My Top 6 Takeaways From Scaling Then Failing A Small Service-Based Business Over 15 Years

Reflecting on 15 years of scaling, then failing..

I started Tragic as a side-hustle for my freelancing. Then in January 2009, I made it my main hustle. And what a hustle it has been! Long days and nights, weekends, holidays; I always worked extra hard and did what was needed to keep stable and growing. 

Originally, Tragic was just me, but in 2012 I saw an opportunity to grow. I hired my first two employees, and started to scale the company.

Over 7 years I bootstrapped our growth to 1M in revenue. We grew, pivoted, adapted, evolved, and we were scaling when Covid hit. With it came economic struggle for our clients, changes to work and business development, and for me, everything started to unravel.. slowly, then quickly.

After a disaster client engagement in early 2023, the fight was over and I had to let my entire team go. Todd Budzinski, and I pivoted the brand for the final time as we continue to deal with the fallout and plan for what is next.

Over the past 15 years of grinding, scaling, struggling, and failing; I have learned a lot. Here are my top 6 takeaways for successfully growing a small service-based business:

1. Referrals are nice, but marketing matters most. Service companies often grow from referrals, which is great. But referrals don’t scale. Think beyond your skill / service and understand your ideal client: What is the pain you are solving? Why is a company willing to outsource that pain? Why can your team solve their pain best? How can you get your brand in front of these ideal clients in the most cost effective way? Answering these questions early will help your business grow faster and with more stability.

2. Invest in your processes first, people second. People can make or break a service-based company, after all, people are your product. But people without process will always break down. Create processes that can withstand employee turnover, that ensures high productivity, and that creates infrastructure as you grow. Investing in people is also important, but it comes second. In a service-based business, people are much more than a cog in a machine. They are your product, they provide your service. If you want to grow, you need to create scalable processes, then find good people, and value and nurture them to support your growth.

3. Test and pivot often. Surviving for 15 years in a very competitive and fast-changing industry was not a happenstance. I constantly evolved everything about the business: our solutions, our pricing, our engagement structure. I tested, validated, and evolved based on what worked (or what didn’t). To test and pivot you need data. Watch what your competitors are doing, poll your customers, and track engagement metrics to give you good data to make informed decisions.

4. Never let any one client / project take more than 20% of your team’s time. This may seem overly simplistic, and there are exceptions to the rule; but when you are a small team giving too much attention to any one client is a red flag. If you do land a big client, you must increase your infrastructure to support that growth. Otherwise it will pull too many resources, and inevitably will cause a collapse when the engagement ends.

5. Business is business. Oftentimes, I cared too much. I would care too much for a client, or an employee. I helped people that couldn’t afford us, gave the benefit of the doubt to employees not performing, didn’t hold people accountable; and as a result I was taken advantage of. Business is business, and you have to treat it as such. Set up rules for your employees and client engagements, and when broken, respond accordingly. Treat business like business, don’t make it personal.

6. Have fun. Above all, make sure you are having fun. Make sure you are enjoying what you do. Build a company that your employees want to work for, and an environment where they can thrive. If you are a founder, you pour everything into your business. Make sure you are having fun, and your business is giving back on your investment.

What tips would you share with someone starting or scaling a service-based business? Share your thoughts in the comments 👇

And make sure to follow me on LI to watch my journey out of services as I launch my first SaaS product Drivey 🚀