Posted by A few days ago I described how products differ from services and that it is sometimes difficult to distinguish between what is one and what is the other. On the surface, there is only one criterion that differentiates a product and a service – a person or machine that is needed to provide a service, and is not necessary to sell a product. In reality, however, the matter is not so simple and requires you to think about whether you want to sell a product or a service.
So what should you consider when deciding whether your company should be a manufacturing company or a service company?
First, a service company.
Let’s be clear: in the case of a service company, the most important things about your business are the people. If the good or value you want to provide (sell, gift, exchange, etc.) to customers requires human participation and without it such an exchange will not occur, then it is a typical service company, not a manufacturing one. Of course, it can be said that in any company the most important thing is people and they are always the engine of the company. This is indeed the case. However, in a service company, their role is special, and specific people are irreplaceable!
If you want to run a language school, an interior design company, an effective copywriting service, a dentist’s office, etc., there is no other approach to such a business than that you and your employees are your company’s most valuable resources and, at the same time, elements of the services you offer. Without these people, the services won’t exist, and even if you succeed with the help of other people, the effect won’t be as good.
Think about how often you choose to buy a certain service just because a particular person – Kowalski, Nowak or Dabrowska – provides it. A visit to the dentist – you don’t go to just any dentist every time, you go to your dentist! Math tutoring for your child – you don’t order a different teacher from the tutoring.pl portal every time, but you already have a proven tutor. You’re doing a renovation in your apartment and you care about quality – you don’t call the first bathroom renovation specialist you meet on the Internet, but contact the one who has already done renovations in your other apartment or in your friends’ apartments. This is the role of people in providing services – they are irreplaceable. So if you have such people, or you yourself are known for your reliability – you can set up a service company.
Second, a manufacturing or product trading company.
As I mentioned above, in a manufacturing company or just trading products, people are also the most important. However, they have a slightly different meaning and a different role to fulfill. In a manufacturing company, people don’t appear together with the product, they don’t wander into customers’ homes, they don’t stay there even for a short time, not to mention years – the lifespan of, say, a table or a bedside lamp. Products, made or purchased by people employed by your company, already live their lives in the homes of your customers.
If your product is supposed to be unique in some respect – custom, in terms of quality, appearance, etc. – then indeed, at the production stage, employees have a similar role to that of services – they are indispensable. However, they are easier to replace in most companies producing or trading already manufactured products than a doctor, teacher or psychotherapist. After all, they are not as visible to the customer, they have more versatile and repeatable qualifications, and certain processes can be automated and robotized.
When you make furniture, print books, bake bread – people are important, but they don’t have direct contact with customers. Similarly, when you trade in products made by others – LEGO bricks, clothes, car parts – here, too, the people of your company (apart from salespeople) have no direct contact with customers. It’s easier to replace them and easier to scale the business. So if you know you can’t hire people who are unique, well-known or outstandingly expert in their field, think more about a manufacturing or sales company – here you’ll have more freedom of action and be less dependent on your employees.