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Product-based businesses sell ‘things’ to their customers. They may sell to ordinary people like you and me: this is called business to consumer (B2C). On the other hand, they could sell to other businesses: this is called business to business (B2B). Popular B2C product-based businesses are retailers selling clothing, homeware, books, music, etc. In fact, the list is endless. B2B product-based businesses typically supply products that other businesses or institutions need as part of their own production process, for example, widgets, machinery, medical equipment, wholesale clothing and IT equipment.

Service-based businesses utilize your skills, time and talent. Think cleaning companies, day-care and consultancies. Service-based businesses can also be B2C or B2B.

Some businesses can sell both services and products, for example, cafés and restaurants. We see more and more of these service-based businesses acting as retailers, selling goods alongside core service. We discuss this further here.

Both types of business might require start-up capital but if you’re a product-based business, it’s likely that you’ll need to purchase goods and pay for distribution or premises, whereas many service-based businesses can be started on a shoestring.