Business services are intangible activities that support a firm without the delivery of any tangible product. These services help to keep businesses functioning efficiently and economically by providing a range of essential functions, including administration, IT services, consulting, waste management, shipping and logistics, staffing and security services.
In addition to this, they allow companies to focus on strategic-based internal goals by avoiding the need to invest in labor-intensive tasks that do not fit into their area of expertise. Companies can then outsource these tasks to business services providers. This saves them from having to train their own employees, as well as the need for them to buy expensive equipment to carry out certain tasks.
While there are a number of benefits that come with running a business services company, it is important to consider the risks involved in this type of industry. Some of the key risk factors in this sector include the following.
1. Inseparability – Unlike physical products, intangible services cannot be stored for future use. They are produced and consumed simultaneously and must be adapted to each individual customer’s needs. This can lead to a lack of consistency in the customer’s experience with a service provider.
2. No Inventory – Since intangible services are not produced and sold in bulk, they do not require an inventory. This is in contrast to other industries such as manufacturing, where production and consumption are two separate processes that take place at different times.