Let us say you want to build a software business. There can be two models of companies you can build.
- Consulting You offer some kind of consulting. It could be supporting an open source software, building a product for another client, quality assurance services, etc. Your revenue is proportional to the time you put in. If you think about it, working for a company for only salary is also consulting.
- Product You build a product and put it out there for people to use. The product could be installed in your client's machies or it could be accessed as a SaaS. Your revenue is proportional to the number of users for your product, not the amount of time you have invested in building the product.
There is also a combo of these two where you sell a product and support services for the product.
The most important difference between these two is what limits the return on investment. In the first case, the time you can spend for the business is the limit. Without you spending your time to do the work, you will not have any revenue. In the second case, the number of customers is the limit. Once you have built a product that somone needs, no matter if you are present or not, some one with a need for your product will pay for your product to use it.
Though this difference looks trivial once you get it, a lot of the people do not understand it. They end up spending their time offering consultation while they actually intended to build a product.