Businesses for Beginners
You might have thought of leaving your job some time or the other. Maybe due to boredom, maybe due to stagnancy, maybe due to office politics, or maybe you’re just not that into what you got into years ago. But more often than not, when we are at that crossroads, we have no clue about what we would do if we do actually leave that job.
Let’s look at some business models today that are suitable for people new to business. Because make no mistake, managing restaurants or “buying real estate using other people’s money” may look easy and pleasant from the outside and is very easy to sell on social media, but the truth could not be further from that image. Previous generations had a smaller number of choices than us, but we have the privilege of having the Internet at our disposal. So we can use this tool to create businesses too.
You need to look at businesses from a number of lenses when evaluating them. You need to know the capital required, profit margins, demand, supply logistics and payment cycles. Please keep in mind, I am a trader, so I don’t have first-hand information on all of these business models, but I’ve looked around and found these out. You can obviously think of many more digital businesses on your own too.
Affiliate Marketing: This is an advertising model in which a company pays third-party publishers to generate traffic to the company's products or services.
Capital Required: The money required to start can be low, but if you want to grow fast, you need to pay for ads, and that can set you back a few thousand dollars.
Profit Margins: Due to the ad expenses, the margins tend to be around 30% generally, obviously this can be more or less depending on the efficiency of the ads you use.
Demand: This differs for each and every product, so you have to choose products that you would actually be able to sell at scale through your affiliate links.
Supply Logistics: This is something you don’t have to worry about, since the fulfillment has to be done by the company you’re working with.
Payment Cycle: You get paid only when you generate revenue for the company, so you need to do it well.
Dropshipping: You might have seen this being talked about on social media. It is an option where typically e-commerce companies outsource the production, storage and order fulfilment to third parties.
Capital Required: The money required to start can be low if you choose low-ticket items. But then you would need to sell at a massive scale to reach good numbers. Plus, you need money to be able to test if a product is successful at all. But nevertheless, you would need somewhere around $2000-$3000 to be able to ensure good-quality products and well-placed ads.
Profit Margins: Again there are the ad expenses, so the margins tend to be low, your choice of product dictates this and it can range anywhere from 10-20%. Again, obviously, this can be more or less depending on the efficiency of the ads you use.
Demand: This differs for each and every product, so you have to choose products that are actually needed or wanted, and then you have to place ads correctly. Otherwise, it doesn’t really take much for someone to just search for what they need on sites like Amazon.
Supply Logistics: This is something you have to worry about only when you’re testing new products, to ensure proper quality. After that, you only have to see that your supplier is not slacking off on deliveries and quality maintenance.
Payment Cycle: You get paid only when you generate sales, so you need to have a winning product and store to be able to do that.
Amazon FBA: This is basically Amazon being the third party in the above business model. Obviously, Amazon would be a more trusted partner than most others. And with this, the demand and traffic are taken care of by Amazon.
Tech-based products: These are products like e-books, online courses or audiobooks.
Capital Required: You can create these products for relatively no cost if you already have the knowledge. But if you want to create, for example, courses with quality content and have to hire people to do that, the cost could run into hundreds of dollars at least.
Profit Margins: The main expense here would be how you promote your product. You can do this using social media ads or through affiliates. Either way, the margins can be higher than the previous two here, maybe even more than 50%.
Demand: You have to gauge how the demand is for your niche/industry and curate your product according to the wants of your audience/consumer to be able to sell your product.
Supply Logistics: As a beginner, this is difficult because you really don’t understand how much your product would sell and what kind of changes would be required to tailor it to the real audience it appeals to.
Payment Cycle: This is a little flexible with this type of product. You can set up both one-off and recurring payments. For example, you can sell a course for a one-time fee of $450 or for 12 monthly payments of $40.
Trading: This refers to buying and selling securities over a certain period of time to generate profits.
Capital Required: The main thing with trading is that you should use small capital to learn, so that you don’t lose too much when you lose and learn through that phase. But to generate actual sizeable profit, talking realistically, you need a good chunk of money. 10% is a very good rate of return for a month for a trader, in a profession in which most people don’t make any money at all.
Profit Margins: You can create a fortune inside one month with this, but that has a very small probability. But what can be done is consistent 5-10% profits each month once you’ve got the skill. But please remember, it takes most people at least a few months of experience to become profitable.
Payment Cycle: You can be paid whenever you want, provided you have a decent broker.
Freelancing: This refers to doing limited work for clients without the commitment of a full-time job. You can freelance for companies by being a web designer, software developer, copywriter and mostly any type of work you might already be doing.
Capital Required: This isn’t like a typical business. You don’t require much capital to start. You only need a computer and be skilled enough to be hired.
Profit Margins: This really depends on the number and size of clients you take on. Your income could be in the thousands of dollars each month if you play your cards right.
Demand: There is always demand to do jobs like writing up articles for a company’s products, or creating social media posts for them, since many companies might not want to hire full-time employees to do stuff like this and this is where you would come in.
Supply Logistics: The one problem for a beginner in this type of business is getting enough experience to be noticed by big clients. And getting off the ground is difficult everywhere.
Payment Cycle: This would depend on the number and size of projects you take up, there is no upper limit per se.
There are a few more business types, like Social Media Marketing Agencies and ROI Marketing for businesses, that are out there. But I really don’t understand much about the demand and supply myself to be able to explain them to you. Maybe you can do so for me if you know. But in any case, remember that you would always be paid according to the size of the problems you solve.
And while that’s it for this article, you can read more from me here. And do let me know if you want a specific topic covered! Subscribe for free to receive new posts and support my work.