So, you have finally realized that having a regular job will never help you achieve the financial freedom that you want and decided to put up a business. Congratulations. Realization that your current situation will not magically improve on its own while you’re staying on a 9-5 job, and that you need additional source of income, is actually the first step to achieving financial independence.
If you already have the capital but you’re still confused on which kind of business to invest in, I think this article will help you decide what is the right business for you. If you are a beginner, I’d like you to focus on the two types of business to consider of; Service and Products. It is also important to know what the two businesses will require you, including the pros and cons of the two.
Service. The good thing about service is that it doesn’t really cost you a thing. If you are selling your service to a particular field you are expert in, this saves you from all the hassles of inventory. While you can still track a record of your sale it is not as bloody when you have a product-oriented business. Service-oriented business is some sort of selling product that doesn’t really have a physical form. You basically share your professional skills, train people, or even giving advice. The best examples are accounting firms, repair shops, or even personal trainer of whatever field of your expertise. The only major investments in this type of business are attending seminars and enrolling to short courses to basically improve your skills.
One of the problems of service-oriented business is the increase of demand. I had been offering a short personality improvement course for young professionals in the past and it was going well during the first quarter. When the demand increased, it was so hard to basically juggle my schedule around to attend to all trainees. The whole thing was exhausting and the only way to actually solve it was to duplicate myself. So, I had to train new people, teach them basically everything that I have learned for free, and made sure they could give the kind of service that I provided.
Ensuring the quality is the hardest to track on service business because clients’ opinions varies and subjective. Unlike the product business where you can just easily track record of sales, the service-oriented business is the exact opposite. Needless to say, disappointment and relationship conflicts are inevitable in service type of business.
If you are not the people-type of person, then service is not the type of business for you. However, if you can tolerate personality differences and enjoy interpersonal skills, then you’ll most likely excel in service business effortlessly.
Products. The good thing about product-oriented business is that you can predict the profit ahead of time. The only question is how are you going to sell the products? Are you buying goods for wholesale price and sell it at retail? If that’s the case, then that’s buy and sell. But if you want to buy raw goods and make products out of it, then that’s manufacturing.
So, under products, you have to understand the two ways to actually sell it. Through buy and sell (or merchandising) or manufacturing. If you don’t have the time and patience for a hands-on business, then buy and sell fits well for you. However, if you can be a full-time business man and you want to have a say on every detail of your business, then manufacturing business is just the right one for you. The question whether which one will give you more profit between buy and sell or manufacturing; the quick answer is manufacturing.
Buy and sell has a ceiling price, a limit on just how high you can only go when it comes to the price of your product. With manufacturing business, although you will pay for the materials and labor, you have the freedom to decide how much your product is worth. You may also increase the price significantly based on the demand and market. If business is your passion, then manufacturing business will suit well for you.
As a whole, the only difference of service and product-business is their focus. While service tends to focus on the quality, product-business is more on the productivity. However, whether you choose service or product business, the success rate basically depends on your marketing. Any kind of business you decide on pursuing, as long as you have a good marketing strategy, the business can definitely go a long way. -M.D.
Comments
Post a Comment