What Are Business Services?
Business services are activities that benefit companies without delivering physical products. They are an essential part of a company’s operations, and they provide a number of benefits, including marketing, production, safety, cost and convenience. The services that businesses use may vary by industry and size, but some of the most common include consulting, information technology, waste handling, travel, staffing, shipping, and administration.
Unlike physical goods, which can be stored for future consumption or sale, business services are delivered at the moment they are required. This creates an interesting challenge for service-oriented businesses, which must focus on developing a customer experience that is as close to the actual service delivery as possible. The key to this is the ability to identify the needs of customers and create an experience that meets those needs in a unique way, similar to how product-oriented businesses design their products to set them apart from competitors.
Many business services are based on labor, but some are more complex and require specialized expertise or equipment. For example, software services enhance the features and security for a company’s technological devices like computers and phones. Other business services include child care, which allows employees to balance work and family responsibilities. These types of services are often outsourced to outside providers, but companies can also offer them in-house.
Another type of business service is support for internal or external communications. This might include the creation of a website, or the provision of telephone or email help desks. This can be an essential aspect of a business, especially in the case of a large enterprise that requires multiple departments to collaborate with each other.
A company can also improve productivity by outsourcing certain business services to external vendors. This can be an effective strategy for reducing costs, and it can allow businesses to focus on their core competencies while leaving non-value-adding tasks to experts. The outsourced providers can also be scaled up or down in response to demand, making them an ideal choice for companies that deal with seasonal output fluctuations.
In the accounting world, business services are a subset of economic services and are identifiable by their characteristics, which include the fact that they involve both service providers and consumers. They are usually provided as an intangible asset to a company and the value that they add is determined by the way in which the provider is able to differentiate itself from other offerings in the market.
As with products, service businesses face barriers to entry that prevent them from becoming commoditized. One of the most significant barriers is brand differentiation, which is the ability to develop a distinctive image that creates an association in the mind of the consumer with the specific service being offered. While successful product-oriented companies are able to achieve this, it is more difficult for service businesses. This is because most people are unable to physically compare the quality of services, as they can with tangible products.