Business services are those activities that assist a business but do not deliver tangible goods. These include information technology, logistics, and financial management.
Almost every company needs some form of business service to function properly. They are typically either hired in or outsourced, depending on the business.
Examples of business services are computer and telecommunications, management, software, legal, and human resources. In addition, there are many specialized services for specific industries.
How do you differentiate your business?
Traditionally, businesses have focused on developing products. A product-oriented business is much easier to describe and understand, because the physical reality of the product provides a powerful base on which to build a description.
In service-oriented businesses, however, it is often more difficult to develop a description because the primary value is intangible. This makes it challenging to distinguish your service from competitors.
Barriers to entry are common in both product and service-oriented businesses, but they are especially prevalent in service businesses. One of the biggest barriers is what I call “service differentiation.”
Another is the cost structure, which varies greatly from business to business. A service-oriented business can charge more or less for its services, but the price must reflect the actual costs.
The cost of delivering the services is also influenced by many factors beyond just the costs of employees. For example, how the customer explains the purpose of the service can make a big difference to the efficiency and quality of the service.