Business services are a wide range of tasks and activities that help businesses maintain their operations, even when they don’t produce a physical product. They can be very diverse, ranging from IT to real estate and employee wellness. They can be outsourced to companies that specialize in those areas, or done in-house by a company’s own employees.
There are three different kinds of business services: pure service businesses, mixed service businesses and service-oriented firms. The first kind, pure service businesses, does not sell any products at all. This type includes airlines, banks, computer service bureaus, law firms, plumbing repair companies and motion picture theaters.
The other two types, mixed service businesses and service-oriented firms, also do not sell any products at all but offer a variety of services to customers. These include advertising, marketing, consulting, logistics (including travel and facilities), waste handling, staffing, shipping, administration and security services.
In pure service businesses, any transfer of a physical or concrete product is incidental to the service–for example, the written report from a management consultant. This kind of business can be very successful.
Those businesses that have been in business for more than a few years may begin to see a shift toward the use of services for more and more of their work, especially if the economy has begun to show signs of a service-driven recovery. This kind of business, with its focus on delivering value to customers, may also be easier to manage than traditional product businesses.
They can also become more profitable. One reason for this is that the intangible nature of services makes them a more attractive product than tangible goods.
Another advantage of services is that they often have a lower cost structure than goods. A customer can usually get a general feel for the cost of a service from the price that he sees advertised, although comparison shopping is sometimes difficult.
Some business services require specialized expertise or equipment that a company may not have in-house. These are often outsourced to a provider, which can then scale up and down the amount of work that it does for the client in response to changes in the business.
This approach can be particularly useful in industries that have seasonal output fluctuations, such as food and apparel manufacturers. It allows a firm to hire a smaller staff during periods of low demand and then expand again as business picks up again.
It also reduces the risk of hiring employees who lack the necessary skills and experience, which is important in industries such as health care.
A third benefit of services is that they can be a way for companies to reach new markets and customers without the costs of developing an in-house team or building an infrastructure. The external service providers can also provide additional skills, such as accounting, human resources and marketing, that a company might not have on its own.
A fourth benefit of services is that they can be adapted to the needs of different customers. For example, a restaurant might have a special menu for senior citizens or a grocery store might stock items in a particular section that might be more convenient for some customers than others.