Product Business vs. Service Business

I realize that as I talk to people about starting businesses, one of the first things that happens in my mind is I separate the product businesses from the service businesses because product businesses usually require a lot more capital than service businesses.

I've done both. My business plan consulting business got started with a phone call from a client, which turned me into a consulting business. What it took was one good client. My business plan software business, on the other hand, took serious product development for a long time, serious packaging, working capital to build prototypes, working capital to deal with inventory, and channels.

The product businesses usually offer a better chance of leverage and scalability. But you have to invest more too, and if you go down, you lose more.