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5 Small Ways Your Service-Based Business May Be Losing Money

5 Small Ways Your Service-Based Business May Be Losing Money

Nahla Davies

Service-based businesses — perhaps more than any other business type — find success in the little details. Where other businesses might survive with poor customer service because of the raw strength of their products or brand image, service-based businesses must always cultivate a friendly atmosphere, offer an excellent user experience, and serve their customers in a way that can’t be replaced.

But even if your service-based business is currently surviving or even thriving, it is likely you are hindering productivity in some ways or losing money due to missed sales opportunities or a poor onboarding experience. Over time, that lost time and money can add up and be a significant impediment to your business model. Today, let’s break down a few small ways your service-based business could be losing money without you knowing it, and how to avoid these pitfalls.

Missing the small but important details

Simply put, the complete experience you provide for your customers translates to their level of enjoyment of your business. When it comes to selling a service, no detail is too small, and there is little room for mistakes. This is truer than ever given that customer loyalty is lower because of tight finances or simply having other good options.

The competitive landscape is fierce in the service industry, and it is important to polish the entire experience that your service provides. Does your website visually and verbally best represent your business? It should. After all, this is often one of the first impressions of your business. Is it easy to book an appointment for your services? Too much friction in booking appointments or paying for the service leads to more hassle and frustration for the customer.

Businesses must constantly adapt and improve, or they risk losing money. Small details in the service you provide are important in attracting and retaining customers. It’s important for your service to:

  • Provide a stellar customer experience from start to finish
  • Contain a streamlined onboarding process
  • Have excellent customer service from top to bottom
  • Avoid annoying or irritating your customers at any point in the process

Small details that are overlooked or neglected can detract from your overall service. With that in mind, let’s break down how your service-based business could be missing out on cash flow.

Failing to provide a good first impression

There’s no such thing as a second first impression, which is why service-based businesses must master the initial moments of your customers’ first experiences. Even one poor experience can impact customer retention and lead to bad reviews and other negative press.

The first impression of your business is made up of elements such as:

  • A first encounter with your brand, be it online or in-person.
  • The customer onboarding process, such as scheduling an appointment with your business.
  • The first encounter with one of your staff members.
  • The look and feel of your physical business location (if you have one).
  • A brand promise — the promise your service makes to a customer.
  • A clear expression of your service and an overview or roadmap of the experience.

If you ruin the first impression of your business, you might be turning away business at the door or after an initial appointment.

Bottom line: You need to consider the customer journey — beginning from the moment they visit your website. Anytime you have a new customer, you should dedicate necessary time and energy to keeping the customer over the long term. Your marketing team has already done the work to bring customers in, so now it's up to you to finish the sales process and keep them coming back.

Poor follow-up service

Even after someone experiences your service or product, you must remain in contact with your customers. Lots of service-based businesses don’t provide any follow-up service, such as a survey or a reminder about an upcoming appointment. Many customers, even if they have a great experience the first time, may not show up for another appointment if they aren’t reminded about it at the right time.

Additionally, follow-up service helps to boost customer engagement with your brand or service. It can make lifelong relationships with your target audience. The more a customer consumes your services and has a positive experience, the more loyalty you build.

Making it difficult to book an appointment and pay online

Customers want an easy option for booking an appointment for your service. The process needs to be fast and simple. It also needs to be easy to cancel the appointment.

Customers also want an easy option for making payments online. Some service-based businesses lose out on potential business and profits when it is too difficult to book an appointment and make payments online.

Studies show that 71% of customers report using credit cards for online transactions now. A lot of people also like to use PayPal, Apple Pay, or similar services. Your business should give your customers multiple ways to pay, including credit or debit card options.

And where you can, you should make it simple for repeat customers to reschedule services and re-up with automatic withdrawal or one-click confirmation. Even if you make a good first impression, your long-term revenue will decline if there is too much friction in scheduling repeating appointments.

Poor accounting practices

Every business needs to have a solid accounting strategy, but this is particularly important for small businesses. Otherwise, you could not properly track expenses and miss out on eliminating unnecessary spending. Poor accounting practices can lead to lost profits by:

  • Failing to provide visibility into who still needs to pay for services via invoice tracking.
  • Not giving a clear picture of end-of-year tax circumstances. This could result in missing out on deductions or incentives and could also lead to penalties.
  • Not showing real profit margins, causing you to spend more money than you really should.

Overall, good accounting is vital for the long-term financial health of your organization. But it’s also important so that your brand doesn’t lose money that it already technically made from its customers.

Keeping loss leaders for too long

Last but not least, plenty of service-based businesses are too afraid to cut some of their biggest loss leaders. A loss leader is a service or product you provide that technically causes a loss based on its price or expenses. But in theory, a loss leader will cause customers to spend more on your products or services, resulting in a net profit.

While loss leaders can be successful, many businesses must experiment with them before they find the right loss leaders to keep around. Don’t stick with labor-intensive loss leaders for too long and don’t be afraid to cut products or services that don’t turn a profit. Even if your customers come to expect a loss leader, cut it out of your service line if it’s too much of a financial burden to bear.


At the end of the day, each of these items can add up in big ways and truly affect how much of a profit your business turns over the course of a year. If you want your business to really thrive in a competitive market, you need to save every penny you can and invest in customer management over the long term. Keep these little mistakes in mind and your service-based business could very well dominate its niche over the next few years.

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