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Despite the rapid growth and lure of the service sector, entrepreneurs are well advised to consider the numerous competitive challenges encountered when owning and operating a service business. The unique nature of services (i.e. intangibility, heterogeneity, perishability, simultaneity) serves as a backdrop to accentuate the competitive landscapes in the service sector. To frame the analysis and discussion of the competitive environment for service businesses, the article applies Porter’s conceptualization of the five sources of competition – rivalry among existing intra‐industry firms; new entrants; substitutes; suppliers; and buyers. Discusses implications and suggestions for service entrepreneurs throughout the article.