In my last post I discussed the pros and cons of beginning a service related business. Today I’ll talk about products.
You may sell products that you make, or you might sell products for another company (think Avon or Southern Living).
Each of these two possibilities has pros and cons on their own. Today I will talk about this in general terms, though, unless otherwise noted.
- Financially, you can really make the sky your limit when you talk about selling products. If the product is hot, gets picked up by a lot of vendors, and sells off the shelves, consider the profit!
- Set prices. This may not seem like a big deal, but in service-related businesses you are always considering your price, and possibly changing it. In a product oriented company you know the market will pay this for the product – if they don’t, you can drop the price, but it’s not a constant game of tag.
- With most products you have the world open at your fingertips and can sell anywhere. In some service oriented businesses, however, you must remain local (think dog walking – you’re certainly not driving three states over to find clients!)
- If you are online only, you may have some great flexibility in running your business. You might be able to do it from, say, a tropical island with a foo-foo drink in one hand and a laptop in the other.
- Storage. Where will you keep said products? Do you need a room in your home, or an entire storage unit?
- Costs. It can get costly to start a company in which you are making something. Money up front to purchase the supplies to make said product may or may not be returned through sales. And what do you do with all of those products that don’t sell?
- Vacations – or the lack thereof. If you are running a store, you are open when traffic is high. You can’t close a Christmas shop down around the holidays because you want to get out of town. You may need to monitor sales and inventory while out of town.
If you are selling for another company (think direct sales), some of these may not be concerns at all. For instance, many direct sales companies send a select variety of products for home parties and then don’t send the others unless a sale is made. Also, with direct selling you are spending much less up front to start your company than you would be if you were to make your own product.
Of course, the downsides to direct selling include the fact that you are not selling your own product, so you will never make a full profit off of a sale since some money goes back to the company. Also, you are not in control of these products so if you are looking for a creative way to get into business, you might not be as satisfied as if you are making your own product.