Should You Start a Product or Service-Based Online Business?

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Should You Start a Product- or Service-Based Online Business?

Let’s talk about the difference between a service-based business and a product-based business. I currently am running both types so I am able to share my own perception of the pros, cons, and logistics of both. This article will explain what I’ve learned in running these businesses and offer tips for choosing and starting either type.

I was able to build one of my very successful businesses with a product-based business called Back from Bali. I still run this ecommerce business and we sell women's resort clothing on Amazon.

But I have also started a service-based information and consulting business that teaches and mentors women entrepreneurs on how to be successful in business. In this side of my business, I have consulting clients, I teach courses, and I’ve created a website and active social media to promote my company and connect with my community. Here is what I’ve learned in running these two very different businesses.

Product-Based Business Basics

From my own personal perspective, having a product-based business is a win. If you can find a product and go in that direction, I really do recommend it. There also seems to be, right now, a shift towards service-based businesses which means there are opportunities in physical, product-based businesses.

Of course, this business form is a little more hands-on. The upfront and ongoing costs are higher because you’ll need inventory (with Back from Bali, my inventory costs are probably 25% of my gross sales) and a way to sell and ship things. But with the right tools and strategy, you can automate everything from sourcing to ecommerce to delivery. You also have much more opportunity for scaling when you find a winning product. I know this seems amazing but (with the right product) you can scale your business into multiple millions!

Best of all, this means you make money while you sleep which is one of the greatest experiences you could possibly ever have: you go to sleep at night and wake up and be richer than when you went to sleep.

Service-Based Business Basics

Women tend to gravitate towards service-based businesses (coaching, teaching, consulting, etc.) because that’s what women do. They build relationships first and all the rest flows from that. In addition, this style of business is much easier to start up and can easily be done from home (or the beach!). You also have lower start up costs because you don’t need inventory or a space to store it.

Some service-based businesses such as digital courses or teaching systems are scalable but anything that depends on your direct input of time (i.e., one-on-one consulting) has a top limit. However, as you become more in demand, you can raise your fees and hourly rates.

Successful young woman in modern office working on laptop.

Common Aspects of Both Business Styles

Both businesses require beginning research – whether you’re scanning the marketplace for product ideas or reaching out to Facebook groups to learn what people are looking for. Finding a successful product or service means finding your niche and developing a profitable strategy to get your thing in front of paying customers.

No matter what type of business you start you will need a few common things: a website, social media outlets, an email system, accountants, and advertising or promotion. Most of these things can be done yourself but can also be outsourced. The key is to learn the systems yourself first so you can intelligently find someone you can work with long term. If you do your homework, you can find someone who will help you build your business because they, too, are entrepreneurs. Contract workers and VAs will be your best friends!

Pick One and Do It!

Now is the time to start! Every day women just like you are opening shops and building your brands and I know you can do it too! I love having a product-based business and I’m excited to share with you what I’ve learned while building my sales into the seven figures. I want to help women entrepreneurs be successful in whatever business they choose.

Want more women-centered business advice from someone who’s done it herself? Be sure to subscribe to our newsletter here so you’ll always get the latest news.

Who is Leslie Kuster?

I became a 7-figure woman entrepreneur in my 50s -- with my successful Back from Bali clothing brand! It took some getting real with myself to finally say, “Damn it, I want money!” Now I am here to ignite women entrepreneurs -- like you -- to experience the empowerment, independence and joy of creating a business that brings you both money and freedom. Read more about my story here.


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business coach for women, women empowering women


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