Managing Clients in a Service Business

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Most businesses can be separated into two broad categories: those that sell a product and those that sell a service. Service businesses have some unique challenges in tracking the work flow and the clients themselves.

If your business sells a product, tracking your customers and sales is easy- the product has a defined price and your cost to sell the product is also defined, and includes things like your cost of purchasing the product (if you are a retailer or wholesaler) or your cost to build the product (if you’re a manufacturer).

If you’re selling a service, however, it becomes more difficult and more critical to track all of your inputs into providing that service to your clients.

Tracking the Work

Every successful service business has a work management system that tracks what work is in the door, what stage it’s at, how long it’s been in process, and when it has been promised to the client.

The more staff you have, the more sophisticated the system needs to be to avoid confusion and having work slip through the cracks. However, when you’re just starting out, and if there’s only you in the business, the tracking system doesn’t need to be elaborate. Let’s take a look at the main types of information you need to track and plan.

Work In and Work Out

One of the most basic pieces of information to track is what has come in the door and what has gone out. For example, if you are an architect, your clients may have provided you with photographs, preliminary sketches, and other documents and pieces of information that belong to them. It’s important to remember that these documents belong to the clients and that you are simply looking after them until you finish the work that the clients have retained you for. Therefore, it’s critical that you know at any point in time exactly what documents you are holding for your clients.

Your tracking system doesn’t have to be elaborate. It can simply be a sign in sheet where you chronicle the movement of your client-owned materials. You also need to document what client items are in your possession and get your clients to counter-sign. Although this may appear time consuming, it can prevent misunderstandings and confusion. When you return these items to your client, you want to ensure that you don’t hear, “But I can’t find the material swatches. I’m sure I gave them to you”- or something to that effect. Having the client sign the “Client Sign In” form clarifies for both parties exactly what has been transferred to your temporary care and will help you to ensure that you return all records to the client when the work has been completed.

Tracking Progress

Your management system also needs to be able to track the inputs into the service that you are providing to the client. For example, if you are a lawyer who bills based on the number of hours you spend on a client’s behalf, you need a system that will track the time you’ve spent to date. If you are an interior designer, your billing may include both the time you’ve spent and the items that you’ve purchased for your client’s project. Make sure that your tracking system can handle more clients than you think you will have. It’s better to have too much system capacity than not enough.

Tracking Turnover Time

The amount of time it takes you to get new work in the door, process it, and complete it is called “turnover time”. Quick turnaround time can be one of the clearest (although certainly not the most accurate) indications to the client of the value that they are receiving. Minimizing turnaround time also allows you to be more efficient and therefore be able to process more work, which translates into more billings and higher revenues.

In order to minimize your turnaround time, you will have to track it. You can do this for all of your client work together (if you only provide a few services) or by type of work (if your turnaround time varies greatly depending on whether, for example, you are preparing a personal income tax return or recording a month’s worth of transactions for a small business).

To calculate the average turnaround time for a specific type of work, take the total days between the date in and date out, and divide by the number of client engagements.

Understanding your historical turnaround time will help you to provide better completion estimates to clients and will be a starting point for actively working on reducing those turnaround times.

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