I made 3 videos covering this, you can watch them here: https://www.youtube.com/watch?v=hN2Dht1U9S4
This answer is supplemental to the videos, so you can both read and watch.
Before we start, a few assumptions:
You are currently interested in becoming an entrepreneur, and you want to start a business.
The problem you are trying to solve right now is that you want to determine what business to start.
You also may not necessarily have the money, but you do have enough time that you can put into your business. If you don't, I would recommend considering looking into starting a business when you have either time or money/capital. You can't start a business without either of those resources.
BUSINESS MODEL YOU SHOULD CONSIDER My recommendation is to start an affiliate marketing business. Affiliate marketing business is just like a traditional business except you don't have to deal with manufacturing, shipping, handling, fulfilling the product, customer support, etc.
That will take out most of the costs associated with starting a business. Affiliate marketing is done over the Internet, so you don't need an office or any physical location for your business which is usually an additional expense.
HOW THE BUSINESS MODEL WORKS Your job as an affiliate marketer is to market and advertise already existing products. Here's how it works in a nutshell.
You select a market you want to be in. Then you find a company ** that is already selling products that you want to sell and one that also **offers an affiliate program which allows others (businesses and individuals) to market and advertise their products in exchange for a commission (percentage of a sale, e.g., 10-50%).
There are probably tens of thousands of such companies, Amazon (sell any physical product), Clickbank (digital products), and many more, etc. (I know some really good companies – that I am affiliated with – that offer USD $1000 in commissions per sale)
Next, you sign up with them as an affiliate and you begin your marketing their products. There are multiple ways to attract customers (drive traffic), some of them include: *Building a website and ranking it in google, *Building a following/audience on social media like Facebook and twitter, *Running paid ads on the internet, networking and collaborating with others in order to get in front of each others audiences, etc. (I will be making educational videos on YouTube teaching the aforementioned things in the near future)
Ultimately, when your prospective customers click on your unique link (issued by the affiliate program) that takes them to the company which sells the product, you will be attributed a commission for each sale (typically 10-50%).
All the manufacturing, inventory, shipping and so on, will be taken care of by the company that you are being an affiliate for.
In short, your job is to: *Select products to market *Market the products / attract customers *Receive commissions *Let the other company do all the leg work, e.g., handling orders, shipping, manufacturing, customer support, etc.
CRITERIA FOR EVALUATING THE BUSINESS MODEL Regardless of what type of business you want to start, there are certain criteria you have to consider when deciding on the business that you want to start:
*Likelihood of achieving your target revenue goals *Market demand for the product *Ability to make a quality product *Passion for the market, business or industry *The size of the financial investment required to reach the point of profitability – you don't have a lot of money to burn, so you need to begin generating profit as fast as possible *The size of the financial investment required to achieve target revenue goals – you don't have a whole lot of money in the first place, you need something to live off of *Percentage of revenue generated that is profit after all business expenses *The cost of producing/manufacturing a product *The size of the financial loss if the business has to be closed pre-maturely, e.g., because it is not working out, not how envisioned, etc. *Probability of making costly mistakes when starting a business, e.g., making inappropriate purchases, losing money on poor business practices, etc.
ADVANTAGES AND DISADVANTAGES OF THE BUSINESS MODEL Now I'm going to "evaluate" the affiliate marketing business model for you, each criterion at a time. This is so that you would better understand the advantages and disadvantages of the model.
Likelihood of achieving your target revenue goal
For comparison a traditional business requires education on manufacturing, inventory, hiring, handling returns, customer support, etc. As you can imagine there are quite a few moving parts and things that can go wrong that can lead to failure.
When running an affiliate marketing business there's less training and education for you to take on because you're "partnering up" (not literally) with a company that manufactures it's own products, has its own customer support, has its own staff, and holds its own inventory.
The end result is you have fewer things to take care of, fewer moving parts in your business, fewer things that can go wrong that can lead to failure to achieve your revenue goals.
Market demand for the product
A traditional business requires comprehensive market research that you will have to conduct on your own if you are strapped for cash (or pay and hire somebody to do it for you).
In affiliate marketing, you only need to pick an already existing product that has lots of demand already. The company that you are promoting has already done all the research, otherwise they would not be in business.
Ability to make a quality product
Traditional business: proper market research and a thorough understanding of your market's needs is a must if you want to appeal to your market's needs with surgical precision.
Products that deliver exactly what the market wants have a higher perceived value (hint: you can charge more for the product). Moreover, let's not forget that a product has to manufactured using good manufacturing practices in order to achieve high quality.
In contrast, in affiliate marketing, your only concern is researching and selecting a quality product to promote. And this you can figure out by checking how well existing products (ones that you can affiliate market) are received by customers, e.g., reviews, testimonials, popularity, etc.
For example, if you find that a particular pair of Nike shoes are in high demand, maybe you could identify an opportunity reach a particular market as an affiliate for those shoes.
Apparently, Nike has an affiliate program and this means you wouldn't need to deal with opening an expensive physical store, deal with the costs of holding inventory just so you sell those shoes.
Passion for the market, business or industry
An affiliate marketing business you can be started in a fairly large number of industries and markets that you are passionate about, as there are quite a few brands and companies that are willing to have affiliates drive additional sales for them.
The size of the financial investment required to reach the point of profitability
It often takes anywhere from a couple of thousand up to a few hundred thousand US dollars to get a traditional business started, whereas one you could start an affiliate marketing in range of ZERO (for free) up to a few thousand dollars (if paid advertising is used).
The size of the financial investment required to achieve target revenue goals
Traditional business like stores, restaurants, factories usually operate at a loss for some time incurring hundreds of thousands or in some cases even millions until they turn their first profits let alone achieve their target revenue goals.
As far as affiliate marketing goes, as long as you not using any paid advertising, then it is possible to bring the initial investment down to ZERO. One caveat though, the process of getting to your revenue goals will be slow, it can take many months and years.
Conversely, if you are indeed using paid advertisements then the initial investment could be up to a few thousand US dollars.
Percentage of revenue generated that is profit after all business expenses
As an affiliate, you can be making anywhere from 5%-10% for physical goods, and 10%-75% for digital products like training & education, software, etc.
I have made a video explaining this in greater detail (see PART 2, but you should also watch PART 1 in order to see the "big picture" of what I'm explaining).
I also realize that this answer is already running really long (1700 words, I apologize for that, but this is what happens when I get into the state of flow), so if you are interested in exploring a couple more criteria against which I evaluate affiliate marketing and how it compares to a traditional business see the videos above.
Here are a few examples of criteria that are covered in the videos (there are obviously more):
The cost of producing/manufacturing a product
The financial loss if the business has to be closed pre-maturely, e.g., because it is not working out, not how envisioned, etc.
Probability of making costly mistakes when starting a business, e.g., making inappropriate purchases, losing money on poor business practices, etc.
WHY YOU SHOULD START WITH AFFILIATE MARKETING FIRST My recommendation is to start with affiliate marketing if you are beginner entrepreneur. Start small and scale big only when you find what products are selling like hot-cakes.
Try selling your competitors products first and see if you even have the skill to sell that type of product. You will have an opportunity gather feedback from your customers by then you will have plenty of information on what's working and what is not and how to improve the product in order to get ahead of the competition.
Begin generating revenue by starting with the affiliate marketing business model. You always later branch out into other markets or replace the affiliate products with your own.
3 IDEAS FOR MARKETS YOU CAN PURSUE WITH AFFILIATE MARKETING 1. Learn everything about maintaining good health and weight management and then teach others. The world population does not seem to be getting slimmer and healthier.
You could become an affiliate for high-quality online courses, physical products such as blenders (for juicing, making healthy dishes, etc.), as well as nutritional supplements, Omega 3, Vitamin D, etc. (people don't get enough omega 3's and vitamin D).
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Another idea: Learn how to do marketing properly and then teach others to do it as well. Robots and automation are coming, help others develop the necessary skills in order to survive an era of A.I. and automation and you will be rewarded for helping the world make the transition smoother.
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If you are into dogs, start a blog teaching dog owners how to take of their dogs. Dog owners are in need of help and they are willing to try solutions even if they cost money.
CONTINUE LEARNING If you would like to get an overview (the big picture) of how an affiliate marketing business model works, see
https://www.youtube.com/watch?v=KQoF6gzF8Ts.
I hope you find my answer helpful. Best of luck!
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