The second annual Mavenlink State of the Services Economy report for 2018 finds almost 4 in 5 or 79 percent of service companies are facing increased competition. This rivalry is coming from new entrants who are pushing established businesses to work much harder to find new customers and keep existing ones.
Competition Is Heating up for Service Businesses
The report highlights a change in the services economy being driven by fast transformation and increased competition. This has led companies in the segment to modify their business model to face the challenges brought on by new players and old hats that have adapted to the current way of doing business.
Although many large companies were included in the survey, the data applies equally to small businesses looking to compete and thrive in today’s service economy. According to the SBA, small businesses make up 99.7 percent of U.S. employer firms, and many of these businesses are in the services economy. For these companies, staying in business will require adopting some of the findings in the Mavenlink report. This includes a more adaptive and nimble workforce with freelancers and new technologies such as collaboration tools.
In addressing the workforce and technology challenges, John Reese, Senior Vice President of Marketing at Mavenlink, told Small Business Trends, “Leveraging project collaboration technology is a major opportunity for all businesses today, big and small. The benefits include improved team communication, productivity and skills development, not to mention the ability to work more seamlessly across geographies and time zones. Using a project collaboration technology to interact, share timelines, and track project progress with your clients can really set your customer experience apart, displaying the kind of transparency clients are looking for today and building that coveted trust in the relationship that drives repeat business.”
The Mavenlink report points to this stating 89 percent of executives had remote employees, and 72 percent said they work with employees in different countries. Considering this sentiment, it wasn’t surprising when a whopping 99 percent of the participants said collaboration is critical or important to success in 2018.
One of the barriers to new technologies for small businesses is affodability. When asked if there are affordable solutions addressing their needs without sacrificing functionality, Reese said the cloud has made collaboration technologies accessible for companies of all budgets and sizes. He adds, “The challenge for SMBs is not in finding potential options, but in determining what solution is best for them given their needs and the value they’re looking to generate with the technology.”
Choosing the right solutions will be key. In the report, high performers were focusing on data, they were 2.5 times more likely to adopt technology automating their services operations, and leveraging a liquid workforce played a very important role.
Ninety-four percent of the high performers said they used external talent such as contractors, and another 97 percent stated it has gotten much easier to hire this workforce in the past 12 months.
Being Able to Compete
Businesses in the service economy have to be informed and adapt to the changes based on the data they have acquired. This means moving to more project-based work as 75 percent of businesses in the survey have done, delivering specialized offerings with a wider variety of services to customers as 89 percent have done, and moving to new services which may have to be one-off projects as 74 percent have done.
These changes have made operating in service-based businesses harder. Forty-nine percent attributed the difficulty to conditions changing faster than ever. But the market is full of tools designed to make the environment easier to navigate. As Reese said, you have to find the right solution for your specific needs which will generate the most value, while keeping you in business.
The global report was carried out with the participation of 576 respondents in professional services industries, including IT, marketing, advertising, media and consulting in collaboration with Research Now. The US had the largest number of respondents at 56 percent, followed by 25 percent from the Asia-Pacific region, and 19 percent from Europe. Forty-nine percent of the companies had 999 or fewer employees, while the rest were made up of organizations with more than 1,000 employees.
The other 21% must not be paying close enough attention. I can’t think of a single service-based industry that isn’t getting more competitive.
It really is. We have gone through the times of duplicating successful business models. We need to be able to stand out from the competition nowadays.
The competition is expected to get tougher in the upcoming years. It is just like bloggers. We now have too much that the need to stand out is too apparent.
This is the reason why business planning should be more than just about making money but standing out from the crowd.