Most service firms have no market value. This usually comes as a nasty shock to their owners who point to their profits, industry awards and client list and mistakenly believe they are creating equity. In reality, all they have created is a job. It maybe a rewarding job. The job may pay well and get them all kinds of public recognition, but it is still just a job, not a sell-able company.

That’s why if you try to sell your service company, most people will politely decline. Those who express interest will offer you a sum contingent on a 3-5 year “earn out”. All they are offering you is a small amount of cash up front followed by money they are only forced to fork over if you reach certain milestones. If you had reached these milestones on your own, you could have paid yourself the same sum and still own 100% of your company.

The only way someone will buy your service company is if it runs without you. This means you need to find a way to standardize your approach to dealing with customers so that you can train others to do it the way you would. Most service-based business owners understand this principle of standardizing their process because they have read Michael Gerber’s The e-Myth or Tim Farris’ Four Hour Work Week. So why do so few service businesses make the switch to a Standard Service Offering? Let’s look at three reasons:

1. Providing service makes us feel good

Solving client problems feels good when you’re doing it but it does not create any lasting results. Many service business owners enjoy the mental stimulation of solving a client’s problems. It gives them a great sense of accomplishment when they stretch their mind, stand on their head, and come up with a unique solution for a client need. It makes these owners feel smart and helpful. Needed. They delude themselves into thinking they are building a business by creating happy, satisfied customers. All they have done is indulge themselves in the satisfaction of helping others. This is a great feeling but it comes at the cost of building a sell-able company.

Instead of personally solving client’s problems, if you want a sell-able business, you have to train others how to be the heroes. Some business owners just can’t give up their fix of client back-patting for a job well done.

2. The very nature of service

By its very definition, to “serve” is to put others in the drivers seat. The natural course of capitalism puts service business owners at the whim of their client. You become a glorified Geisha Girl: your client has a problem and you serve up a solution. Clients have lots of different problems and you need to serve up lots of different solutions. This requires years of experience in different situations to serve up an appropriate solution. You (or an equally experienced and expensive person on your team) are the only one with the experience to reach back into your library of past situations to come up with an answer. Once you get too busy answering questions, you realize you need more senior people like you. You try to hire them and realize they cost more than you can afford so you have a choice: make them a partner and dilute yourself or turn down the work and limit your growth. Checkmate. Instead of serving all needs a client has, you need to pick one and build a team of people that get really good at solving that one problem.

3. Running on cash flow

Most service businesses exist on positive cash flow. The owner may have a small bank line of credit (perhaps a couple of months of revenue) guaranteed by the equity in their home. Their spouse is not keen on them relying on this safety net which means they are running a cash flow business. This makes it very difficult to turn down work. They are literally trying to pay this month’s bills with whatever work they can scrounge up – beggars cannot be choosers. This lack of financial reserves makes turning down work very difficult.

Instead of offering to “serve” your customers, you need to pick a problem that you’re good at solving, create a system you can train others to follow without your involvement, and offer to take customers through your Standard Service Offering for a fee. Build up a war chest of cash to rely on while you’re turning down work that does not fit into your Standard Service Offering. This requires enormous discipline. It’s difficult, but it is the price you must pay to build a sell-able company.