The Difference Between a Business and a Service


A business and a service are two different types of organizations that both make money through the provision of goods or services to consumers. While this commonality might lead you to think that the two are synonymous, there are actually several important differences between them. Read on to learn about the similarities and differences between these two types of organizations, as well as whether it’s possible to convert from one type of organization to another.

A Service Differs From a Product

To understand what makes services different from products, it’s helpful to think about all of them as providing something for their customers. Products offer physical goods: cars, toys, books, etc. Services offer experience: classes that teach you how to juggle; restaurant experiences that make you feel gourmet; haircuts that make you look more youthful. Businesses deliver products or services to consumers who want them because they’re valuable in some way. And yet businesses still provide value in ways unique to their industry.

A Service Has Core Customers

it is serving one group of people with their needs. A business has peripheral customers: it is providing a product or service to anyone who can pay for it. If you’re running a brick-and-mortar store, your core customers are people who walk through your doors, whereas your peripheral customers include everyone else—shoppers who might not enter but want what you have to offer. For example, if you own a bakery, your core customers are local residents who come in every day for coffee and breakfast pastries; your peripheral customers include tourists passing by on vacation as well as other bakeries in town that sell similar goods. In addition to having different customer bases, businesses and services differ in terms of pricing strategy.

A Service Has Several Products

A computer repair shop is an example of a service that has several products. The computer itself is one product; fixing it (or teaching people how to fix it) is another. But even if you only offer your services, there are other products in your market. A law firm, for instance, can sell their experience: have you ever been nervous about getting legal help, but not sure where to go? If so, you’re looking for someone with specific knowledge of your problem who will fight for you.

A Service Can be Sold Multiple Times

A plumber comes to your house and fixes a leak. You pay him/her, and they go on their way. Now someone else is in need of plumbing services, so they call another plumber. The second plumber goes through all of the same steps as before: they fix a leak, you pay them, and then they leave. In short, there’s no reason why that first job couldn’t have been done by any other plumber in town. The second job could only be done by that specific plumber—it was unique to them. This distinction is what makes something a service rather than a product or good.

Service Businesses are Easier to Start Than Other Types of Businesses

you don’t need to buy or rent expensive equipment, nor do you need to hire employees. This is why many entrepreneurs start off with service businesses: they are relatively low-risk and require little investment. However, as a business owner in a service field, it’s up to you to get your work out there—you must make sure people know about your services (and find them valuable) if you want them to succeed.

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