Business Services: Types and Functions

Business services can be defined as various tasks and activities that help maintain a business, despite not delivering any tangible product. An example of a business service can be information technology which assists numerous other business services like procurement, finance, and shipping. In today’s world, most of the trades are interested in these exclusive services and cover a major part of the industry.

Business Services Characteristics

It can be classified into five characteristics:

• Intangibility: With reference to business services introduction, services do not have any physical form i.e. they can only be practiced, instead of produced.

• Inconsistency: Services do not have any consistency. They need to be exclusively done each time.

• Inseparability: Both consumption and production take place at the same time for services.

• Inventory: A person cannot stock services for future use; it has to be delivered when demanded. This is one significant difference between goods and services, as the former can be stored for later use. 

• Involvement: Customer involvement is required in providing any kind of service.

What are the kinds of Services Available?

1. Business Services

They are used by organizations to accomplish their trade activities. Banking, warehousing, marketing, inter and intra-departmental communication, etc. fall under business services.

2. Social Services

These services are given out voluntarily to promote equality and help people.

3. Personal Services

This type of service varies from person to person. It can be a tourism service, food service, etc.

A form of service known as business-to-business service takes place between trade organizations. It depicts the involvement between a wholesaler and a manufacturer, or a retailer and a wholesaler. They stand in contrast to business to consumer and business to government transactions.

For example, a car manufacturing company performs B2B transactions with a wholesaler company that sells tires, rubber hoses, and other necessary materials which are needed to build a vehicle.

Types of Business Services

Let’s take a look at some of the different business services.

1. Software Services- Technology is required almost in every field. Software services comprise a major part of it. They range from anti-viruses to various operating systems and etc. Furthermore, another department where software services are vital is banking. Nowadays, transactions have become more accessible through online banking. Hence, software services need to be upgraded to combat hacking and virus threats.

2. Consultancy Services- Consultancy services are provided by numerous organizations irrespective of their field of specialization. These services are given for business expansion projects, commercial projects, etc. Moreover, these services also help a company to comprehend the industry environment and the competition in the market.

3. Training Services- Many enterprises require these services. Though most companies are well enough to give training to their employees, they also take help from external agencies. These agencies train the employees with soft skills and other necessary requisites to work in the company.

4. Financial Services- It is one of the most important services of an organization. Financial services are taken for evaluating taxation, depreciation, valuation, and expansion. The finances of a company are looked after by the finance department, but some also require additional support from financial advisors.

5. Marketing Services- Companies call for marketing services to reach out to a broader audience by creative advertising and skillful marketing. There are specialized agencies that help with these services. These companies allow agencies to get innovative marketing ideas to receive quality work. An organization prefers investing in a third-party service provider as they present them with quick feedback and execute marketing strategies efficiently.

6. Travel Services- Many times companies need to travel to various places due to business requirements. Here, travel services come into play. These companies help with scheduling and reservation required for the journey. 

7. Security Services- This type of function is considered necessary for a company to keep its goods and products secure. Security services employ individuals to stay physically present in the office premises. It is a part of financial services where it also provides safety for fraudulent dealings. Government and banking sectors hugely avail security services.

8. Waste Management Services- Management of waste is crucial in preventing pollution. Wastewater and materials produced from a manufacturing plant must be recycled and passed carefully to minimize the leakage of toxic products that may affect the environment. Waste management services guarantee that the waste generated from a plant is less harmful or less polluting, and helps in keeping people and the environment healthy.

Apart from these, there are various personal services that individuals may opt for as an independent way to earn money. Check the below list of service business ideas:

1. Personal fitness trainer

2. Makeup artist

3. Graphic designer

4. Corporate event planner

5. Party planning services

6. Pet sitting

7. Private school application consultant

Here is a Chart that Gives a Clear Idea about the Difference in Goods and Services:

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Business and the Types of Business

Business can be defined as an activity undertaken to make profits. Any activity that produces or sells a product or a service to make profits is a business.

It can be sub-classified on the basis of ownership of the business, and they are as follows:

1. Sole Proprietorship

A business or an organization that is owned and run by a single person is called a sole proprietorship in business.

The liability for this kind of business is unlimited. The owner operates the business and runs it. The owner may hire employees.

2. Limited Liability companies(LLC)

A limited liability company is the one in which the owners and partners running the business are protected under certain legalities in case the business fails or is in any problem. This means that if a business is incurring a loss, then the owner is not directly liable to bear it.

3. Partnership

In a partnership, a business has two or more owners and the profit and loss are liable to all of them. The liability in this business partnership is unlimited. This type of business can be further divided into a general partnership, limited liability partnerships(LLC), and limited partnerships.

4. Franchise

When someone purchases the rights to run and own a small unit of business from the parent company, then it is referred to as a franchise. Mainly the food businesses are run as a franchise like McDonald's burger etc.

5. Corporation

The corporation is a business that has limited liability and is protected under certain legalities, in fact, the corporation has a different legal personality. The corporations can be privately owned or government-owned. Some of the corporations are for-profit whereas others are listed as non-profit organizations. These types of businesses are also listed on the stock exchange to make and generate profits or to grow the organization.

6. Co-operative

In a cooperative type of business, there are decision-makers and not shareholders. This type of business is a limited liability business and can either be for-profit or non-profit. 

7. Limited Liability Partnership

In a limited liability partnership, All the partners or some have limited liability. This type of partnership can be called the hybrid of partnerships and corporations. The LLP also has certain tax liabilities as well.

The Components of a Business

Every business has some key components that help the business run smoothly and successfully. Listed below are five elements in every business:

1. Creating Value

The success of any business is dependent on the value that is created by it. The product or service that makes the difference in a customer's life. The user experience of any product or service offered by the business should be value-adding. No matter how good the packaging is of a product, if the customer doesn't like it, it's a loss. So the key aspect of a business should be adding positive value to their target audience.

2. Marketing

The marketing of a business is as important as creating the product itself. It is attracting the target customers. Marketing allows the business to advertise their product or service such that people are aware that this kind of product or service exists. Marketing is for the long term. It helps create a brand value for the business as well as creating the demand for certain products/services.

3. Sales

When an attracted client or customer is turned into a buyer, then it is sales. Without sales, there won't be cash inflow and business would soon run into a loss. For any business to be profitable, the sales should be happening on a consistent basis. It is telling the customer why one should buy from a particular brand or business.

4. Delivering the Value

The business doesn't end when a certain buyer purchases the product or service. When the buyer is dissatisfied with his/her purchase, they won't buy from the business again, and that too would mean a loss to the business, sort of negative advertising. Positive feedback from the existing clients or buyers would mean there will be more buyers in the future.

5. Finances

The foundation of any business is money. The inflow should always be higher than the outflow, only then the business is called profitable. To keep a track of investments and other funding and the return of investments a separate entity in the business is required.