CENTS Framework - Business models + overhyped gurus

[martinz1995]

Hi all so the CENTS framework is an excellent framework but looking at most businesses, and I wish I honestly knew about it earlier. It is really true that some businesses are just lower effort and higher return. And even certain services/products are just better.

For example I am currently running a residential cleaning business and it is very complicated with pay rates, equipment, insurance, work safety laws, hiring. I'm talking the pay rates differ on times e.g. weekend rates, plus there's even things like travel time, travel km allowance, cold allowance, hot allowance etc. From what I've seen, MOST cleaning owners are solo or mum and dad teams, with few actually having knowledge of automating processes through a VA and knowing how to scale and grow it.

Yet I know someone who is running a COMMERCIAL cleaning business. They don't have to worry about equipment, insurance, work safety laws etc. All they do is literally subcontract their work to other cleaning companies. WAY less work. They just have to market, quote the price, and have the subcontract team carry out the work. They don't worry about payroll, having to get insurance, all these intricacies involved in the cleaning award that governs pay, conditions etc.for employees. So he is doing less work and making more.

However looking at the CENTS framework, I see that many business models don't seem to fit:
E.g.
Products - Import+export - ebay, Amazon FBA, Dropshipping, Retail stores
Services - marketing agencies, accountancies, law firms, home services, pressure washing, cleaning, beauty services etc.
Entertainment channels/influencers - Youtube, Twitch, IG influencers etc.
SaaS - B2B SaaS
Coaching/online programs - online courses, online communities
Platform - e.g. Uber, AirBnB, Amazon etc.

Out of all these business models:
1. Products - E - there is a somewhat low barrier to entry e.g. Alibaba imports.
2. Services - E - low barrier to entry for marketing agencies, beauty services, cleaning. T - seems to be a lot of management involved S - scaling isn't quick or easy, to scale it'll mean hiring more and more people. Having Scale + Time may only possible if you eventually have a franchise model. Either that or getting VAs to automate hiring, marketing which is what I'm currently attempting.
3. Entertainment - E - very low barrier - anyone with a phone can do it. C - controlled by big platforms e.g. Meta, Twitch etc. T - it is very much tied to the influencer/entertainer
4. SaaS - this one I think fits the CENTS framework, but I wonder if it is also low barrier to entry E - considering developers can be paid $10-$30 p hour?
5. Coaching - this one definitely fits CENTS framework although E - somewhat low barrier to entry too. Anyone can be an "expert" nowadays. T - somewhat tied to the coaching owner too.
6. Platform - fits CENTS framework but also wonder if it is low barrier to entry E - considering developers can be paid $10-$30 p hour?

Especially service businesses. But I have also added some extra factors to consider aside from CENTS:
Speed - how quickly it takes to build. E.g. some businesses can hit $20k p month within a year, while others can take 5 years
Growth of industry/timing - eg newspaper industry has declined and died.
Regulations - many industries are highly regulated (I guess this would be considered E, knowledge of laws, regulations would increase barrier to entry)
Effort required - I think this one really applies for people that perhaps work while building a business. E.g. if you're starting a service business while working full time, it is not really feasible at all to answer client calls, messages while at work (depending on the job). With a product business it is much easier to get home, then pack and process orders.

With that said, Nick Huber had a very good article on Sweaty Startup - and he mentioned to evaluate the amount of people succeeding in a market. e.g. if only a small percentage of people succeed in a market/business it should be avoided. E.g. marketing agencies, tech startups etc. and that common services e.g. cleaning, pressure washing, window cleaning etc. is very easy to succeed in.

Honestly I think the super hyped ones e.g. SMMA, dropshipping, crypto, clothing brands, influencer, affiliate marketing, UGC, YouTube automation - are best to be avoided. All in all, there's a million ways to make a million, and just because a business doesn't work for you doesn't mean it won't work for someone else. But these overhyped courses and gurus make it seem like ANYONE can succeed. Some people are better suited to certain models than others in my opinion. E.g. dropshipping requires good knowledge of running paid ads, technical skills, creativity with content creation. While running a window cleaning business may be more about marketing, and knowledge of the industry etc.

 

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[Jon822]

Of course there are going to be businesses with higher reward/effort ratios. But there aren't going to be any massive outliers or else they would be saturated. The barrier to entry is what allows the rewards to remain high.

 

[Bounce Back]

So in your other post like a week or so ago I offered to answer any questions about the commercial cleaning industry. I ran a business in the space for 3-4 years and sold it. Perhaps you just didn't see that post.

I just want to share at least my experience of my local area is that this take on commercial cleaning versus residential is very rose-tinted glasses so to speak.

8/10 quotes I would go on would literally start the conversation (mostly on the phone before I would even get there) with making sure I was not a subcontracting shop because the experiences they have are mostly awful. Mostly because there are tons of those types of shops for the perception of what you listed above (and franchises sold on the concept). They then race around town mostly competing on margin and attract the sketchiest subcontractors to out compete each other. And going to shoot it to you straight, all the shops I knew in town that used subcontractors had workers who couldn't speak English at all (you make your own assumptions of why/how they were paying them). This is not conjecture - when you working at office parks from 10pm-4am you bump into them at the dumpsters frequently. Overall to me it was a "dirty" side of the business to be in and I couldn't help but feel a little bad for a lot of the subcontractors of what they must be being paid compared to my workers.

I don't know why you think there is not running payroll (there is still definitely cycles of paying subcontractors) and you most certainly need insurance. And if you do it with your own employees everything you listed that you consider in residential is just the start of commercial - now add background checks, filling out specific government documents, getting badge access per individual cleaner (no just swapping on the fly), different types of insurance you didn't know existed for some specific clients, managing different consumables/chemicals for different accounts, having chemical documentation up to date in each account for government random audits, etc. (Stopping here because I could type all night).

Also if you are not straight up with the customer in explaining you are going to use subcontractors when you get complaints how are you going to resolve it on the spot if you don't have some employees, equipment, etc.? (literally commercial cleaning is almost all complaint resolution + prevention game because you have every single person in the office to please)

I could go on and on but I will stop here.

With that being said the largest multi-million/national type companies all do use subcontractors but to service the mega-campus businesses (think skyscrapers that need cleaned every night with day porters, etc.). The customers in those circumstances are usually understanding of that flow more but that isn't an industry you just step into and honestly from my little experience talking with some of the guys who run those ones - it is all a cash flash/cash management game that requires quite a giant wad of cash to really break into.

 

[martinz1995]

So in your other post like a week or so ago I offered to answer any questions about the commercial cleaning industry. I ran a business in the space for 3-4 years and sold it. Perhaps you just didn't see that post.

I just want to share at least my experience of my local area is that this take on commercial cleaning versus residential is very rose-tinted glasses so to speak.

8/10 quotes I would go on would literally start the conversation (mostly on the phone before I would even get there) with making sure I was not a subcontracting shop because the experiences they have are mostly awful. Mostly because there are tons of those types of shops for the perception of what you listed above (and franchises sold on the concept). They then race around town mostly competing on margin and attract the sketchiest subcontractors to out compete each other. And going to shoot it to you straight, all the shops I knew in town that used subcontractors had workers who couldn't speak English at all (you make your own assumptions of why/how they were paying them). This is not conjecture - when you working at office parks from 10pm-4am you bump into them at the dumpsters frequently. Overall to me it was a "dirty" side of the business to be in and I couldn't help but feel a little bad for a lot of the subcontractors of what they must be being paid compared to my workers.

I don't know why you think there is not running payroll (there is still definitely cycles of paying subcontractors) and you most certainly need insurance. And if you do it with your own employees everything you listed that you consider in residential is just the start of commercial - now add background checks, filling out specific government documents, getting badge access per individual cleaner (no just swapping on the fly), different types of insurance you didn't know existed for some specific clients, managing different consumables/chemicals for different accounts, having chemical documentation up to date in each account for government random audits, etc. (Stopping here because I could type all night).

Also if you are not straight up with the customer in explaining you are going to use subcontractors when you get complaints how are you going to resolve it on the spot if you don't have some employees, equipment, etc.? (literally commercial cleaning is almost all complaint resolution + prevention game because you have every single person in the office to please)

I could go on and on but I will stop here.

With that being said the largest multi-million/national type companies all do use subcontractors but to service the mega-campus businesses (think skyscrapers that need cleaned every night with day porters, etc.). The customers in those circumstances are usually understanding of that flow more but that isn't an industry you just step into and honestly from my little experience talking with some of the guys who run those ones - it is all a cash flash/cash management game that requires quite a giant wad of cash to really break into.

Thanks I don't think I saw that post. Yes I agree, the commercial cleaning industry use a lot of poor subcontractors. That's the cleaning business in general. However I don't know maybe if it's different in Australia but it is much less regulated compared to residential. In Australia using subcontractors carries way less risk and operational management vs employees. Employees require superannuation (retirement), tax, paid leave and other benefits that subcontractors don't have.

 

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