know what service you will offer, you need to clearly define your audience.

Who needs this service? This is another critical piece that should not be overlooked.

Do a quick brainstorm and answer these questions.

Who is the audience for this service?
Who can benefit from it?
What problems are they needing to solve?
What are they looking for?

Determining your audience is crucial—spend some time giving this some thought. Write down the answers to these questions like you did previously in step 1. The goal in this step is to do some research so you know exactly who you want to serve. This will allow you to create better services and offers that help that specific group of people.

But is it profitable?
If you have been able to successfully define what you re good at, what you enjoy doing, and what problems other people are having that you can solve, the next question to answer is: will people pay for this service?

Plenty of people have great ideas for a business, start taking action on that idea only to have the wind taken out of their sails because they realize the market isn’t there for what they are offering. You have to find an avenue that is practical to be profitable.

Does your skill match someone else’s needs and are they willing to pay for it?

Remember the holy grail rule of why businesses exist is to solve problems. You will make money when you solve people’s problems.

Don’t spend too much time overthinking this. Determine your audience, understand if the service you are offering aligns with the problem they are facing, recognize if they are willing to pay for it, and move on. Go with your gut. You will refine and pivot as you go.