Should I start a Service-Based or Product-Based Business?

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


  • 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


  • 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


  • 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


  • 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 or your Gumtree app (click for Apple & Android) to advertise it when you’re up and running.

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