MBA2689 The Signs of a Great Business

0:00Let's face it, most businesses aren't great. They're complicated, the margins are razor thin, the offers are confusing, and the moment the founder stops working, it just totally collapses. But every once in a while, you spot a business that's just brilliant. Not just profitable, but scalable, it's elegant, it's wildly valuable. Today, I want to help you spot the signs of a great business. Whether you're thinking about starting one, buying a business, or growing one you already have. These are the five big signs I look for when I evaluate if a business is truly amazing. And I'll add a few bonus traits that might surprise you.

0:41Let's get into it.

0:48Welcome back to the$100 MBA show. I'm your host, Omar Zinhome, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday, to help you start, grow, and scale your business. real quick if these episodes help you in any way hit the follow button on this podcast app it helps us to keep bringing you practical business insights three times a week for free thanks sign number one it solves a painful urgent problem i can't tell you how many businesses don't do this there's so many people that are starting businesses that are just meh right the greater the problem you solve, the more painful the problem that you solve, the easier your business is.

1:29That's just the bottom line. A great business starts with that real problem, one that people really feel deeply about. They want this problem solved like right now. This isn't nice to have. This isn't, hey, this is a cool feature. It's about real pain. Think about what you would be willing to pay for life-saving surgery, okay? You'd pay as much as you can, right? As much money as you have. Why? Because it's an urgent problem, right? And it's worth it for you. So think about it for a moment. I mean, this is an extreme example, but we can apply this to our own businesses, to businesses that we're looking at.

2:06For example, a coach could be helping you fix a failing relationship. If you're having a tough time with your relationship with your spouse or with a family member or a parent, fixing that relationship will solve a lot of pain for you. Another example, a tool that helps you stop wasting money on ad spend. You are spending so much money on ad spend, and if you could save some money, that's money made, all right? And it's kind of urgent because you are running ads constantly, and you want to save some money before you run your next ad. Another example, a system that finally gets you paid on time if you're a freelancer.

2:39If you're a freelancer, you know the pain of chasing invoices. So you want to solve that as soon as possible. The more painful and urgent the problem, the more willing people are to pay for the solution. Just remember that. The more painful and urgent the problem, the more willing they are to pay for the solution. And the faster they are to make a decision. Think about it. They're not going to um and ah about something they know they need. They are in pain. They see a solution and they're going to just want it now. They're not going to just say, let me think about it. They're going to be like, hey, where do I sign up?

3:14So this is why this is number one with a bullet, because if you could solve a painful, urgent problem, your life is going to be so much easier as a business owner. Sign number two, high profit margins. I talk about margins constantly in our content because it's so important. Great businesses make great money. Bottom line, period, end of story. Okay, there's no way around this. Okay, they don't run on razor thin margins. Great businesses don't just settle for 5%, 10%, 20 % margins. They allow lots of room to reinvest into the business. Also, they understand that not all the time in the lifespan of the business, everything's going to be great.

3:58There are going to be some storms ahead. They got to be able to weather those storms. They need to be able to grow despite the storms. So you want to look for 80 % to 90 % margins for digital products or software. This is why I absolutely love online business and digital products, because the margins are amazing. And there's just no greater feeling in my book than having enough margins for you to run your business, pay your bills, have lots of profit, be able to reinvest into your business, hire the best people, not have to sacrifice quality, and it all starts at the margins. What if you're in coaching or services?

4:32Well, I recommend 50 % to 70 % margins, if you could pull it off. and even physical products, you should shoot for at least 40 % margins, which is not easy. And this is why I believe if you're in the physical product world, you should go up market and not try to compete on price on low price products. Let me just boil it down to its essence. The reason why margins matter is because it gives you leverage. It allows you to do a lot of things in your business, allows you to advertise, allows you to hire great talent, allows you to reinvest, It allows you to even discount strategically if you need to, because there is room for that.

5:09And here's a bonus tip. Many founders underprice in the beginning. Start higher, then adjust. Higher margin businesses give you that flexibility, because if you could charge more in the beginning, you can afford to start growing and hire and do all the things you need to do in your business to have a thriving business. And you make it worth your while, because you've got to remember, in the beginning, you don't have a lot of customers. So the higher your margins, the more profit you make, the more money goes into your pocket. This is why I always say don't underprice at the start. Start at a higher price point.

5:43Sign number three, the value is obvious. If I don't get your value, why I should buy your product or service quickly, like within seconds, then you're really making it harder for yourself to get customers and get sales. If you need a 10-minute explainer video for people to understand what your product does, it's just not clear enough. Great businesses have simple, crisp messaging. They have clear outcomes. They have immediate perceived value. Immediately, they're like, oh, I could see why I would want this. I'm going to give you some quick examples of some products or services that show immediate value immediately, like with the headline of the actual website.

6:23Get booked for a podcast in 10 minutes a day. Very easy to understand what I'm getting here. I'm going to get booked on a podcast as a guest so I can grow my brand in 10 minutes a day. So in 10 minutes, I can quickly get that. Another example, instant advice on your sales page with AI ready in two minutes. So quickly, I know what I'm getting. I'm going to get advice. I'm going to get critique. I'm going to get some improvements, areas of improvements on my sales page in two minutes. Very clear. Stop forgetting important tasks with my new mobile app. Clearly, I know what I'm getting. I'm getting a reminder task, something that's going to make sure that I don't forget things that are important on my mobile phone.

7:02Let me give you an example from my own history as an entrepreneur. We had a software company called Webinar Ninja. Our value prop was very clear. Create a webinar from A to Z in 10 seconds flat. And that's exactly what it was. You just fill in a form that takes 10 seconds to fill out. And we created every aspect of the webinar, the signup page, the actual webinar page, the replay page, all the email notifications. Everything was done with our wizard. What I found early on is that the best businesses feel like magic. The best products feel like this shouldn't be possible, right? This is great. One of my favorite features on Apple products is that you can copy something from your phone and paste it onto your laptop.

7:42And that's just part of being an Apple consumer. Feels like magic, right? Ask yourself, could a 10-year-old understand what you sell? If not, Keep simplifying. Remember, clarity sells. One of the most foundational things we teach inside of our program, the$100 MBA, is that a confused mind never buys. Sign number four, it's scalable from day one. A great business doesn't require you to be there for every transaction. Scalability means you can deliver things and deliver the product and service you're promising without you getting involved. That means digital delivery, like a course or an app or a membership, like automation, checkout, fulfillment, onboarding, all that stuff is important so that you don't need to do all that legwork.

8:28You have systems that grow with you without you needing to add more hours. They're all documented. The moment a business depends on you in order for it to earn money, it's no longer a business really. It's self-employment. This is why I say if you're building a business or you're buying a business or you're in a business, start thinking about how you can remove yourself completely from the business. Is there a way for you to deliver the value that you promise without you getting involved, or you're just sort of an investor? See it that way. I always do this thought experiment where it's like, if I wasn't allergic to work, I wasn't able to work, even just from a physical point of view, what would I have to do to make my business run just as effectively without me?

9:13Can I hire somebody else to do something? Can I get other people to do all the actions I normally do to make money? If so, do it. Start building that out so that you can then be freed up to work on the brand of the business, invest in the business, manage recruitment, all other stuff. And that way, your time, which is the most valuable thing you have, is yours. Now, don't get me wrong. You can start with a service or with coaching, but build with scale in mind. Think about how you can turn calls into group coaching programs, how you can turn projects into products. How can your IP be turned into assets like courses or templates or software?

9:52A good litmus test that you can try is could 100 customers buy tomorrow without needing you to personally intervene? Do you need to intervene in order for this to happen in order for 100 customers to buy? If not, you got work to do. Listen, it's okay if you got work to do. It just means right now, your business is not scaling or built for scale, you need to start doing that so that you can not only grow faster, but do it without leveraging your own time. Remember, you can always make more money. You can't make more time, right? You only have 24 hours in the day. Let's give you back that time so you can do things you enjoy and love in life.

10:30Sign number five, it's a sellable business. One of the biggest signs of a great business is that can you sell this business tomorrow? If you never plan to, it's okay. But a valuable business is a business that is an asset in its own. My buddy Rob Walling says this all the time. We all sell it and we can't take it to our grave. Somebody's going to take it. Somebody from our family or we're going to sell it to somebody and cash out. But the point here is that if you build a business that's sellable, it's a business that's healthy. That means that it runs without you. It means that it has reoccurring revenue.

11:02It means it has systems and SOPs. It means it's not a mess. It means it has happy customers with real lifetime value. The founder is not the brand, at least not completely. It's okay to leverage your own brand to grow your business, but the business continue without you. Even small businesses are getting sold now. We're talking about newsletters for millions of dollars, by the way. Newsletters being sold for millions of dollars. Niche sasses, micro sasses, micro brands, creator products. These are all businesses that get sold day in and day out. There's dedicated marketplaces, websites, that people can post their businesses and buy them.

11:40And a lot of people close these deals within a month. So this is definitely doable, even at a smaller scale, even if it's for six or low seven figures. It's really life-changing money for a lot of people, and you could take that money and invest it in something else so you're not totally just leveraging your whole life off your business. Think of it this way. If someone offered to buy your business tomorrow, how easy would it be for them to take over? Build it as if you are going to sell it. One of the things I learned when building a software company is that you've got to be ready for sale at all times.

12:12That means you should always try your best to document everything, have all your systems and your SOPs in order so that you're ready for sale. Why? Why? Because you want to make sure that you are ready when the great offer hits your table so that you're not scrambling and taking six months to get ready for sale. If you're ready all the time when the great offer is there, you close the deal as fast as possible. So you could build these systems and this documentation as you are building, as you are growing. And guess what? When you build a business that is prepared for sale, you actually make better decisions for the business because you have the right mindset in mind.

12:51You're not just kind of burying things under the rug and you're doing things on the up and up. All right. Those were the five signs. We're going to recap real quick, but we have some bonus signs for you. So hang on. We have sign number one, which is make sure you're solving a painful problem. Number two, high profit margins. Okay. Number three, you have obvious value. You are, the value is super obvious to everybody. They understand quickly what you offer and why they should want it. Okay. Sign number four, it's scalable from day one. Sign number five, it's a sellable business, a business that is easy to sell.

13:27Bonus sign, okay? Here's one. Customers keep buying. Retention is a superpower in business. It's easier and cheaper to sell to existing customers than to keep finding new ones. That's just the math. They're actually more willing to spend more money, by the way, four times more money than a new customer. So retention is incredibly important. Great businesses have reoccurring products like membership subscriptions, retainers. They have upsells, they have add-ons, they have higher tiers, increasing the lifetime value of the customer. And fans who want the next thing, when you have a business that people just can't wait for the next thing to come out, like Apple, for example, can't wait for the new iPhone or the new AirPods or the new Apple Watch or whatever it might be.

14:08If your customers only buy once, you're working harder than you need to, meaning that you're working super hard just for one purchase, for one transaction. Why not work once and have multiple transactions per customer? You want to create a value ladder that they can climb and keep receiving value each step of the way and buying more and more products from you. Next bonus sign, you'd want to run it for 10 years. This is a personal one. The best businesses are the ones you don't want to exit because they fit your life. They fit your values, your rhythm. And ask yourself, would I still enjoy doing this business in 10 years?

14:48Does it drain me? Does it energize me? Would I be proud to put my name on it? Businesses don't just make money. They fit you. They fulfill you. That's a sign most people overlook because business is challenging. And if you don't enjoy you, you're not going to make it through the grind. So let me put this all wrapped up in a bow for you. Great businesses, they're designed. They're designed with intention. And if you're building something new, ask yourself, is this solving a real pain? Can I charge healthy prices and have great margins so I could sleep at night? Would a stranger understand what I'm offering?

15:23Can I grow it without me? And can I sell it one day? Will customers stick around? This is really what we want to make sure of. And most importantly, does this feel right for me? Does it feel great to run? Because if it does, everything else gets easier. You know, one of the reasons why I loved my software business, Webinar Ninja, is because I love accomplishing things. I love building things and seeing it out in the world. And with software, you get to see that all the time because new features come out all the time. You're building new features, you're improving it. And it was these little, little products within the product that kind of fulfilled me and got me excited to get up in the morning.

16:01Before I go, I want to leave you with this. What I love about business is what Derek Sivers calls, you could build your own utopia. I love business because the fact that I get to create my own world. I can build the products I want. I can hire the people I want. I can work the way I want, all that kind of stuff. But if I want to be happy, if I want to make sure that this is not like an impossible task and I don't hate myself every day, then I wanna make sure that I'm building a business that is significant, that's important, that's great. And these signs I shared with you today are really the backbone of a business that is not only great and fun and profitable, but sustainable so that I can continue to grow and work on the thing I love.

16:45If you found today's episode helpful and you want more practical business lessons to help you start, grow, and scale your business, the best thing you could do is subscribe to this podcast. Hit subscribe or follow on your favorite podcast app, the one that you're using right now, whether it's Apple or Spotify or wherever you listen to podcasts. By hitting subscribe, you get our next episode automatically and it's the best way to support the show. It's absolutely free and it's a way for you to commit to growing your business. And now that you've subscribed, I'll check you in the next episode.

17:20Thank you.