Why Digital Products Are Better For Starting Entrepreneurs
Starting a physical product based business can require a lot of time
, money, and risk.
Physical products need to be physically produced. When you are just beginning to start your business, attract customers, and make sales, producing and selling your product to a very small group may be manageable. You may be able to produce your product, sell it, and manage your business all within your working day. In these situations you are directly investing your time and profiting when you sell your products.
After a small amount of expansion however, you may not be able to produce more of your product by yourself. You only have a limited amount of time you can spend producing your product. If the number of products you make is determined by how much time you can spend producing them, you will reach a maximum number of products you can produce eventually.
Beyond this point, without additional assistance, you won't be able to expand your business.
Furthermore, you will probably have other needs to take care of. Your products will need to be advertised and sold to your customers. Plus, you will likely have other administrative tasks to tend to. This limits the capacity of a physical-product based business even further.
Since one persons' time is so constrained, the point when you cannot produce any more physical products often occurs sooner rather than later. Plus, when you are busy producing your products, you aren't actively expanding the capacity of your business. This restrains your success, keeping your business small and your profits limited.
Many very intelligent, well educated service providers experience this problem too. Self-employed professionals, such as doctors, restaurant chefs, and some lawyers, can only work so many hours in a day. They may be able to delegate tasks to other employees, but their income is still limited based upon how much time they can directly invest in their business. This limits their potential income.
To correct this problem, you will likely need to invest in machinery and employees to produce more products. You may be able to design or purchase machinery to produce your product. You can also hire employees to operate your machinery. This will allow your business to produce more products, freeing your time to work on other areas of your business.
While extremely helpful, and in many businesses necessary, machinery and employees can be expensive and risky. If your business is unprofitable or takes a while to mature, you will still have to pay for your machinery. You will still need to compensate your employees for the time they have provided to your business. If you acquired loans, you will still need to pay off these too. This increases the cost and riskiness of expanding a physical-product based business.
In contrast, digital products are easy to reproduce. You only have to make a single copy of your product, and upload it to your hosting server. When your customers purchase your product, you can direct them to your product via a link. They can then download it quickly and easily.
This entire process is automated. You don't have to spend your time producing a copy of your product for each customer. You don't have to spend money to buy machinery or pay employees to produce your product individually for each customer. When you sell a digital product, your hosting server will provide your customers with a digital product.
The cost of providing digital products to your customers is also greatly reduced. Basic machinery and wages for a few employees can easily cost tens or even hundreds of thousands of dollars. Paying to host many digital products only costs a few hundred dollars.
by: Artavius Hill
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