When we start a business, we are doing one of two things. We sell a service or sell a product. Yes, we can do both, but the company’s offering is usually one or the other. Starting a business is an incredible step to take in an attempt to take control of our financial lives. We want to create a steady income while having entrepreneurial perks. The perks are setting our schedules, not reporting to anyone, and owning what puts food on the table. It’s a great choice. Like most things in life, a choice that is a good idea with the potential to become either a bad or great idea. How? Well, starting a business is a great choice and a good idea. Choosing to start with a service or product turns the idea from good to bad or good to great.

First, we must start by reminding ourselves why we plan to start the business. Our “why” are the perks. It is calling our own shots. It is controlling our lives and freeing up our time. Creating a service-based business is counter-intuitive to why we plan to start a business. To sell a service, you must provide it. Starting, we rarely have the budget to hire others. It will be up to us to provide the service. How many hours must we work a week to supply our ideal income? Our time is limited. We can work our tails off and put in 80 hours per week, but is that sustainable? No. Do we have the power to make more? No. We also cannot take any time off. If complaints about the service arise, who will be providing the service again for free? Us. More hours spent with no additional income is a nightmare. Especially in regard to the core goal of running a business which is profit. What happened to all of those perks? They don’t exist. This good idea has morphed into a bad one. Starting a serviced-based business as the initial offering of our company is a terrible decision. We will give ourselves more work with no way to scale the business. Scaling in business is adding revenue at a faster rate than adding new costs. We’ll find ourselves stuck in a situation that we cannot stop or feel we can sustain. It will be a financial and psychological horror.

Hopefully, we are not in the situation above. I’ll have to write a separate blog on how to escape that situation. Let’s address those who have not chosen to start a service-based business.  A product-based business is what we should start. Yes, we still work hard, but the work has residual income. In a service-based business, we work each time we have to provide the service we sell. In a product-based company, we work once. To drive this home, let’s say we are writing a book. We must brainstorm, plan, then write the book. We also will need to get the book edited and published. Yes, that is all work, but then we have a finished product. One we can sell for the rest of our lives. This scenario is where the perks of creating a business are realized. Receiving checks in perpetuity for work you completed years ago is what the goal should be. Trips being paid for by work you completed before you even thought to go on the trip is the ultimate flex. This scenario is something a service-based business cannot provide.

In closing, there are ways to create a profitable and beneficial service-based business. It is more complicated than starting with a product-based business. The service offering should come after the product. The product will provide the income to pay employees to provide the service. This method should be how we look into starting businesses from this point forward. There is a method to success, and following the correct order of business. The correct maturation of our business will give us exactly what we want. The perks of entrepreneurship without the grim consequences of committing our time to the company’s offering. Work once, sell over and over again. This goal is what it is all about.

Food for thought. You do the dishes!