Lesson six

6.1       SERVICE BUSINESS 

These are businesses that provide intangible (non-physical) benefits which satisfy consumer needs for which they are willing to pay. 

Services are invisible and intangible commodities that provide utility to consumers hence satisfying their needs. 

Examples of service businesses in Uganda include: – 

  • Travel agencies
  • Hair and beauty saloons
  • Baber shops
  • Motor and vehicles repair garages
  • Hotels, restaurants
  • Telephone businesses
  • Consulting firms
  • Radio stations

6.2       TYPES OF SERVICE BUSINESSES 

– Educational service businesses 

These are businesses that provide education services to the customers. These services are provided at progressive levels i.e. nursery, primary, secondary and tertiary / universities. 

Entrepreneurs in such businesses can therefore engage polytechnics, universities etc. 

-Medical / health service businesses 

These are businesses which provide medical services to their customers ranging from simple treatment for elementary diseases providing tablets to customers to complex treatment that may involve surgery of all kinds. 

Entrepreneurs here invest in establishment of hospitals, pharmacies, laboratories, drug shops and counseling centres on private basis. 

 -Transport service businesses. These are businesses that provide transport service for both people and goods from one place to another. 

Here entrepreneurs can establish and separate boda boda businesses, taxi and bus businesses, marine transportation and air transport service businesses. 

 -Entertainment service businesses. These are businesses which provide recreation and relaxation service that people pay for and enjoy the service. 

Entrepreneurs here can establish and operate cinema halls, theatres, disco, sports clubs, stadium etc. 

 -Tourism service businesses. These are businesses that provide tour services both within and outside the country receiving foreign tourism and ensuring that they have a nice stay in Uganda. 

 -Security service businesses. These are businesses that provide security for both people and property of businesses. 

Entrepreneurs engage in businesses like security groups such as securko, Escom, secrity and government bodies like UPDF, Uganda police. 

-Food and drinks service businesses: 

These are businesses which provide feeding services to their customers at their premises or even mobile food services that include delivery at the customer’s premises and take away such businesses include; 

  • Restaurants
  • Butchers a
  • Food markets like NAKASERO

 -Financial service businesses. These are businesses which provide financial services ranging from accepting savings deposits from individuals and companies to providing loans. Examples of financial services businesses include; banks, microfinance institutions, saving and credit societies. 

These financial service businesses also keep important items and documents such as land tittles, wills, academic documents etc. 

 -Technical service business. These are businesses which provide repair services of all types for technical equipment. 

Entrepreneurs here establish businesses like, motor vehicle garages, radios and television repair businesses, computer repair and maintenance businesses, plumbing business. 

 -Beautification service businesses. These are businesses that maintain and improve the beauty of the customers. Examples include; hair saloons, barber salons, bridal saloons, body care and cosmetics businesses. 

 -Utilities service businesses. These businesses which provide support services to other businesses such as electricity, telecommunication services, water supplies, postal services etc.  

6.3       BENEFITS / IMPORTANCE / MERITS AND ADVANTAGES OF SERVICE BUSINESSES 

  • Service businesses improve the standards of living of entrepreneurs and the people through providing basic needs like food, water etc.
  • They provide support for other businesses and increase their productivity and profitability for example transport service businesses (utility service businesses).
  • Service businesses dealing in transportation and communication services help to open up different parts of the country. This attracts more entrepreneurs and business men.
  • Service businesses such as news-papers, radio, and service business ease the process of delivering information and feedback. This improves efficiency in the business.
  • Service businesses help to provide skilled labour for all other businesses through imparting knowledge and technical skills among workers e.g. educational service businesses.
  • They provide employment opportunities to people in the country thereby increasing their incomes. For example, many people are employed as drivers, managers, plumbers, teachers, doctors etc.
  • They provide revenue to the government in form of taxes charged on them. This enables the government to provide social serices like medication to people.
  • Service businesses dealing in security provide a conducive secure predictable environment for successful running of other businesses.
  • Service businesses contribute to society development through directly participating in developmental programms like providing clean water, electricity etc.
  • They provide financial services which are very important in successful running of businesses e.g. they provide loans to businesses people, accept their deposits and keep their important documents.
  • Medical service businesses help to keep people’s health, this increases productivity of workers in business operations. 

6.4       CHALLENGES FACING SERVICES BUSINESSES

  • High initial capital / operational costs. Some of these businesses require huge capital to be established for example construction service businesses, medical service businesse etc.
  • Maintaining high quality services being rendered, since th equality of services offered depends on the technical skills of the entrepreneurs and workers, constant training and motivation is highly required yet it is too expensive.
  • High cost of maintaining staff. Service businesses incur high costs to retain their staff because of the stiff competition existing amongst themselves. They have to give them good wages and salaries in order to maintain them.
  • Bad debts service busineses tend to have regular customers by nature who normally ask for credit facilities after which they fail or refuse to pay.
  • Poorly (under) developed infrastructure especially roads and hydro – electricity. These negatively affect the performance of service businesses like technical service businesses.
  • Unfavourable government policies for example high taxes imposed on service businesses, bureaucraly and red tapes involved in getting trading licenses.
  • Inadequate capita. Many service businesses entrepreneurs have inadequate capital to facilitate their business operations.
  • Limited credit facilities. The available credit facilities have high interest rate that cannot be afforded by many entrepreneurs of service businesses.
  • High level of competition from well established service businesses owned by foreigners. This reduces profits of service businesses.
  • Limited market for their series caused by the low level of income of people in the country.

6.5       REMEDIES / SOLUTIONS / WAYS OF OVERVOMING CHALLENGES FACING SERVICE BUSINESSES 

The following are the ways of overcoming the challenges facing service businesses in Uganda. 

  • By providing good working conditions to employees so as to produce high quality products e.g. paying workers in time and adequate salary so as to maintain them at the work place.
  • Through conducting market survey before starting service business to ensure that there is ready market for services.
  • Through providing services on cash basis only so as to overcome the challenges of bad debts.
  • Through improving the state of infrastructure by the government that is to say rehabilitating the expanding feeder and main roads, extending power in all parts of the country.
  • Through joining businesses associations to expand the market of service businesses.
  • Through providing credit facilities to entrepreneurs of service businesses at reduced interest rates to overcome the challenges of inadequate capital.
  • Through reducing taxes and procedures involved in getting trading licenses so as to enable service entrepreneurs to maximize profits.
  • By carrying out on job training to overcome the problem of unskilled / inadequate man power.
  • By motivating employees and keeping them satisfied so as to retain the for example giving the fringe benefits like housing, medical and transport allowances. 

6.6       Revision questions. 

  1. Distinguish between technical service and utility service business.
  2. State four examples of education service business in your community.
  3. Explain the forms of service businesses in Uganda
  4. What are the merits of service businesses? 
  5. State the challenges facing service businesses
  6. How can such challenges be solved?