I’ve run productized service businesses for the last six and a half years. In that time, my businesses have made over two million dollars in revenue without doing custom work.

While there are productized service businesses out there that make that number in just a few weeks or months, I’m pretty damn proud of it.

Because I run these types of businesses, I also like hiring them. I’ve hired them for:

• Design
• Development
• Content

Because many of these services are relatively high ticket ($5k+ per year at minimum), I have also had phone sales calls with more than I have hired. 

As I’ve sat and thought about my own businesses, and reflected on the productized services I haven’t hired, there have been a few reasons that have come up time and time again that the deal didn’t close.

But one stands out as the main reason why I didn’t, and why my own main business has struggled at times.

That one reason is exactly what you need to know about growing a productized service business (or even a custom services company, otherwise known as an agency).

That one reason is the lack of a repeatable process to be able to deliver the service you offer.

Stated another way:

the number one secret to growing a successful productized service business is having a rock solid process that allows you to consistently sell and deliver that service to all of the demand you have for that service.

So how do you do that? How do you create a process that can continually deliver value?

Here are the steps.

Solve the problem manually first

There’s a reason why agencies are often able to build successful software businesses at some point. They may try a few times and fail because running a product business is VERY different from running a services business, but ultimately agencies succeed because they’ve solved the same problem time and time again and now can build technical systems around solving that problem for many at scale.

My buddy Greg runs AltAgency, which literally teaches agencies how to launch a productized service from within their agency. I have heard him say many times that before you productize, you have to solve the problem consistently and repeatedly.

There are many agencies out there who think their problem is not enough leads, but really they have a capacity issue and wouldn’t be able to serve more clients.

Learn how to solve a high value problem consistently with good margins. Then you can productize your service.

Have a cheat code on both sides of the market

When I started out on my own, a coach told me: “Don’t start a business by yourself and don’t start a two sided business.”

I, of course, being the stubborn person I am did both.

But I got lucky with Credo because I had from the start a cheat code to both sides of the market:

1. I had people coming to me wanting me to consult with them on SEO or digital marketing. I could tell them I wasn’t taking on new clients but could refer them to someone who was a great fit. People were appreciative of this.
2. As a former agency marketer who is friends with a lot of agency owners, I could easily seed the supply side of the network as well.

Both of these cheat codes has come in handy throughout the lifespan of the business, but if I’m being honest I wish I had a stronger in for the first one. Demand is almost ALWAYS the hardest part to scale in a productized service, so if I had to choose between having an unfair advantage on the demand or supply side I’d pick the demand side any day.

Charge good rates

When you’re ready to productize your service so that you can serve more clients, it’s tempting to charge less because “we’re working less.”

I’m not going to give you a diatribe on pricing, but I will say that this is the wrong approach because you’re still in an hourly time-for-money mindset.

The best productized services charge for the value they bring by staying just “custom” enough to charge high rates while also leveraging the benefits of a system that has reliable outputs based on reliable inputs.

Charging like this will also let you run your business with a good profit margin, which as we all know is extremely important in lean times as well as letting you pay yourself well. Good margins let you hire good people, pay yourself well, and weather changes in the competitive landscape.

From my experience, the hierarchy of operating margin in a business goes like this:

• SaaS – 80-90% margins
• Productized service – 30-70% margins (you really want 50%+ minimum to be viable)
• Agency – 10-40% margins

Just like Nathan Barry’s Ladders of Wealth Creation, it’s often best to start at the bottom and then work your way up. You can skip a rung if you want, but your life will most likely be unnecessarily more difficult than it would otherwise. 

Build technology to facilitate delivery

One of my most key learnings in running Credo, which I am also applying to EditorNinja, is the importance of building technology to automate or at least systematize as many of your repeated processes as possible, as soon as possible.

When I first started working on Credo I literally ran it with a free CRM, a few spreadsheets, and my email inbox.

We still have a CRM, spreadsheets, and email inboxes but we also invested a lot of money in building out our Platform to facilitate project creation, matching and introductions, and appointment scheduling.

At EditorNinja, I’ve built simple workflow software using no-code tools to facilitate document creation, assigning to editors, and returning them to customers.

I know Design Pickle has built out their own workflow management software called Jar (keeping with the pickle theme) to facilitate a similar workflow to what EditorNinja will become someday.

The sooner you can build technology that makes it easy to plug people into the processes to run them instead of doing them in a myriad of places, the sooner you’ll be able to scale.

You don’t even have to build your own technology. I know a lot of productized services use project management software like Asana or Basecamp with repeatable fields and repeatable process sheets to run their business.

I don’t care which you choose. Just use technology to enable you to scale.

What lessons have you learned?

If you run a productized service business, what other lessons have you learned? If you run an agency, what questions do you have about productizing your services?