MBA2511 The Best Business Models to Start With

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1:06Hey, everyone. Welcome back to the$100 MBA show. I'm your host, Omar Zinhome. And in today's lesson, you will learn about the most crucial decision you may need to make as an entrepreneur. And that's choosing the best business model to start with. What's a business model? Well, it's a fancy way to say, how are you making money with your business, right? What are you offering in exchange for the money that your customers are going to be giving you? Very simple. But choosing this model, choosing how you make money is actually really important so that you can maximize your ability to succeed. Did you know that 90 % of startups fail in the first five years?

1:48And one of the main reasons why they fail is because they choose the wrong business model. But don't worry, today you will learn about the best business models to start with and how to choose the one that's perfect for you. When I was first starting out, I had no idea which business model to choose. My first venture was a full-time agency creating websites for independent creators and bloggers. This is back in 2012. I had seven years experience before that building websites on WordPress. So I felt confident I knew that I can fill a need in the market and I can provide a good service for a decent amount of money.

2:27So key takeaway here from the story is I used my experience. I used what I knew already and I leveraged that into a service. Now, funny side story, I actually charged$500 for my first website. It's pretty, pretty low costs for a website build. Even for 2012, that's just chump change. Just to put things in perspective, we just spent over$25 ,000 on our latest website for the$100 MBA. So yes, I am in the position to do that now in the business, but I was just starting out before. So I was willing to work hard, get some experience, get some testimonials so that I can prove this business model works, even for just$500.

3:12So let's dive into which business models I recommend when you're starting out in business. The first one is one I just mentioned, a service-based business. A service-based business has a lot of benefits. The first big benefit is that it has low startup costs. You don't actually need to spend any money to start offering a service. This could be consulting, This could be coaching. This could be any kind of service, accounting, editing videos, whatever it might be. And you don't need to spend any money before you get a client. You get the client, they can pay you a deposit, pay you upfront for a portion of the agreement, and then you can start working on the project.

3:55The second benefit is that you can start immediately with your existing skills. Look at where you have experience, what you can actually provide the world for some value in exchange for money. Okay. So if you have experience in engineering, in coding and development, you can use your skills there. If you have experience in public speaking, you can show people how to be better public speaker as a coach. The point here is that you don't need to reinvent yourself. You can use what you already have to start building your business. Another thing I love about service-based businesses is that you're not in the commodities business.

4:29Meaning let's say I'm selling a t-shirt. Okay. If I create a t-shirt and sell it, I'm competing with every other t-shirt in the market. So many different brands, so many different qualities of t-shirts, a lot of different big companies are competing with me, small companies. So it's very hard to get traction. But with a service-based business, you are competing on experiences, which is not objective. It's very subjective. So as long as you provide a great service, you can really get the ball rolling and create a great reputation for yourself. Again, my first full-time business was a service-based business involving creating websites and blogs for creators.

5:12It was low risk and it was a way for me to start and allow me to build a client base and learn the ropes of running a business, paying bills, hiring people, making sure that I have a handle on being an independent creator and independent entrepreneur. Now, Now, if you're not sure about how to get your first clients, I would recommend you use a platform like Upwork or Fiverr to get your first few clients. I'm saying only your first few because these platforms do take a big chunk of the money that you earn in order for you to get clients, in order for you to get exposure. But this is a good way to quickly get a few testimonials, a few case studies, some work that you can display on your website to say, hey, I can do this, whatever it is for you.

5:58And you're learning along the way how to deal with your first few clients. So it's a good way just to get started and get some work. The second business model I recommend is digital products. Digital products are exactly what they sound like. Products that you sell online, things that people buy and consume online. This could be online memberships. This could be an online course. This could be a book that people download. It could be a template. It could be icons that people download, emojis, whatever. The point here is that people are buying this online and consuming it. And there's a lot of benefits to digital products.

6:35Number one being that it's easy to scale. You can scale this business very quickly. You create the product once and you sell it multiple times. Also, because of that, there are high profit margins. You create, again, the product once. It's not like when I'm selling, again, a t-shirt where there's a fixed cost to creating each product I sell. So it costs me X amount of dollars for each t-shirt to be created and to be shipped out to the customer. With a digital product, I create something once and I can sell it multiple times. I create that book once and then I can sell it multiple times. So high profit margins.

7:06And also there's a flexibility to creating products based on your expertise, meaning I can create an online course on an area I know. Say, for example, I know how to play the piano and I want to teach people how to start playing the piano. I can create an online course with videos, but I also can create a book out of that online course and sell that. I also can do coaching, like we mentioned before. So there's a lot of ways I can package my expertise with the digital product. When Nicole and I launched The$100 MBA, we started with creating an online course, The$100 MBA. It allowed us to share our knowledge, our expertise, how we built our business with our audience so they can do the same.

7:46And we were able to largely scale our business very quickly because we created it once and we're able to kind of just market that product over and over and over to many, many people. So as a quick tip, just choose a product that you can create around your expertise and make sure it's high quality so people really are impressed with what they bought and they tell other people. All these business models really shine when people tell other people referrals, when people say, wow, I can't wait to tell you about what I just bought. You know, the company that we use to build our website, 8px.studios, they came from referrals.

8:27Somebody told us, you gotta use these people. They're the best. That's usually what it sounds like when they say they're the best. You want people to say that you're the best. So as long as you put out high quality work, whatever it is, whatever business model you choose, make sure it's amazing. The third and final business model I recommend is affiliate marketing. What's affiliate marketing? Well, basically you are selling a product on behalf of a company and getting commission for each sale. So when we ran our software company for 10 years, Webinar Ninja, we had an affiliate program. We had affiliates selling Webinar Ninja to their audience, to the people they know, and then they would get a commission, 30 % for every sale that they made.

9:04So this is a great way for you to make money without creating a product, okay? But how are you gonna get the audience? Well, you need to build an audience, a brand around the products that you promote. This really works. Great affiliate marketers really succeed when they really niche down. So say, for example, they niche down to the topic of how to create a cooking business or a baking business. And they are affiliates of all the products that deal with how to build that business. So, for example, how to set up your cameras, which cameras to buy so that you're doing cooking shows on your YouTube channel, or how do you publish a book?

9:46maybe you're an affiliate of a publisher. The point here is that you are niching down and then you're creating content on how to build that type of business and then offering great products to help them along the way. And those products are affiliate products, products that you promote and you get a commission for. Affiliate marketing is great because there's really no overhead. You're not actually buying any product. You're selling a product that already exists in the market and getting commission for it. It's also great because you can scale this very, very well. If you create great content around your niche, around your area of expertise, every time someone comes to your website and clicks on a link and buy something from you via your affiliate link, you make money.

10:27So this happens kind of organically. And over time, this scales really well as you build more traffic. That's the key with an affiliate marketing type of business model. You need the traffic. So this means you need to be in the content business, creating a lot of great content, whether it's blog posts or videos or a podcast or whatever it might be. So the point here is that you want to create a lot of buzz around this area of expertise. You want to become the expert in this area of expertise. So you're the go-to person when people learn from you. And then when they want to buy something that relates to this idea, this market, they are going to buy through your affiliate links.

11:06A tip I have for you when it comes to affiliate marketing as a business model is sell the product like it's your own. So if you had your own product, you would be running webinars to sell this product. You'd be doing sales calls and the best affiliates do this for their affiliate products because they want to have a predictable way to make money. And I just hope that people click on links on their website. They want to run regular types of sales campaigns so that they can be able to earn that commission over and over and over. The best affiliate marketers I've seen, they run regular webinars, they do sales calls, they do extra content, they do bonuses.

11:41So they're always getting new sales through their affiliate commission. So those are the three business models I recommend when you're getting started. Number one, a service-based business. Number two, digital products. And number three, affiliate marketing. Now you might be saying, Omar, what about e-commerce? What about software or SaaS. Well, I've had both of those businesses, right? I've had an e-commerce brand. I sold custom tailored clothing for men. That was a business I had over 14, 15 years ago. I had a software company, highly successful software company that I grew for 10 years and got acquired by ProProfs.

12:16So I know the ins and outs of these businesses. These are tough businesses to start with. E-commerce has a lot of overhead because you've got to buy product. Even if you do drop shipping, there's a lot of overhead that you're going to have to spend to be able to sell an e-commerce product like t-shirts or physical products that you're going to be shipping out. And usually e-commerce is what people think about when they think about online business, but there's a lot of easier ways, easier business models out there. Like I mentioned today, software is a beast. There's a lot of moving parts. There's a lot of overhead.

12:47There's a lot of development that needs to be made for you to be able to do that. Engineers are not cheap. I know this firsthand. So I didn't mention these because these are kind of like second tier or second level types of businesses, I really want to see you succeed. And I want you to start out with something that gives you the highest level or highest chance of success. Make some money, have some wins under your belt, build a business that actually allows you to quit your job and have a lifestyle that you've dreamt about. Once you've established that, then you can go on to another mountain, another challenge, e-commerce, SaaS, whatever it might be.

13:20So like I mentioned, choosing the right business model is important, but you got to choose, get started. Okay. Which one of these you feel most comfortable with, which one of these fit your lifestyle or your ambition or the way you want to kind of start out in business, whether it's creating a digital product, whether it's, you know, service-based business, affiliate marketing, you tell me, okay, put it in the comments, or you can email me anytime at omar at one zero zero nba.net. Now, before I wrap up, know that each of these models will have their own set of benefits, but also challenges. But the key is to find one that aligns with your skills, your interests, and the market that you want to get into, okay?

14:01Remember, the best business models are the ones that allow to provide value and leverage your strengths so that you can grow as a person, as a business simultaneously. This is really what we want to do here, okay? So it's time for you to make a decision. This podcast, this show is all about action. It's time for you to take action. Choose a business model and let's get started. Let's make it happen. Now you made it to the end of this episode means that you're pretty serious about building a business. I want to congratulate you because that means you're not playing business. You're actually doing business.

14:32You're actually looking to take a step forward and change things in your life. So congrats on that. Keep moving forward. Keep doing it. And I'll check you in the next episode.