What Type Of Business Should a New Entrepreneur Start?
A lot of people stumble upon this site because they want to get involved with online business. If you go on business forums, there are a million or more money making methods, and it can be difficult to know where to start. What is the best type of business to start as a beginner entrepreneur?
That said, those same business forums seem to all push variations of the same idea. You should build your own products: usually info products – because you can sell them twenty-four hours a day, seven days a week and make money while you sleep.
That’s a noble and plausible argument. Who doesn’t want to make money while they sleep? I think that certain entrepreneurial authors are guilty of pushing this dream, but overall, building relevant products and using them to help people will make you money. You can earn money while you sleep.
However, a product-based business is not the best place to start. I’ll tell you why, and then I’ll tell you what the best type of business to start is.
Why a Product-Based Business Is A Bad /Place To Start For The Would-Be Entrepreneur
A lot of gurus have a weird quasi-pyramid scheme going on. They’ll release an ebook that teaches you how to achieve success and wealth in your life through releasing an ebook of your own.
Like I said above, it all boils down to create a product>market the product (usually by free means – a blog, twitter or whatever) and then rinse and repeat. It sounds easy, and it’s painted to be even easier than it is. Therein lies the problem.
Releasing a product involves a lot of different processes. You have to find the audience, make sure you deliver something to them that they want, build the product, release the product, do the marketing and handle all the customer support. Then you have to rinse and repeat.
The problems with this are numerous. Firstly, when you do the above, you have to get every step right otherwise you won’t make money. Also, you won’t know until you’ve done all of the processes whether you got one wrong. Then you’ll have to go back and diagnose your mistake. This is all costly.
Then, you’ve got the fact that there are probably going to be better established people with better products. Even a book project which is relatively easy can see you competing with people with massive budgets who are jumping in as a vanity project.
Also, customer support for a product-based business is never-ending. This s something online gurus really skirt over when they sell their courses. Some customers are a pain in the backside. Some customers are well-intentioned but useless with your product. I knew a guy who worked in a tech support business – and you’d have people that couldn’t even switch PC’s on without help. Then you’ve got the customers who are never going to be happy. Do you give them a refund or do you try and serve them?
These are all issues you’ll face. That’s completely aside from the actual product creation itself.
So What is The Best Type Of Business To Start Then?
Most people are better off starting with a really simple service business.
When I say simple, I mean really simple. I mean “Go on Fiverr and see what people are doing for $4” simple.
I know that that’s not glamorous. You might be a writer with dreams of out-earning Gary Halbert or you might be an artist who shudders at the thought of creating a five-minute logo for money. However, if you’re new to business, then you’ve got a lot to learn without having to worry about the quality of service you deliver and whether you’re up to a professional standard.
The simpler the service, the better.
You might be wondering why that’s better than a product-based business. After all:
- You still have to deal with customer support.
- You can’t make money while you sleep. It’s not passive at all.
- Simple services mean simple income. It’s not exponential either.
- You have to learn how to get clients.
There are a few reasons I am suggesting this. I’ll talk about them now.
Everything Is Simple
If you create a simple service business to start, then all you have to worry about is providing a quality service on time. That’s all. You don’t have to worry about the myriad things that can go wrong with a product-based business.
Sure, you have to do customer support. But what can really go wrong when you’re writing Tweets for people? Even if you get a massively difficult customer, if the job only takes five minutes then you haven’t lost anything by providing a refund in full. Sure, it’s a pain. But it’s better that than have to give a refund because some guy is trying to pirate your $500 online course.
You have to learn the skills anyway. It’s best to do them in a less stressful environment. Speaking of which…
It’s Your First Business. You Don’t Know Anything.
When I started my first business, it was a product-based one. (We talk from experience in these parts.) I thought that all of the things I’ve mentioned above were just items to learn about.
Well, I was wrong.
I was naive, and I didn’t know everything I needed to. If you’re running an e-commerce store – especially a dropship one like I was doing – there are tons of things that can go wrong. What if you get an order for 50 items and then your supplier tells you, “Sorry, we’re out of stock.”
You might think, “No big deal…” except you then have to tell the customer. You then have to deal with the fallout. Finally, that reflects badly on you – the supplier gets away free. (There’s a reason manufacturers let people drop ship – they’re selling the risk for the wholesale discount.)
If it’s your first business, you can’t be expected to know everything. But you will have to deal with these things. If you create a service business – particularly a simple service-to-service business, you get paid to learn these things without risking your own products and business.
With a service business, your learning is quicker. That’s because you’re providing a simple service with low overhead. You can take more risks. You get exposed to different businesses and sectors more quickly. Because of the lower overhead, you can see what works and doesn’t work more quickly.
These things aren’t simple. They’re crucial. If you send six months writing copy for other companies, you’ll learn at an exponential rate when compared with the guy who tries to learn how to sell just by trying to sell his own ebook on the internet.
The same is true for getting customers. When you’re selling product, there are so many links in the chain that have to align for you to get a sale, it’ll take long time to work out what works and what doesn’t. With service-based business, you’ll have a pitch that either works or it doesn’t.
For the young, would-be entrepreneur, the best place to start with business is to create a quick service business that meets a simple need. I’d recommend doing a business-to-business service like simple content writing or graphic design (or programming, web design, anything really.) This will get you an “in” with businesses so you’ll be able to see how they operate.
This will teach you how business operates. It’ll teach you the fundamentals of providing something of value from end-to-end, and you’ll learn all of these things a lot more quickly than you would if you threw yourself in the deep end by researching, creating and selling a product.