Product and Service Startups
Basics of Product and Service Startups
First off, what is a startup? A startup is a starting business with no proven track record. It is a business just starting up.
Product and Service Startups
Product and service startups are startups that are doing things that have to be manufactured or of a tangible nature.
- Franchises: Restaurants, bars, brick and mortar stores, etc.
- Brick and mortar stores
- Physical services: Mowing lawns, construction work, etc.
These startups can be cheap or not cheap but most people think of them as expensive. The downside to a hardware startup is that you have to keep selling a service or product over and over again. This means that you have to keep producing items. It also means you have maintenance issues, labor issues, etc.
Tech startups can be classified under hardware startups if they are of a tangible nature and must be manufactured however tech startups have a lot of exceptional materials so that is why they are classified under tech startups.
Product Startups (Hardware Startups)
Product startups are also commonly known as hardware startups as they are startups that focus on hardware and not software products (digital products). These can be carvings, inventions, or any other products.
Service startups are businesses that revolve around providing a service. Some examples are call centers, mowing lawns, etc.
Running a pure product or service startup is difficult because a lot of things involve a service and a end product. McDonalds for instance is one of these types of businesses because they provide the service of making the food but then they deliver a product as the end result. Software and Website developers also fall into this realm because they provide a service of developing a product and deliver a product as the end result of the business transaction.
Services do not have sales tax applied to them but the product itself does.
Specifics of Product and Service Startups
The specifics are going to depend a lot on how you deliver your product or service. Things that can be different are taxes, permits, advertisment methods, monetization differences, etc. Not all business are pure to only one type either. Many businesses use online as an extension of their business for example but the different methods require different things so you could end up with a combination of different legal issues, combination of different tax situations, etc.
Some business types can use their other methods to create a synergy for themselves. A business that does business in person but has an online presence can promote their website at their real life location while promoting their real life location online.
Some Business Choices
Brick and Mortar Businesses
Brick and Mortar businesses are business that have a physical location other than home based business. These are restaurants, stores, industrial plants, office buildings, etc.
Home Based Businesses
Home based businesses are businesses that have a physical location but are located in someones home. These can be useful for web developers, writers, craft makers, and other folks who do work from home. Freelance work is tied to home based businesses even though some people prefer to work at a cafe.
Mobile business can be very good for someone just starting out. It means they don’t have to have a brick and mortar store but it also means they have a lot more sales ability than an on foot person does. They have a place for their wares. This could be a food truck, food stand, or kiosk, or any other mobile business.
On foot can be such things as door to door, selling food by walking around at a Baseball game, flea markets, selling glow sticks at the fireworks.
Is your business online only or is your online presence just an extension of your in person business?
The online subject is a huge subject. There is a fine line here in how things are determined. Things determine weather you are a web startup or just a Product and Service startup using a website for promotions or sell things you have. It comes down to payment methods and product and service delivery methods.
- Online Only
- Payment method: Online only
- Delivery method of main product or service: Online only
- Online is Extension (one of the following must have an offline method)
- Payment method
- Delivery method
Example 1 (both)
- Pure Online: A web developer freelancer goes on elance and gets a job, gets job information from client all online, does the job, delivers the job online, gets paid online. In this one he never meets the client.
- Online as extension: A web developer freelancer gets work through his website, meets with the client in person, does the job, delivers the job online or with a flash drive, gets paid by check in person or by paypal online. In this one he has met with the client.
With situation two you don’t always have to meet with the clients but it is left as an option. The in person option makes the online presence just an extension.
Many freelancers can get away with doing this. However when it comes to a large web dev company, you will generally get a lot of phone calls, personal meetings about the projects, might get sold on the service in person, etc. There tends to be a lot more personal work done when it comes to a non-freelance web dev situation as being a freelancer allows for more telecommuting type work.
Example 2 (online extension)
A hotel wants to be able to book people through a website so they setup a website and allow booking and payments through the website. The service however is delivered in person in the format of letting them stay in a room. The online booking and payment as just an automation of an in person or phone call booking and setup. The entire business model cannot be hosted on a hosting platform as this is an in person service.
The Specifics of Web Startups
So when you don’t meet your customers it is most likely an online only business which is a pure web startup. Web startups have a lot of specific situations that are required of them. If you are using online as an extension of your business you will have to deal with both the web startup aspects as well as one of the in person methods (e.g. brick and mortar, mobile, on foot).