Starting your own service business

Howdy–I was interested in hearing from people who have started their own service-oriented business, especially if you’ve progressed from working on your own to hiring employees.

How did you organize? Register your company? Finance your venture?

How have you grown?

What unexpected challenges have you encoutered?

Would you do it again?


The Ghost of Philip Marlowe

Does it matter if the company is both a service-oriented and inventory-based business? We’ve been running for about 13 years now, well established, successful. It’s a small business, under 25 employees usually.

Just for a really quick idea:

How did you organize? Register your company? Finance your venture?

We “organized” haphazardly as hell. Seat-of-your-pants stuff. Recognized a need, made some phone calls, lined up suppliers and started selling basically. Everything was reactive as hell at first. Sometimes this can’t be helped as new business typically lack money to do everything perfectly. Sometimes it’s just inexperience but you learn quick when you’re starving for a paycheque.

We registered the company according to incorporation laws in Ontario. You’ll have to find out what the equivalent is in your area and do likewise.

The initial financing came from cashing in a small RRSP. Then, we used a small overdraft as an “operating line”. Banks only became more helpful when we started making money, naturally.

How have you grown?

We’ve grown pretty haphazardly too. For example, it might be a year of wild growth followed by a couple years of plateau, followed by a couple years of moderate growth, etc. We’ve somehow always managed to make money or at least break even annually. Which seems kind of miraculous when I think back on some of the stupid mistakes we’ve made.

What unexpected challenges have you encoutered?

You name it, you’ll probably encounter it: Supplier and supply problems, client problems, scheduling, vehicles, infrastructure, insurance, taxes, banks, money, employees, theft, sabotage, competitors, regulations, etc, etc, etc. Too many to list in one post and it doesn’t necessarily get any easier as time goes by, to be honest.

Would you do it again?

Weellll…I dunno. Sometimes I feel like chucking it frankly. Other times, I think I could never work for someone else again. I think a lot of business owners feel the same way. It probably depends on the day you ask them the question.

The most useful thing I could probably tell you in brief would be: Get a good accountant. They can guide you in more ways than number-crunching. Good ones are knowledgeable about some legal stuff too and might be able to save you some money there, at least initially. A really good accounting firm is worth it’s weight in gold, I kid you not.

Fascinating stuff . . . did you start out as a sole proprietorship or partnership? Did you incorporate at some point?


A couple friends and I, who worked together, had a small (<$1000) project to do, when our existing company folded up. We stayed together and did the project on our own, working from my kitchen, and grew from there.

At first, not at all (we worked as individual, 1099-based contractors). Later, we went to in conjunction with a lawyer and accountant.

Our savings and initial project got us going, although as a services firm our needs were pretty small to start. We each had a laptop, and we worked as I said from my apartment.

Steadily. Honestly, hiring the first staff member was a huge leap of faith, on our part as well as his. We had one project for him to work on, which would last 2-3 months, and we had no visibility beyond that. Since then, we’ve always just managed to get more work than we have people to do it, and hire steadily to handle it all.

All of them :-).

Yes. In fact I already am, this is my second startup (although my first was more of a product-based company, we had a large services component to it).

Cheers - F.I.

We incorporated immediately, on the advice of our accountant. This was because of the nature of the business though. We retained his firm’s services almost before we did anything else IIRC. We still use the same firm for all the month-end stuff to this day. As the business grew in complexity, we needed a specialized tax accounting company to do the annual returns. We lucked out with the corporate tax accounting firm we use too, we’ve stayed with them for the past 6 or 7 years.

I’d suggest trying to find someone with whom you would feel comfortable building a relationship over the years even if it means an initial hassle of going through a few at first. I wouldn’t recommend you try pinching pennies too much in this area although lots of people do with varying results. Nor trying to tackle it yourself, unless of course you actually are an accountant.

Good luck. :slight_smile:

The single biggest problem I’ve had in my business is balancing client and employee growth. That means, having enough employees to service my clients AND enough clients to keep my employees employed/busy. I have a cleaning service and it takes about $1000/week of customer work to keep one employee busy full time. Roughly, depending on logistics. We’re still early in the game and I expect this should become somewhat less of an issue as I have more teams (generally two people on a team) to spread the work load across.