Something I've learned over the years is that there are two primary types of businesses. There are product businesses and service businesses. Product businesses are those businesses that produce something which can be made available to millions of people over and over. Great examples of product businesses are the TVs, cars, and coca cola. All these products can be produced and reproduced without requiring the maker to do a whole lot of hand holding with the customer. Investors typically prefer product businesses over service businesses because the potential upside is much larger. Adversely the risk in starting a product business is often greater. In large part because product businesses require more capital to buy materials, machines, computers, etc.

On the flip side you have service businesses. Service businesses are based primarily on the idea of performing a specialized task for a specific customer. Some examples of service businesses are landscapers, barbers, and mechanics. Service businesses typically cost far less than product businesses to get off the ground but aren't able to expand as easily. Primarily because in order to expand they have to replicate quality people with specific skills. One of the hardest things about running a business is finding quality employees.

Early in business I would say I much more favored the service model since I didn't know where to get startup capital and understood the concept of charging people for a specific skill. However now that I'm more experienced Iv'e come to think product businesses are the only way to go. In the end it all comes down to goals. If you want to make a lot of money and you hope to have time to live and enjoy your life I recommend a product business. If you don't want to make a lot of money but want something stable and secure I suggest the service business. Not to say people can't make a lot of money in the service business. Again, it's just that it requires finding and training the right people. There are also many example of companies who offer products and services. Naturally when you make a product, if you sell enough of them you're going to have to provide service at some level.

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