Business services are activities that provide value to businesses without delivering physical products. They are a large industry, making up about 11% of the European economy. They are used by companies for operating their business, reducing costs and increasing productivity. They are also increasingly being used to add value to products through new combinations of goods and services.
There are three major types of business services: business-to-business, business-to-consumer and social services. Business-to-business, or B2B, services help other businesses for a flat or hourly rate. They include logistics, finance and accounting, human resources and IT support. Business-to-consumer, or B2C, services help customers buy and use products and services. They include retail, sales, marketing and customer service.
Examples of business services include a company that manages logistics for another company, a third-party fulfillment service, or an IT consulting firm that provides advice on optimizing the IT infrastructure of a business. Financial services are another common type of business service, including bank loans and lines of credit, as well as investment advisory and insurance services. These services are provided to companies that need to finance their operations, expand and make acquisitions.
Other examples of business services include a printing company that provides bulk printing services or a graphic design firm that produces logos, signage and publications for other companies. Management consulting firms also fall into this category, providing advice and support to other organizations in their management roles. Other examples of business services are travel and event planning, production of small runs of items or a contract manufacturing service, and design and technology services such as a software development company that provides a cloud-based sales automation platform.
Many of these services are necessary for a business to operate, but it can be challenging for managers to understand how they work and what the best practices are. In a class I teach on managing service businesses, I introduce the concept of the service tool kit, which is a set of four critical elements that must work together in harmony to create a successful and profitable business model. The tool kit consists of marketing, production, cost and convenience. Each of these areas are important in their own right, but they can conflict with each other and pull the business apart if not properly understood or managed. To overcome this conflict, a manager must have the right people in place to drive the business forward. Without this, the business will likely struggle to survive, if not fail completely.