During most of the past 10 years, I have been selling physical products online, but recently had the opportunity to start a service business to sell web design to other people. There are various pros and cons to each type of business and in this post, I will discuss these in as much detail as possible.
Service Businesses
The service business I chose to start was a website design business. You can check it out at www.webdevelopersetc.com. The reason that I chose this niche was because there are a lot of people that needs websites. In fact, almost any legitimate business will at some point get a website created.
Through the years, I spent a significant amount of money building websites for my various businesses and found some really good freelance coders and designers. After awhile, I realized that I could use the opportunity to create a new business that didn’t rely on SEO. Here are some of the advantages of a service based business:
Almost no startup cost and inventory – When you start your service based business, it is usually you that are providing the service. Some common professions are web developer, graphic designer, writer, and marketer. When you start, you can get going with almost no overhead or inventory. So you can be profitable the moment you get paid for your first job.
Tons of work out there – If you pick the right niche, there is a ton of work out there. All you have to do is be active in searching for it and you should be able to find enough work to keep busy.
Repeat business potential – Another upside is that if you do well, you can get some repeat clients. I thought that when I completed my client’s websites that the job would be over and we would just go our separate ways. But around a third of them came back with follow up jobs.
Time consuming – The biggest downside of running a service business is that it can be time consuming. Although the original idea was to outsource and automate the whole process, it is more difficult to do with this type of business. Your people need support and guidance and it takes time to build the systems and processes for your business.
Selling Physical Products
I got my start by selling physical products on Ebay and then creating my own websites.
Simpler business model – With service based businesses, there is more variability. The clients are different people and have different needs. With physical products, you are just shipping an item to your customer.
Can be more difficult to market – With physical products online, you generally will need good SEO skills. Other marketing tactics include affiliate marketing, email marketing, PPC, and social media. These niches can be highly competitive though.
Inventory – You will need to store and ship inventory, which will incur cost and take up space. Although it is possible to do strictly drop shipping, if you grow to a significant size, it will become practical to warehouse your own items.
Overall, I prefer selling physical products as it provides less variability, but both business models are worth considering.
About Brian Liang