Very few businesses deal exclusively in the provision of goods or in the performance of services. For planning purposes, however, it is useful to consider whether your business is primarily a service provider, a seller of goods, or both. Understanding the mix of goods and services that your particular business provides to its customers is vital when considering the key areas of your business. Issues that might be extremely important to a product-based business, such as inventory, can have vastly less significance for a service provider.
- The customers of a service business expect that something will be done for them. A car detailing business is an example of a predominantly service business. The customer who pays $99.95 for a full detail expects to get a car back that is clean inside and out. A dog-walking service is also predominantly service-oriented.
- The customers of a product-based business, in contrast, expect that they will acquire something. A customer who calls a mail-order house and orders a shirt expects to acquire some clothes. He isn’t particularly looking for the firm to perform any services, beyond shipping the goods and billing.
- The customers of a business that provides both products and services expect a lot. A homeowner who negotiates with a heating contractor for the installation of a new furnace expects to acquire property and to have services performed as well. The contractor is expected to dismantle and remove the old furnace and deliver and install the new one. The entire transaction is based on the provision of a package of goods and services.