Entrepreneurship And The Service Sector (Guide)

Service industries often foster entrepreneurship due to their low startup costs and lack of manufacturing processes. As manufacturing and production industries become more mechanized, the demand for service industry businesses has increased in areas such as distribution and sales, creating a surplus of opportunity. 

Moreover, some service businesses are in the business of creating positive experiences: including hospitality, beauty and wellness, entertainment and fitness, create positive experiences that provide emotional value and promote the well-being of those they serve. After gaining valuable skills and expertise working in a giving service industry, one may choose to start their own business with the service knowledge they've gained.

The service industry is composed of professionals or team of experts that deliver work or aid in completing a task for the benefit of its customers. There are several types of nonmaterial goods and products that service businesses provide to their customers. Virtually all services involve a direct interaction between producers and consumers, whether it's face to face (as in retailing, personal services, health care, live entertainment,etc), or more remotely (as in the case of Internet access or television broadcasting).

Why Are There So Many New Business Enterprises In The Tertiary Sector?

When it comes to Entrepreneurship, the Tertiary/service sector is the most profitable sector. Aside the fact that the service sector often has lower start-up cost than primary or secondary sectors there by increasing their profit margin, among all the sectors, tertiary sector compete with each other the most. Hence, they try to supply their products and services with good quality, design that captivates other people, and provide better customer service.

The Four Categories Of Entrepreneurship Are:
  • Small business
  • Scalable startups
  • Large company or intrapreneurship
  • Social entrepreneurship

Small Business: The Small Business Administration (SBA) says that more than 99% of all U.S. businesses are considered small businesses, and a majority of them are entrepreneurial ventures. These could be anything from, restaurants, retail stores to local service providers. They typically don’t have any intention of becoming a chain or franchise.

Small business is typically a privately owned corporation, partnership, or sole proprietorship that has fewer employees and less annual revenue than a corporation or regular-sized business. A good business idea may seem hard to come by, but with some planning and preparation, you can easily launch a small business.

Further, when it comes to the best small business ideas, Airbnb Co-founder, Brian Chesky, said:
 "If we tried to think of a good idea, we wouldn’t have been able to think of a good idea. You just have to find the solution for a problem in your own life."

If you’re like Brian and you’ve already thought about a solution for a problem you encounter in your life — or you’re on the path to doing so — then starting a small business is ideal.

Scalable Startup: This is a business model where an organization started on the basis of a unique idea. It involved everything that ranges from creating a plan to all the way up launching the business. This form of Entrepreneurship involved a great sort of work, education, and experience.

The goal is to find out a repeatable and scalable business model. Once you find that model, you further started raising funds for the growth of the business. A small proportion of all trades are made up of scalable startups because of the risk capital and outsize return. Facebook, Instagram and online shopping for consumer goods, are few examples of a scalable startup business.

To establishing a scalable startup, scalability is the first thing one must consider. Then, consider the entire scenario such as products of the business, employees(partners) and plans for the successful running as well as smooth operating of the business. The entrepreneur must have a particular plan for the scaling of the business and maintain stability and profitability for the long run.


Here Are The 10 Main Industry Groupings, Or Sub-sectors, Within The Service Sector:

  • Wholesale & retail trade
  • Information, culture & recreation
  • Finance, insurance, real estate & leasing
  • Transportation & warehousing
  • Accommodation & food services
  • Health care & social assistance
  • Professional, scientific & technical services
  • Educational services
  • Public administration & defence
  • Business, building & other support services

In order to run a business in the service sector you need to understand the main industry groupings, or sub-sectors above. So let's take a detail look at them.

Wholesale & Retail Trade

The wholesale & retail trade industry includes everything from "mom and pop" corner stores to large department stores or wholesale distribution centers. Wholesale and retail are two distribution arrangement that constitutes a major part of the supply chain. This section includes wholesale and retail sale (i.e. sale without transformation) of any type of goods, and rendering services incidental to the sale of merchandise.

To summarize the key differences, retailers sell goods directly to the end-user, typically in small quantities. Wholesalers, on the other hand, sell goods to other store owners and others in the retail industry who then turn around and sell the goods to the end user. Thus, wholesale trade consists of establishments who sell merchandise to other businesses. They arrange the purchase or sale of goods for resale.

Unlike wholesalers who resale, retail trade is the business activity associated with the sale of goods to the final consumer, the ultimate customer. It is basically the link between wholesalers or manufacturers and the customers of the product. Typically, retailers sell goods in small quantities to consumers for personal use, not for resale or business use.

Consumers benefit from retailing as retailers perform marketing functions that makes it possible for customers to have access to a broad variety of products and services. Retailing also helps to create a place, time, and possession utilities. A retailer's service may also helps to enhance a product's image. Among the different types of retail trade operations are the following:

Itinerant And Fixed Shops

Itinerant retailing is a type of small-scale retail trade in which retailers move around and sell a variety of items directly to the consumers. They are those retailers who do not have a fixed places for their business but move from one street to another carrying items on their heads or carts in search of customers. Hawkers, pedlars, street traders are different type of itinerant vendors.

Itinerant retailers deal in daily need articles. You must have seen an itinerant retailer distributing newspapers early in the morning; selling peanuts, vegetables, fruits, milk, ice cream, rice, eggs and fishes etc. They also sell goods like bangles, toys, pens, toys,carpets, earthen pots, utensils, etc. Itinerant retailing requires only a little capital to start because itinerant retailers do not need to have a shop to operate.

They only need to buy goods. As they go from street to street and from door to door, itinerant retailers provide consumers with the convenience of fast delivery. Conversely, the retailers selling goods from a permanent place are known as Fixed Shop Retailers. They have a fixed place of business and does not move from one spot to another to serve their customers. 

Fixed shop retailers are one of the most common types of retailing trade in a market. There are four types of fixed shop retailers. They are street stall holders, specialty shops as well as second-hand goods dealers and general shops. Street stallholders put up their stalls where there is heavy pedestrian movement. Having selected a location with utmost care, they retain that place of business. 

It becomes a permanent place of business for them. They get their supplies from wholesalers and suppliers operating in their area. Specialty stores are retail businesses that focus on specific product categories. They carries a deep assortment of brands, styles, or models within a relatively narrow category of goods such as office supplies, men's or women's clothing, florists, sporting-goods stores, bookstores, gifts shops, bicycles shops, shoe shops etc.


Mail-Order Houses

Mail order houses sell their products through mail. The advantages of such a business is that it requires minimum capital, removal of middlemen. Mail-order houses, along with department stores and chain stores, were the most important innovations in retailing institutions during the late nineteenth century. Unlike the other two, however, mail-order houses were essentially a unique American phenomenon in their extent and significance.

Indeed, because the majority of Americans still lived in rural settings before the 1920s, they often first experienced the emerging national consumer culture through the medium of the mail-order catalog—or, as many called it, the "wish book." Before the 1860s a few firms (for example, patent medicine vendors) advertised the availability of their wares by mail in newspapers and agricultural journals.

Of the many firms that quickly followed Montgomery Ward into the mail-order trade, its most important competitor was the company founded by Richard W. Sears. Beginning in 1886 as a vendor of watches and reorganized several times through the early 1900s. In 1893, Sears began offering a general merchandise catalog that soon rivaled Ward's in size and variety. Moreover, Richard Sears was a master of promotional copy. 

Bucking the trend, he filled every available inch of ad space with text as well as illustrations. His catalog instructions were designed to make the farmer feel comfortable and secure, emphasizing liberal return policies ("Satisfaction Guaranteed"). With the addition of Julius Rosenwald as a partner in 1895, the company's administration and operations were increasingly systematized, and by the time it occupied a new forty-acre Chicago facility in 1906, Sears's sales were nearly $40 million annually, surpassing Ward's in total sales. 

The two leading mail-order houses would remain major national rivals for much of the twentieth century. Some urban department stores, such as Macy's, followed suit with their own catalog sales departments, although with mixed results. 

The increasing personal mobility made possible by the automobile, the incursion of chain stores like J. C. Penney's into small-town markets, and the demographic trend toward an increasingly urban-based population all meant that rural mail-order sales had probably peaked. Beginning in the mid-1920s, each began to diversify operations to include retail outlets; by the 1950s, these stores would become their leading sources of income.

Mail-order retailing remained big business through the end of the twentieth century, but companies tended to thrive with more specialized niche marketing. The Sharper Image, L. L. Bean, and Victoria's Secret are all examples of utilizing upscale mail-order appeals as a successful entering wedge into the enormous American consumer market.

Further, Jeff Bezos went from 20 mail order products to dominating e-commerce. The story of Amazon is complex but it all started with a simple vision to sell books on the Internet. From there, CEO, Jeff Bezos took a fledging online bookstore and transformed it into one of America's most iconic companies. So far, Amazon has managed to dominate in nearly every sector of retail.


Franchises are a popular way for entrepreneurs to start a business, especially when entering a highly competitive industry such as fast food. One big advantage to purchasing a franchise is you have access to an established company's brand name. A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name.

In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees. A contractual agreement takes place between Franchisor and Franchisee. Franchisor authorizes franchisee to sell their products, goods, services and give rights to use their trademark and brand name. And these franchisee acts like dealers.

This right allows the beneficiaries to sell products or services of these manufacturers or parent businesses. These rights could even be in terms of access to intellectual property rights. The boom in franchising did not take place until after World War II. 

Nevertheless, the rudiments of modern franchising date back to the Middle Ages when landowners made franchise-like agreements with tax collectors, who retained a percentage of the money they collected and turned the rest over. The practice ended around 1562 but spread to other endeavors.

For example, in the 17th century, England franchisees were granted the right to sponsor markets and fairs or operate ferries. There was little growth in franchising, though, until the mid-19th century, when it appeared in the United States for the first time. One of the first successful American franchising operations was started by an enterprising druggist named John S. Pemberton.

In 1886, he concocted a beverage comprising sugar, molasses, spices, and cocaine. Pemberton licensed selected people to bottle and sell the drink, which was an early version of what is now known as Coca-Cola. He was one of the earliest—and most successful—franchising operations in the United States.

Moreover, in the mid-19th century, two companies in the United States—the McCormick Harvesting Machine Company and the I.M. Singer Company—developed organizational, marketing, and distribution systems. These novel business structures were developed in response to high-volume production and allowed McCormick and Singer to sell their reapers and sewing machines to an expanding domestic market.

The earliest food and hospitality franchises were developed in the 1920s and 1930s. A&W Root Beer launched franchise operations in 1925. Howard Johnson Restaurants opened its first outlet in 1935, expanding rapidly and paving way for the restaurant chains and franchises that define the American fast-food industry until this day.

Until the early 20th century, and in whatever form franchising existed, it looked nothing like what it is today. As the United States shifted from an agricultural to an industrial economy, manufacturers licensed individuals to sell automobiles, trucks, gasoline, beverages, and a variety of other products.

There are more than 785,000 franchise establishments in the U.S., which contribute almost $500 billion to the economy.

In the food sector, franchises included recognizable brands such as McDonald's, Taco Bell, Dairy Queen, Denny's, Jimmy John's Gourmet Sandwiches, and Dunkin' Donuts. Other popular franchises include Hampton by Hilton and Day's Inn, as well as 7-Eleven and Anytime Fitness.

The franchisor may grant franchising rights to one or several individuals or firms. Consequently, if just one person gets these rights, he becomes the exclusive seller of the franchisor’s products in a specific market or geographical limit.

In return, the franchisor supplies its products, services, technological know-how, brand name and trade secrets to the franchise. It even provides training and assistance in some cases.



This is a form of non-store retailing in which the consumer can purchase goods and services using a telephone or direct computer link. Teleshopping includes home shopping, Online shopping, Shopping channel and Infomercial. One can become a multi-channel retail business by using teleshopping to create direct-to-consumer live shopping experiences.

In Modern times, live commerce has taken China by storm since Taobao launched in China in 2016. While TV shopping channels like QVC is a simple sales, thus is that the presenters are experts at helping the audience visualise how a product can fit into the viewers lives, making products feel both useful and essential, live commerce is based on a closed loop of network ecosystem. 

Its advantages include that it connects online shopping, watching and buying, while generating social buzz, and integrating entertainment, shopping, exploration, and social interaction altogether. You can watch it with your mobile phone anytime, anywhere. The Internet ecosystem is the biggest difference when it comes to teleshopping expecially with rising e-commerce and maturing logistics and payment platforms.

When it comes to television, teleshopping gives you the opportunity to tell your brand’s story by taking over a specific time within an infomercial and selling directly to the viewer.

Home shopping

Home shopping is shopping that people do by ordering goods from their homes, using catalogues, television channels or computers. Home shopping is the electronic retailing and home shopping channels industry, which includes such billion dollar television-based and e-commerce companies as Shop LC, HSN, Gemporia, TJC, QVC, eBay, ShopHQ, Buy.com, Amazon.com, as well as traditional mail order and brick and mortar retailers as Hammacher Schlemmer and Sears, Roebuck and Co. 

Home shopping allows consumers to shop for goods from the privacy of their own home, as opposed to traditional shopping, which requires one to visit brick and mortar stores and shopping malls. The home shopping/electronic retailing industry was created in 1977, when small market talk radio show host Bob Circosta was asked to sell avocado-green-colored can openers live on the air by station owner Bud Paxson, when an advertiser traded 112 units of product instead of paying his advertising bill.

Hesitant at first, Circosta reluctantly obliged – and to both men's great surprise, all 112 can openers sold out within the hour. Paxson sensed the vast sales potential of home-based commerce, and founded the world's first shopping channel on cable television, later launching nationwide with the Home Shopping Network (rebranded as HSN).

The classic television-based home shopping industry quickly became a major player in the retail industry. The two most successful shopping channels – HSN and QVC – generate a combined total of over 10 billion dollars in sales every year. In Europe, more than 150 home shopping channels were identified in activity in February 2018 by the European Audiovisual Observatory.

There are three main types of home shopping: mail or telephone ordering from catalogs; telephone ordering in response to advertisements in print and electronic media (such as periodicals, TV and radio); and online shopping.

Online shopping is the buying and selling of goods or services on the Internet. It encompasses a wide variety of data, systems and tools for online buyers and sellers, including mobile shopping and online payment encryption. Most businesses with an online presence use an online store and/or platform to conduct ecommerce marketing and sales activities and to oversee logistics and fulfillment.

According to eMarketer, in 2022, global retail ecommerce sales will surpass $5 trillion for the first time, accounting for more than a fifth of overall retail sales. And by 2025, total spending will exceed $7 trillion, despite slowing growth. To fully understand ecommerce, let’s take a look at its history, growth and impact on the business world.

From small startups to large enterprises, ecommerce businesses can come in all sizes. A startup ecommerce is a business or project in the first stages of development, often built by an entrepreneur to pursue an innovative business model. Generally, there are different models of ecommerce that businesses can be categorized into including B2C and B2B:

B2C - B2C ecommerce encompasses transactions made between a business and a consumer. For example, when you buy shoes from an online retailer, it’s a business-to-consumer ecommerce transaction.

Business-To-Business (B2B) Unlike B2C, B2B ecommerce encompasses sales made between businesses, such as a manufacturer and a wholesaler or retailer. B2B is not consumer-facing and happens only between businesses.


Department Stores

A department store is a retail establishment offering a wide range of consumer goods in different areas of the store, each area specializing in a product category. Today, department stores often include the following: clothing, cosmetics, do it yourself, furniture, gardening, hardware, home appliances, houseware, paint, sporting goods, toiletries, and toys. 

Additionally, other lines of products such as food, books, jewellery, electronics, stationery, photographic equipment, baby products, and products for pets are sometimes included. Customers generally check out near the front of the store in discount department stores, while high-end traditional department stores include sales counters within each department. 

Some stores are one of many within a larger retail chain, while others are independent retailers. Example of such stores are as follows: Macy's, Nordstrom, Selfridges, Galeries Lafayette, David Jones etc.

Department Stores Can Be Classified In Several Ways:

Mainline department store or simply, the traditional department store, offering mid- to high-end goods, most or at least some of the time at the full retail price. Examples are Macy's, Bloomingdale's, J.C. Penney, Sears and Belk. Junior department store, a term used principally in the second part of the 20th century for a smaller version of a mainline department store. 

These were usually either independent stores, or chains that specialized in cosmetics and wearing apparel and accessories, with few home goods. such as Boston Store and Harris & Frank. Discount department store, a large discount store selling apparel and home furnishings at a discount, either selling overstock from mainline department stores, or merchandise especially made for the discount department store market. Examples are Nordstrom Rack, Saks Off 5th, Marshalls, Ross Dress for Less, and Kohl's.

Other Forms Of Store Models Are Chain Stores And Hypermarkets Including:
  • Customer service
  • Consulting
  • Management
  • Design
  • Data
  • Information
  • Ideas
  • Education
  • Knowledge
  • Maintenance
  • Repair
  • Cleanliness/sanitation
  • Safety
  • Health care
  • Experiences

Telecommunications: This is a field that deals with the transfer of signs, words, signals, messages, images, sounds, or information of any type across radio, the Internet, and television networks.

Professional services: The tertiary sector includes a variety of professions that need specialized knowledge and training in the arts & sciences. Engineers, architects, surgeons, attorneys, and auditors are among the licensed professionals in this sector.

Franchises: It is a practice of selling the right to utilize a particular business model and brand for a set period.

In terms of revenue generation, the service sector is presently the largest sector of the world economy.
Economists have discovered that when a country's economy advances, this sector expands while the primary sector, which generates raw resources, falls.

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