The business services industry encompasses activities that benefit companies without supplying physical products. Large firms rely on these service providers for marketing, production, safety, cost and convenience purposes–particularly when they cannot meet their work demands themselves.
A few of the most common types of business services include delivery services, real estate agents and day care facilities. Many companies also contract out their IT support needs to technical service firms that help them troubleshoot computer, network and other technological issues as they arise. Additionally, some businesses hire interpreters and translators to help them communicate with clients and other customers who speak a different language.
Warehousing services are another common type of business service that help companies manage inventory and keep products moving from warehouses to stores. This type of service can take many forms, from merely storing goods to assisting with value-added activities like sorting bulk goods into customized lots, packaging products, completing light assembly, labeling and marking prices.
Ultimately, the success of any company depends on its ability to deliver the goods and services it offers its customers. To that end, it is important for managers to understand the differences between a service business and a product business so they can effectively manage these distinct characteristics. Fortunately, a framework that recognizes these distinctions has emerged as a core teaching module in my class on crafting successful service businesses at Harvard Business School. This article provides an overview of this approach, which centers on four critical elements for building a successful service business.