Online Entrepreneurs: Assets vs. Services

By on March 4, 2008

As an online entrepreneur there are countless different ways to make money (a few weeks ago we looked at 7 ways to make money from a blog). Two different approaches are to build assets and to perform services. Like anything in life, both have pros and cons. There really is no absolute right or wrong way to pursue your goals of making money online, as each person’s situation is different.

I suppose we should start the discussion with some clarification. An asset is anything that you own that will continue to have value and to make money for you. An obvious example is an established website or blog. As an asset you could sell it to make some quick money or you could hold on to it and continue to profit from it in the future. Services, on the other hand, will pay you once and that’s the end of it. Some examples are freelance writing and design, and consulting (such as Adnan’s blogLOUDER).

Pros of Assets:

1. Higher Long-Term Potential

With an asset that you are able to successfully develop, you’ll have the potential to make far more money than you could be offering your services. While the prices of services will certainly vary, with any service there will come a point where you simply can’t charge any more. Assets are able to be grown without having that same type of ceiling.

2. Ongoing Money for Your Work

It is possible to spend some time developing an asset and then to profit over and over again for the work that you did in the past. The beauty of assets is that you are not only making money from your work, but from the asset itself.

3. Stability

The ongoing revenue that is achievable with assets can help you to improve the stability of your income. Of course the income with most assets is not 100% predictable, but once you have some assets that are producing ongoing income, you’re not so dependant on constantly being required to work to produce income.

4. Assets Can Help to Build Other Assets

One of the great things about making money online is that sometimes you can transfer your success from one project to another. Blog and website networks are a good example of this. Imagine you have a large and profitable blog on a specific topic. Starting a second blog on a related topic can be much easier since you already have a sizeable, interested audience that you can instantly expose to your new project. In this case, you could be running to money-making blogs in no time, rather than just the one.

Cons of Assets:

1. Building Assets Requires Time

Typically, it will take a considerable amount of time to build an asset, and it could be a while before you really make any money from it. This requires a willingness to work hard and a lot of patience and dedication. Most people that attempt to build an asset give up before they really get anywhere.

2. You Could Spend a Lot of Time with No Results

Since you are working on building an asset with the goal of future earnings, it is possible that the project will fail or that you will quit. In both cases, there is a chance that you could get no return on your time and effort.

3. Ongoing Management

Most online assets will require at least a little bit of maintenance on a regular basis, and some will require a considerable ongoing time investment. This will depend on what type of asset you are attempting to build, but in most cases you will need to invest some time in management of the asset.

4. Financial Investment

Depending on the situation, you are very likely to need to invest some of your own money in order to get the asset off the ground. Of course the idea is to get your money back with increased earnings, but any time you invest in something there is a bit of a risk involved.

Pros of Services:

1. You Are More Directly Compensated for Your Time

When you are providing services you may or may not be charging by the hour, but either way you are directly making money as a result of your work. You are providing a service and someone else is paying you for it. There is less risk of spending your time on a venture that isn’t profitable.

2. Quicker Payout

As a service provider, you will be paid shortly after you perform the services (or before the service in some situations). With an asset you are likely to have a wait before it is producing money as a result of your work.

3. Plenty of Opportunities

If you are looking to make money online as a service provider there are endless opportunities as a consultant, writer, designer, and much, much more. There are even job boards filled with freelancing opportunities that are waiting to be filled by a qualified provider.

4. You Can Work When You’re Available

While building an asset will require ongoing effort, you will have a bit more control over when you work as a service provider. You can work when you are available, and if you want to stop taking projects at any time you can.

Cons of Services:

1. You’re Trading Time for Money

While it’s nice to know that you are going to be compensated for your effort, trading time for money is not the way to long-term wealth building. Most of the world works every day trading time for money, and most of us want to get out of this pattern. We’ll only ever have a limited amount of time that we can work, and that is always going to limit income as a service provider.

2. No Work, No Pay

As a service provider you are required to keep working to keep making money. The goal of asset building is to create assets that continue to produce money even with minimal effort on your part. This isn’t possible with services.

3. No Long-Term Income

Because you are required to keep working to keep making money, the long-term prospects of providing services is not very good. While assets can continue to grow in value, services will always require you to keep working.

4. You Are Essentially Working for Someone Else

Most entrepreneurs are working hard so they can control their own destiny. As a service provider, you are really just working for your clients. You’ll be doing what they want you to do, and there’s not much you can do about it unless you walk away from the job.

So What Does This Mean?

If you are hoping to make money online for the long-term, building assets is the way to go. My opinion is that services have their purpose though. I choose to spend my time somewhat evenly between building assets and providing services. For me, the money that I make from services helps to supplement my income and allows me to build assets without making no money for a while.

Some entrepreneurs choose to spend all of their time on assets and nothing on services, which is a matter of personal opinion (and I’m very interested to hear your opinions). In addition to the money, services have helped me by providing strong networking opportunities (a huge plus), building name recognition, and learning a lot along the way.

Personally, I am willing to sacrifice some of my time (but certainly not all) from asset building in order to get the benefits that go along with providing services, but that is a decision that you will have to make for yourself.

What’s Your Opinion?

How do you spend your time? Are you willing to make money as a service provider, or do you prefer to spend all of your time building assets.

This post was written by Steven Snell. 

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