Business models: which ones are best?

[martinz1995]

Hi is it true that certain business models are better and faster than others? I was thinking about this recently

Eg
Service based eg running an agency, a cleaning business etc. usually takes a long time to scale to 10k p month or higher. To really create a service business that can be worth over millions I think most times it becomes like a franchise model.

But eCom, SaaS etc. these models are much faster to scale. Eg you can simply increase ad spend, order more stock and scale very quickly with eCom. Same with SaaS. But for service you’ll have to increase marketing budget plus hire more people.

 

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[StrikingViper69]

Yup, some business models will scale better than others.

Easy example: Teaching guitar one-to-one, not very scalable. Teaching in groups of 5-8, much more scalable.

Whatever you do, online or offline, make sure the business model is going to work. What your exact model is will probably change once you get started and start getting feedback from your customers.

 

[johnp]

SaaS etc. these models are much faster to scale. Eg you can simply increase ad spend, order more stock and scale very quickly with eCom.

So not true for SaaS. Yes when you nail product-market fit it becomes a bit easier, but it's not just about dumping money on the fire. There TONS of factors that go into this. One simple example — let's say you're an enterprise SaaS with an average contract value of $20k-$100K — good luck scaling that with some direct response FB ads and long sales cycles.

Even if you're on the lower side with smaller deals and fast sales cycles, paid ads can still be really hard to crack for SaaS.

That's not to mention server issues, people trying to hack you all of the time, devs quitting on you, having to educate your customers on how to use the darn thing, card declines and the list goes on and on.

Not trying to be negative. I have two micro-SaaS business and work in SaaS. I really enjoy this space , but too many people selling the pipe dream that it's easy and they are full of

The bottom line — nothing is easy.

Anyway, just to answer your question. I personally prefer two things:

1) Anything that is subscription based

2) Isn't a service that I have to manually fulfill, (unless I can quickly outsource it)

This doesn't mean it needs to be SaaS though.

and that's just what comes easiest to me. It doesn't mean it's the right thing.

 

[StrikingViper69]

Also, scaling ads isn't as simple as spending more money. If only that were the case!

 

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[MJ DeMarco]

Finding customers is hard.

It's harder when they are one and done.

Sell consumables or subscription-based products, IMO, is the best model as it creates an accelerated, compounding model for growth and revenue.

It turns a single sales effort into a continuous stream of income, leveraging the concept of lifetime customer value beyond a "one-off" model.

1 new customer can equal 12, 20, 100 sales.

Unlike one-off sales where the effort to acquire a customer dissipates after the initial purchase, consumables or subscriptions maintain an ongoing relationship with the customer.

Compounding becomes part of your equation.

For instance, if I was in the mode of wealth accumulation, the last thing I'd be doing would be writing as an author—for the most part, I find one reader, one fan— and it's one and done.

 

[Jon822]

Web-based SaaS has to be the best. Personally, I'm a huge fan of solo entrepreneurship since it avoids the headache and profit reduction of hiring employees, but the cost of an increased scalability coefficient is increased competition: if your potential customers are worldwide, so are potential competitors.

While this topic is interesting to think about and can steer some young entrepreneurs into skills that have higher expected values, nothing beats identifying a problem and solving it; even it isn't close to the "best" scaling business. There are at least a few forum members killing it in the service industry. If you asked them about their thoughts on their business compared to the theoretical maximum, this would likely be the response:

View: https://media.giphy.com/media/94EQmVHkveNck/giphy.gif

 

[Kevin88660]

Hi is it true that certain business models are better and faster than others? I was thinking about this recently

Eg
Service based eg running an agency, a cleaning business etc. usually takes a long time to scale to 10k p month or higher. To really create a service business that can be worth over millions I think most times it becomes like a franchise model.

But eCom, SaaS etc. these models are much faster to scale. Eg you can simply increase ad spend, order more stock and scale very quickly with eCom. Same with SaaS. But for service you’ll have to increase marketing budget plus hire more people.

Good businesses are those with recurring revenues.

 

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[martinz1995]

Finding customers is hard.

It's harder when they are one and done.

Sell consumables or subscription-based products, IMO, is the best model as it creates an accelerated, compounding model for growth and revenue.

It turns a single sales effort into a continuous stream of income, leveraging the concept of lifetime customer value beyond a "one-off" model.

1 new customer can equal 12, 20, 100 sales.

Unlike one-off sales where the effort to acquire a customer dissipates after the initial purchase, consumables or subscriptions maintain an ongoing relationship with the customer.

Compounding becomes part of your equation.

For instance, if I was in the mode of wealth accumulation, the last thing I'd be doing would be writing as an author—for the most part, I find one reader, one fan— and it's one and done.

100% agree, I don't see service based models as quick or easy to systemize. Nowadays a lot of service models are moving into platform models e.g. Uber, Airbnb or large franchises. I think to create a large franchise/platform vs creating something like SaaS or eCom is definitely much easier and faster to scale and sell. But it depends on the business owner I guess and what their strengths are.

 

[martinz1995]

Web-based SaaS has to be the best. Personally, I'm a huge fan of solo entrepreneurship since it avoids the headache and profit reduction of hiring employees, but the cost of an increased scalability coefficient is increased competition: if your potential customers are worldwide, so are potential competitors.

While this topic is interesting to think about and can steer some young entrepreneurs into skills that have higher expected values, nothing beats identifying a problem and solving it; even it isn't close to the "best" scaling business. There are at least a few forum members killing it in the service industry. If you asked them about their thoughts on their business compared to the theoretical maximum, this would likely be the response:

View: https://media.giphy.com/media/94EQmVHkveNck/giphy.gif

100%, I think at least in the current age and time - SaaS, eCom are great models and probably most fastest. E.g. I know many people who own service businesses and it took them many years to grow their business - but with eCom it just seems like so many younger people are succeeding so quicky.