By Roger Pierce
If you’re thinking about starting your own business in Canada, you’re likely thinking about launching some kind of service.
And that’s good news, because service-based businesses enjoy low startup costs, high profit margins and maximum flexibility when compared to retail or manufacturing. Approximately three-quarters of all businesses in Canada are service-based.
Service businesses thrive best with contracts. Telecommunications providers, for example, insist on signing up users to three-year mobile phone contracts. Banking packages are designed to collect fees monthly. Fitness clubs renew your membership each year.
It’s difficult to build a business without a predictable source of revenue. Contracts (big or small) will guarantee your business a certain amount of income. Secure income allows you to hire help, invest in growth resources and plan ahead with confidence.
Contracts will also increase the value of your business should you ever decide to sell it.
I’ve seen too many entrepreneurs struggle financially because they are selling one customer order at a time. Once the job is done, they must race to find another one. It’s a frustrating, dangerous and depressing hand-to-mouth existence.
Avoid it by doing the market research required to find out what your customers will pay for repeatedly. Model your business based on customers consuming a service they will pay for monthly or annually in the form of a contract, subscription or membership.