I currently run a product business and have run many service businesses online in the past.
If you’re just getting into the game and you are wondering whether you should dive into a product business or a service business it’s key to know the pros and cons of each one.
(Please note, I’m talking primarily about online businesses that deliver digital products or digital services.)
PROS OF RUNNING A SERVICE BUSINESS
- Great way to develop skills and quickly turn those skills into money (like when I sold graphic design or SEO services to clients)
- You can sell right out of the gate without building anything (send the invoice and deliver the service, no setup beforehand)
- Easy way to get lots of referrals (when you deliver a service to someone, chances are there’s people around them who want it too)
CONS OF RUNNING A SERVICE BUSINESS
- Immense time investment if not setup correctly (if you’re in charge of sales AND in charge or fulfillment, you’ll be working all day)
- Always hunting the next client (since you have no real assets built, if getting repeat clients for your service is hard you’ll need new ones)
- Can be stressful “reporting” to people (if you have lots of clients, in a way you have a lot of bosses that you have responsibilities to)
PROS OF RUNNING A PRODUCT BUSINESS
- Build the product once and sell it forever (nobody pays you to BUILD the product but once it’s built you have an asset you can resell infinitely)
- More sales doesn’t mean more time invested (digital products can be delivered instantly whether it’s noon or 4 in the morning)
- You can open it up to affiliates to sell for you (a one-time setup can open up the floodgates to affiliates that will sell your product FOR YOU)
CONS OF RUNNING A PRODUCT BUSINESS
- Building a product is a TON of work (nobody pays you while you’re building the product, even though you can earn when it’s live)
- You have to be better than the competition (chances are other people are building similar products in your space, so you have to one-up them)
- There’s ALWAYS extra work that goes into it (in addition to building the product you’ll need to build a sales funnel to sell it)
I recently announced that I wasn’t taking on clients anymore in my business and that is so that I can devote my time to a product business, where I sell lines of digital products from the various companies I’m running in different spaces.
When I started out though, I was running service-based businesses almost exclusively.
It was the fastest way for me to come into a marketplace and monetize a skill that was in demand like graphic design or SEO (can be others too of course for you).
Personally, as I went through the years I would get better and better at getting new clients.
But what that left me with was a LOT of clients where I was doing all the fulfillment by myself in ADDITION to going out there and getting those sales in the first place.
Discovering that I loved building digital products helped push me in that direction as well.
It really depends on personal preference, don’t get me wrong.
Some people absolutely LOVE and THRIVE in client based businesses.
Some people prefer making digital products and selling those passively.
At the end of the day it comes down to really analyzing those options against your BIG vision of where you want your life and your business to go.
Do you like working with people 1-on-1 to help them solve their problems?
Or do you want to wake up with nobody to report to that day?
Do you like getting on Skype calls and coaching people through things?
Or do you want products to be sold with passive marketing campaigns you run?
Ask yourself these questions (and feel free to ask me any questions as well) while determining which one you want to start with, and know that you can always SWITCH LATER if you feel you’ve picked one you don’t resonate with or you can DO BOTH if you feel inclined to do that as well.