If you are an entrepreneur, there are essentially two avenues you can take: starting a service-based or product-based business. Both types of businesses can be extremely profitable, so which is right for you? We’ve jotted down a quick, easy to understand list of pros and cons for each. Check them out to help you make the best decision for you!
Service-Based Business
Pros
- Minimal capital outlay as there is no stock to purchase
- It is a traditional, timeless business type that will never go out of style
- Every day is different
- The market probably already exists
Cons
- Hard to scale; income is based on billable hours. If you are sick and unable to work, you do not make any money unless you have someone to cover for you.
- Limited creativity as you have to do what the client or customer wants
- Time loss due to amount of communication you need with client meetings, phone calls, and emails
- Lower business appraisals
Product-Based Business
Pros
- Developing and selling products is much easier to scale
- Instead of focusing on client requirements, you can be as innovative and creative as you like when developing products
- Continuous or passive income; when you are sick, things still sell
- Higher business appraisals
Cons
- Large capital outlay
- High risk
- Cash flow is a necessity
- Amazing customer service is crucial
Now that you’ve got the knowledge, it’s time to start your new business! Head to gumtree.co.za or your Gumtree app (click for Apple & Android) to advertise it when you’re up and running.
