When your online business venture is still a twinkle in your eye, you start to ponder what the best move is to join the marketplace. It’s the ultimate question - should you start with a service or a product?

And there are a billion answers. What I have found is that it boils down to this: if you start a service, the money can probably come faster, and in larger chunks at a time, but if you start with a product, you can go into a product line, and have the possibility of a business that is on auto-pilot.

Let’s say I want to go into a business that has to do with teaching some specialized writing such as technical writing. Let’s pretend that I’ve studied the demand and gotten all of that other great stuff out of the way and the only thing to determine is whether I’m going to sell products, or my services, perhaps even both.

If I sell my services as a coach or a consultant, particularly if I can get business from government contracts or bigger companies in the private sector, then if I had the proper contacts I could be in business in a few weeks. In a business where services are more in demand, I might have clients in a few days. If the market will bear the price, I can probably quote my services at thousands of dollars and still be reasonably priced as far as the B2B set is concerned.

Sweet. I have a bit of money in my pocket, and a project to put in my portfolio - if I do well, I’ll have referrals too.

However, with services, unless they are reocurring, you’re constantly after the next client. You are constantly marketing yourself, but there is no residual benefit to that marketing, especially since it’s kind of tough to market effectively and provide services simultaneously. Not enough hours in the day, or money in the bank.

And of course, there’s the issue of payment. In the industry you’ve chosen, is it typical to get the money before the job or after? A deposit and then the rest delivered upon satisfaction of work? Or are you planning to work your way up to expert status so you can call the shots, because you’re in such demand?

Now, let’s see how those issues are different with a product.

What if I took that same service, and boiled it down into a template, then turned it into a multimedia product. I can create this product once, maybe update it every now and again, and get a continual profit from it, and from any marketing efforts I make. If I automate my business I can go on vacation for a week and no one would be the wiser.

Of course, you also have to take into consideration how much longer it takes to get up and running with a product, as well as how much smaller the increments of money you’ll be making are, even though they will be coming in more often, even while you sleep.

Then, of course, there’s the hybrid model. You start off with products, and only do services when the price is right, which can be the best of both worlds, but a bit hard to pull off unless you’re working with a partner. Making products takes creative energy, not to mention the time you’ll put in actually putting together the actual content, be they in the form of PDFs/MP3s/Videos or whatever. You can do all of that, serve clients and market a site without a partner or a team, not if you intend to do all of those things well.

Unless you stop sleeping. Then it’ll be a piece of cake.

In the short view then, the question is, do you want fast money or long money? Do you want to have an on-going stream of steady cash in smaller amounts, or several bigger bursts that are farther apart?

The money considerations aren’t the only ones, either. If you’re going for service, are you cut out to talk to people? As a coach would certain learning styles drive you crazy? How would you deal with a nightmare client as a consultant?

If you’re in e-products, can you keep coming up with a stream of steady ideas? Would you be able to motivate affiliates to keep selling? Do you have an advertising system set up as part of your marketing system? Can you accelerate that system when you’re on vacation?

There are a lot of questions, aren’t there? And even if you pick a horse and ride it, other issues come up later. If you chose to sell products, and create a resource site to drive traffic to it, at what point should that resource site become a product as well? A membership site can provide a great income - you sell once and make money every month. Or do you have enough traffic to sell fewer traditional products, and put advertising on the site instead?

What if you want to sell your business? Are the services you provide such that you can train another specialist and they’ll get the same results?

There aren’t really right or wrong answers, of course. Nonetheless, they have to be addressed to help you pick the right online business model for you.

[tags]online business, deciding what to sell, start a new product, start a new service, working on the web, newbie[/tags]