MBA2653 5 Online Businesses That ALMOST Never Fail

Summary

Podcast Summary: The $100 MBA Show - Episode MBA2653: 5 Online Businesses That ALMOST Never Fail

Introduction

In Episode MBA2653 of The $100 MBA Show, host Omar Zenhom delves into the realm of online entrepreneurship, presenting five robust business models that boast high success rates. Drawing from over two decades of entrepreneurial experience, Zenhom provides actionable insights, backed by real-world data, to guide aspiring entrepreneurs in selecting a sustainable online business venture. This summary encapsulates the key discussions, strategies, and expert advice shared during the episode.

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1. Freelancing and Coaching (40% Success Rate)

Timestamp Reference: [02:15]

Overview: Freelancing and coaching rank first among the five business models, with a commendable 40% success rate. This model leverages individual skills—such as writing, marketing, design, coding, or career coaching—to offer services directly to clients for a fee.

Why It Works:

• Low Startup Costs: Minimal initial investment is required, making it accessible to most aspiring entrepreneurs.
• Rapid Client Acquisition: Entrepreneurs can secure their first client within a week.
• On-the-Job Learning: Facilitates quick development of sales, delivery, and customer management skills.

Common Failures:

• Burnout: Without scaling strategies or delegation, freelancers often face exhaustion from managing all aspects of the business alone.
• Rate Limitations: Difficulty in increasing rates as expertise grows can stagnate income.
• Poor Client Management: Ineffective communication can lead to misaligned expectations and client dissatisfaction.

Strategies for Success:

• Specialization: Zenhom emphasizes the importance of niching down. For example, instead of being a general career coach, specialize in coaching first-generation immigrants aiming to break into the tech industry.
• Productize Services: Develop clear, predefined packages (e.g., podcast editing, website design) to streamline offerings and enhance scalability.
• Focus on Results: Shift the emphasis from hours worked to the transformative outcomes provided to clients.

Notable Quote: "Your success really depends on how hard you work, how much of a problem you're solving, the market, a lot of factors, so nothing is guaranteed success." – Omar Zenhom [01:56]

Case Study: Tasha, a student from the $100 MBA program, transitioned from offering general copywriting services to specializing in email sequences for course creators. Within six months, she was fully booked without having built a prior audience, showcasing the power of a clear, specialized offer combined with proactive outreach.

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2. Productized Services (50% Success Rate)

Timestamp Reference: [04:00]

Overview: Productized services are an evolution of traditional freelancing, offering repeatable, standardized service packages that eliminate the need for constant customization.

Why It Works:

• Scalability: Unlike one-on-one freelancing, productized services can be delegated and scaled more efficiently.
• Clarity and Predictability: Clear offerings provide clients with a precise understanding of what they are purchasing, enhancing trust and satisfaction.
• Operational Efficiency: Standardized procedures and packages allow for streamlined operations and the creation of standard operating procedures (SOPs).

Strategies for Success:

• Define Scope Tightly: Clearly outline what each package includes to manage client expectations effectively.
• Value-Based Pricing: Price services based on the value delivered rather than the time invested.
• Utilize Systems and Templates: Implement structured processes using tools like Google Docs to maintain consistency and efficiency.

Notable Quote: "Buyers love clarity and predictability, so it's clear what they're getting." – Omar Zenhom [05:16]

Case Study: Zenhom shares his experience with a website creation agency that offered tiered packages (e.g., five-page, seven-page, ten-page websites). This clear pricing strategy enabled quick client acquisition and efficient delivery without the need for extensive custom negotiations.

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3. Digital Products: Courses, Templates, and Guides (60% Success Rate)

Timestamp Reference: [08:31]

Overview: Creating and selling digital products—such as online courses, templates, and guides—offers entrepreneurs the advantage of creating a product once and selling it multiple times.

Why It Works:

• Low Production Costs: Developing digital products incurs minimal expenses compared to physical products.
• Infinite Scalability: Digital goods can be distributed to an unlimited audience without additional production costs.
• On-Demand Learning: Consumers appreciate the flexibility to learn at their own pace.

Common Failures:

• Lack of Market Demand: Courses that do not address real-world needs or solve pressing problems are prone to failure.

Strategies for Success:

• Solve a Specific Problem: Focus on addressing a single, significant pain point to ensure product relevance and demand.
• Sell the Outcome: Market the transformative results rather than the content itself. Highlight how the product will change the user’s life or business.
• Prioritize Results Over Content Volume: The effectiveness of the product should hinge on the outcome it delivers, not the number of modules or videos.

Notable Quote: "What you're selling is a result. A real example is my program called the $100 MBA. Our students take it because they're tired of side hustling and want to get started and scale their business to a million dollars." – Omar Zenhom [09:45]

Case Study: The $100 MBA program exemplifies this model by equipping students with the skills to launch and scale their businesses effectively, emphasizing actionable results over mere informational content.

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4. Memberships and Subscriptions (70-80% Success Rate)

Timestamp Reference: [12:00]

Overview: Memberships and subscriptions involve offering ongoing content or services in exchange for recurring revenue, typically through monthly or yearly payments.

Why It Works:

• Predictable Revenue: Recurring payments provide financial stability and forecasting ease.
• Customer Loyalty: Continuous value delivery fosters long-term relationships with customers.
• Low Barrier to Entry: Customers are more likely to commit to smaller, recurring payments than large upfront costs.
• Opportunities for Upselling: Easier to introduce additional products or services to an existing customer base.

Strategies for Success:

• Nail Your Onboarding: Ensure new members receive immediate value to reduce churn.
• Deliver Consistent Value: Maintain high-quality offerings to keep members engaged and satisfied.
• Build a Community: Foster connections among members to enhance the value proposition beyond just the content.
• Retain with Monthly Wins: Regularly highlight and celebrate member successes to reinforce the benefits of membership.

Notable Quote: "If you have a monthly recurring type of bill that they get, you have to win them over every single month. You're like selling the program every single month and making sure they get value." – Omar Zenhom [13:30]

Case Study: A student runs a paid community for Etsy sellers at $29 per month. Starting as a side hustle, it has grown to 700 members and serves as her full-time income, demonstrating the scalability and sustainability of the membership model.

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5. Software as a Service (SaaS), Bootstrapped and Niche (80% Success Rate)

Timestamp Reference: [14:30]

Overview: SaaS businesses offer software solutions through a subscription model, focusing on niche markets to address specific pain points effectively.

Why It Works:

• Recurring Revenue: Monthly or yearly subscriptions ensure a steady income stream.
• High Margins: Software products typically enjoy high-profit margins, which increase as the customer base expands.
• Customer Stickiness: Reliable and valuable software becomes an indispensable tool for users, reducing churn rates.
• Exit Potential: SaaS businesses are attractive assets that can be sold at high multiples, offering significant exit opportunities.

Strategies for Success:

• Validate Your Idea: Before building, ensure there is a genuine demand for the solution. Pre-sell the product to gauge interest.
• Focus on a Specific Audience: Targeting a niche market (preferably B2B) allows for tailored solutions that better address user needs.
• Build Properly: Develop the software thoughtfully to avoid tech debt, ensuring a seamless and bug-free user experience from the outset.
• Start Slowly: Gradual development helps maintain quality and customer trust, even if it means a slower initial growth.

Notable Quote: "SaaS revenue is recurring, it's sticky, it's based on delivering value, not time." – Omar Zenhom [14:45]

Case Study: Zenhom recounts his experience with Webinar Ninja, a SaaS tool he built to cater to webinar hosts. By pre-selling 250 beta spots before developing the software, he validated the demand and secured funding without external investment, leading to the platform’s successful acquisition.

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Conclusion: Building Momentum and Commitment

Timestamp Reference: [15:30]

Zenhom advises entrepreneurs to begin with business models that offer early wins and can fund subsequent ventures. Starting with freelancing or productized services can generate initial income and valuable business experience, which can then be reinvested into more scalable models like digital products, memberships, or SaaS.

Key Takeaways:

• Start with a Solid Foundation: Begin with simpler models to build momentum and financial stability.
• Scale Thoughtfully: Gradually transition to more complex and scalable business models as experience and resources grow.
• Commit and Persist: Success is less about the chosen model and more about sustained effort, consistency, and continuous improvement.

Final Thought: "It's not about the model. It's about you. Any of these businesses can work, but only if you do stick with one. Commit. Don't dabble." – Omar Zenhom [16:00]

Call to Action: Zenhom encourages listeners to subscribe to The $100 MBA Show for more practical business lessons and to commit to their entrepreneurial journey with dedication and persistence.

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Conclusion

Episode MBA2653 of The $100 MBA Show offers a comprehensive guide to selecting and thriving in online business ventures. By exploring freelancing, productized services, digital products, memberships, and SaaS, Zenhom equips entrepreneurs with the knowledge and strategies necessary to navigate the competitive online landscape successfully. Emphasizing the importance of specialization, scalability, and consistent value delivery, this episode serves as an invaluable resource for anyone looking to build a resilient and profitable online business.

Transcript

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[Omar Zenhom]

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[The $100 MBA]

Welcome Back to the $100 MBA Show.

[Omar Zenhom]

I'm your host Omar Zenholm, where I.

[The $100 MBA]

Deliver practical business lessons three times a week, Monday, Wednesday and Friday to help you start, grow and scale your business.

[Omar Zenhom]

Your success really depends on how hard you work, how much of a problem you're solving, the market, a lot of factors, so nothing is guaranteed success. But I'm trying to give you statistically what models work the best. Let's start with number one, which has a 40% success rate. Not bad. Not the best we're going to get there at the end, but that's freelancing and coaching. You've got a skill writing, marketing, design, coding, even career coaching, and you're offering it directly to others for a fee. That is basically what this model is. Why does it work? Well, it requires nearly zero startup capital. You can find your first client in a week. You can learn how to sell and deliver and manage customers very fast because you're going to be learning on the job. So it's quite easy to get started, but also to get traction quickly. So why does this business model fail? Well, the reason why I'm actually pointing out why they fail so that you can look out for these things and prevent these from happening. Number one, burnout. A lot of freelancers burn out because they never actually scale, they never actually delegate and hire other people. Number two, the inability to charge high enough rates. You need to continue to increase your rates as you get better at what you do. And then finally, poor client management or communication when you're serving people, when you're providing a service, communication is everything because communication lines up expectations. So how do you make it work? How do you make it successful? Well, number one, you want to specialize. Don't be a life coach. Be a career coach for first generation immigrants who want to break into tech. That's very specific, right? You're specializing in people that are in tech, that are first generation immigrants that don't understand the culture of their world. Next, you want to productize your services. Offer three clear packages is a good place to start. Also, you want to focus on results. People pay for transformation for an end result, not hours. A hundred dollars MBA student named Tasha went from offering general copywriting services to niching down to email sequences for course creators. In six months she was booked out. She had no audience prior to this. Just a clear offer and just some hustle outreach. Second, business model that has a pretty decent success rate, 50% success rate, product high. This is coaching or freelancing. Leveled up, you can take your skills and turn them into repeatable offers that don't require constant custom work. Predefined packages that people can choose from. Think like podcast editing packages or website design services like I'll get your website designed in a week. That website is five pages, for example, that's one package, maybe monthly blog post bundles. So for example, you write four blog posts for every month and it gets sent to them in Google Docs. Why does this work? Well, it scales better than one on one freelancing. Also, buyers love clarity and predictability, so it's clear what they're getting. And it's also easier to delegate and then eventually step away from this business because you can create procedures and SOPs and you know a way to create each of these packages and deliver these packages to customers. Somebody else can do it for you.

[The $100 MBA]

And.

[Omar Zenhom]

And then you benefit from just having other people's time, leveraging their time and effort in order for you to grow your business. So what's my advice to make sure that this business model works well? Define your scope tightly, exactly what you're offering, what people will get next? Price based on value, not time. What they're going to get for what they're paying. Also use a system, templates, standing operating procedures, documentation. Google Docs is going to be your friend here. Here's a real example. I had a website creation agency where I created websites for bloggers and creators. I had defined packages, a five page website, a seven page website and a ten page website. And then I had some add ons if they wanted some custom animation or some fancy things on their website. But the point here is that someone's just getting started. They're like, hey, I don't need all the bells and whistles, just give me the five page website. And I created a five page website for them in a short period of time, got them up and running, I showed them how to add their content and that's it. I delivered it, I got paid, it was clean. They knew exactly what they were getting. I didn't have to waste time, you know, days or even weeks creating custom deals or packages for my customers. They knew exactly what they're getting from the pricing page. They purchased it, I delivered it.

[The $100 MBA]

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[Omar Zenhom]

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[The $100 MBA]

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[Omar Zenhom]

Third business model has a very good success rate and that's up to 60% success rate. And that's digital products, courses, templates and guides. This is where it gets exciting. You can create a product once and sell it many times. But here's the thing most people don't tell you about this. Courses fail when they're not based on real world demand. Why does this model work? Well, because it's low cost to produce. Okay? You have infinite scalability, which means that once you create your thing, your course, your template, once, you're basically just selling logins or delivering that template to them. Also, buyers love learning on demand. They love the fact that, hey, I need to learn this right now. Let me buy this thing and I can learn on my own pace. Here's my advice on how to make this business model work. Solve one problem that your potential customer has and get them a result fast. Sell them the outcome, not the information. So you're going to sell what their life is like afterwards, what their business like afterwards. Not how many videos or how many pages are in the workbook. That doesn't really matter actually. In fact, if you could get them to get that skill or get the result without any work or any workbooks or any videos, that would be even better. So the actual number of modules and videos is kind of irrelevant really. What you're selling is a result. A real example is my program called the $100 MBA. Our students take it because they're kind of tired of side hustling or thinking about starting a business and they want to just get started. And our program allows them to have the skills to not only get started, but grow and scale their business to a million dollars. So as you can see, it's all about the results. It's all about the tools and what they're going to get for what they sign up for. Business model number four, memberships and subscriptions. Now we're up to 70 to 80% success rate. You create content or offer on an ongoing basis, giving you reoccurring revenue. And people pay you monthly or yearly to stay in. Think community memberships, think newsletter subscriptions, think content vaults. And tool libraries. So why does this work? Well, again, recurring revenue means predictable revenue. Customers become loyal and long term buyers. Also, the barrier of entry is less because they're not buying the whole thing upfront, like lifetime access to the course. And it's easy to upsell, cross sell and grow with this model. So my advice to make this work is nail your onboarding. Deliver value from week one. Because retention is the key to success in this type of business. You want to make sure your customers are happy and they don't have buyer's remorse and they stay customers. Remember, if you have a monthly recurring type of bill that they get, you have to win them over every single month. You're like selling the program every single month and making sure they get value. In this model, having a community and having connection is really important. So it's not just about the content, it's about the community. Build around the content and then lastly retain members with monthly wins and feedback loops. So you want to make sure the members know that this works, that they're actually getting something out of it and other people are winning with this community. So you want to give shout outs, you want to praise your members, make sure that you highlight the wins that they're all having. For example, a student of mine runs a paid community for etsy sellers at $29 a month. She has 700 members now. And what started as just a side hustle is now her full time income. All right, business model number five, SaaS, bootstrapped and niche is what I recommend. And this has an 80% success rate. Now you'll notice that this is the top one and it's the one that's going to cost you the most time and money. And, and because of that investment, you actually buy a high success rate. Now we're talking long game. Software as a service is hard. I'm going to tell you firsthand. I built a software company myself, Webinar Ninja, built to 30,000 users, got acquired. I've been through the whole journey. But when you bootstrap a business and you are focused on a niche, it has some of the highest success rates in online business. And I'm going to tell you why. Because SaaS revenue is reoccurring, it's sticky, it's based on delivering value, not time. And SaaS becomes an indispensable tool for a business, for somebody's life, and it just becomes something that they rely on. And therefore every new customer you get, you get new recurring revenue, growing your wealth in the business. So why does this Work customers don't churn. If you solve a real pain, if you have a real pain and you do it right, is very hard to lose a customer. It's also very high margins and the margins get even higher the more customers you have. And of course exit potential is huge if you want to build real wealth in your life, meaning you want to create an asset like a business. And software has really good potential for building an asset because software businesses sell at a very high multiple. You could potentially sell this business at some point and really not have to work for a very long time. But only when done smart. This is my advice when it comes to this type of business, which I'm very acquainted with. Number one, make sure you validate your idea because you want to make sure you're solving a problem that's very painful. Don't build it first. Validate its concept first and see if you could pre sell the product before you actually build it. Next, try to focus on a very specific audience. So try to care to everybody like Spotify. I actually recommend B2B products in SaaS rather than B2C or business to customer. Next. When you're getting started, build slowly and build properly so that you don't have what's called tech debt. Tech debt is when you build very fast and you make mistakes and then that bites you in the rear end later on and creates bugs and creates a slow program or a slow experience for your customers. Build properly, even if it means slowly in the beginning and make sure you continue to earn the trust of your customers by having a high quality experience, even if it's a simple experience. Like I mentioned, I have an extensive amount of experience with this building my software company, Webinar Ninja. I pre sold my software with a landing page, sold 250 beta spots before I wrote a single line of code that was the green light to build the product and gave me the cash to hire a developer. That's how you launch a SaaS without raising money or going broke and also not building the wrong thing. Validating first. So which should you start? Well, here's the key. Start with what gives you momentum and early wins. You use it to fund the next stage. You could start one of these businesses, make some money and then start a different type of business. And that's just part of your business journey. If you're starting from scratch, start with freelancing or productized service. Make some cash, have a business on your hands, learn some lessons on how to run a business, then roll those profits into a digital product. Or a membership, and then even a SaaS once you know your audience better. Here's the truth. I've seen it again and again. It's not about the model. It's about you. Any of these businesses can work, but only if you do stick with one. Commit. Don't dabble. If you build trust, offer real value, and improve a little bit every single month, you'll be shocked how far you'll go in a year. Thanks for being part of the podcast, being a listener, being a subscriber. If you made it this far, that means you're a doer. You're a completionist. You're my kind of person.

[The $100 MBA]

If you found today's episode helpful and you want more practical business lessons to help you start, grow, and scale your.

[Omar Zenhom]

Business, the best thing you could do is subscribe to this podcast.

[The $100 MBA]

Hit subscribe or follow on your favorite podcast app, the one that you're using right now.

[Omar Zenhom]

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[The $100 MBA]

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[Omar Zenhom]

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[The $100 MBA]

For you to commit to growing your business. And now that you've subscribed, I'll check you in the next episode.

[Rob Lowe]

Hey everybody, it's Rob Lowe here. If you haven't heard, I have a podcast that's called Literally with Rob Lowe, and basically it's conversations I've had that really make you feel like you're pulling up a chair at an intimate dinner between myself and people that I admire, like Aaron Sorkin or Tiffany Haddish, Demi Moore, Chris Pratt, Michael J. Fox. There are new episodes out every Thursday, so subscribe, please, and listen. Wherever you get your podcasts.