In this post, I’m talking about businesses at scale: Which model is the easiest to run, support and sell?
Today I’m involved with five different businesses that follow five different models.
All of them deliver products that generate 7 figures or more a year…
But in my experience, if your goal is to build something that supports your lifestyle, gives you freedom, and generates real wealth…
Then one business model crushes the competition.
In this blog post, I break down my 5 businesses to determine which model is the best at scale.
These businesses are:
- BOOM! By Cindy Joseph – Ecommerce (Shopify) direct response
- BeeFriendly Skin Care – Ecommerce (Amazon) direct response
- Zipify Apps – Software as a service
- Smart Marketer – Information, influencer brand, online courses
- Blue Ribbon Mastermind – Coaching, subscription, events
(I’ve also done dropshipping and affiliate marketing, but since those models actually build someone else’s business and not your own, I won’t focus on them here.)
First… What is “Scale?”
Before we talk about business models at scale, let’s define what scale means. These 5 businesses are all at what I call “scale” for two reasons:
1) They’re generating at least a quarter million dollars/year in revenue.
2) They have ongoing processes like employees, customer support, and marketing cycles.
The 5 businesses we’ll be looking at in this post range from $1.5M – $20M in yearly revenue, and from 1 – 35 full-time employees.
Now, when you analyze a business at scale, the main things I look at first (because they’re first to break) are product delivery and customer support.
#1 Creating & Delivering Your Product
Ecommerce: BOOM! & BeeFriendly
In both of my physical product brands, I essentially sell tubs of goo. It’s high-quality goo, sure, but goo nonetheless…
And while technically a Shopify-only business model like BOOM! ($20M) is completely different than an Amazon model like BeeFriendly ($2M), the creation and delivery of the product remains the same.
To deliver this product, you just need to create a one-time custom formula, select your tub, slap a label on it and add a package insert or two.
And at scale, it’s just more tubs and more goo.
Whether you sell 1 or 1,000 unites, this process isn’t going to change and neither is the formula. Pretty straightforward, right?
Now in contrast to that, let’s look at my software as a service business, Zipify Apps.
SaaS: Zipify Apps
This business develops and sells plug-n-play apps for Shopify stores, and it does around $2M/year.
But here’s what the products actually are: 1,000s and 1,000s of lines of code.
And this code is constantly changing, because we’re constantly adding new features and updating the core product.
Which means to scale these products I need front-end engineers, back-end engineers, QA’s, and project managers (just to name a few)…
And on top of that, we’re constantly fixing bugs and adding integrations with other apps, so the products are being reformulated all the time.
For this $2M brand I currently have 35 employees working to deliver 2 products that generate less than 1/10th of BOOM!’s revenue (which requires only 15 employees).
This is part of the reason why SaaS is without a doubt the hardest business model I’ve ever done.
Info Publishing: Smart Marketer & Blue Ribbon
Now let’s talk about the business you’re engaging with now.
Smart Marketer is an information publishing business model, and the two type of products it has are:
1. Digitally delivered courses (like Smart Facebook Video Ads or Smart Google Traffic), and…
2. Blue Ribbon Mastermind — a group of about 100 six-, seven- and eight-figure business owners — which focuses on coaching, consulting and events.
But when it comes to scale, these products have a major problem: They go bad.
The marketplace changes every year, and the course information stops being relevant as the industry changes…
So every 6 months to a year, I have to update every single one of these courses.
And that’s the difficulty of info-products: they’re constantly going out of fashion and needing to be remade.
Services & Consulting
I sold millions of dollars in services to other business owners in the late 2000s, and even though I stopped the business a few years ago, I’ll include it here for argument’s sake.
The difficulty with services on the product side is you need a big team to scale.
The more services you sell, the more people you need to implement them and the more people you need to communicate with your clients…
And if you’ve ever sold a service before, you know that the client always wants a little more of your time and energy, making it hard to set boundaries around where the “product” ends.
And the Winner Is…
I support all of these business models and each one can build a business that works best for you.
But if your goal is to build a brand that supports your lifestyle, gives you freedom and generates real wealth…
And that can be sold one day as an asset…
Then in my experience, ecommerce wins by a mile.
Now let’s talk about the other huge part of running a business at scale: customer support and what happens after someone buys your product.
#2 Customer Support
Ecommerce: BOOM! & BeeFriendly
Customer support is pretty simple when it comes to ecommerce, because it’s mainly questions about products and refunds — most of which are handled by your FAQ page.
So for a $20M business like BOOM!, I have 7 or 8 customer service employees.
If you look at BeeFriendly — which does $2M a year on Amazon — it only takes 1 person to do all of the support.
$2 million in revenue = 1 customer support person!
SaaS: Zipify Apps
Remember how I said Zipify’s products are always changing?
Well not only do you need the engineers to implement these changes, you also have to document them.
So with each new feature or integration, our help section needs to be updated with a video and standard operating procedure…
THEN, our support agents need to be able to communicate these changes to the customers.
And because the products are so technical in nature, we get more users asking questions and therefore need more team members on staff.
Right now, there are 7 support agents working for Zipify. That’s the same as BOOM! and it’s barely 1/10th the size!
In other words, it takes 10x the energy to support my SaaS business at scale than my ecommerce business.
Info Publishing: Smart Marketer & Blue Ribbon
Like my ecommerce brands, Smart Marketer is actually pretty easy to support…
But you do need a high-level support person who understands the information you’re selling and how to apply it. (Thanks Steve!)
Services and consulting are similar, too, but you need more customer support agents to communicate with all your clients.
And the Winner Is…
When it comes to customer support, once again ecommerce is far and away the easiest business model to scale.
But there’s something else you should know before we can choose the best model:
Can you sell the business or not?
Because real wealth doesn’t comes from running a business, it comes from selling it.
And while wealth isn’t my #1 goal in life, one day you may want to liquidate your business to put those resources into another project.
So, which of these business models is the easiest to sell?
#3 Best-Selling Business Model
BOOM! and BeeFriendly are cash-flow businesses right now, but they are also assets that I can one day sell.
Zipify Apps is running at break even (with all revenue going into funding growth), but it is also an asset I could sell if I chose to.
However, I could not sell Smart Marketer or Blue Ribbon Mastermind.
Why? Because they’re both influencer businesses, and…
Influencer businesses are not assets.
If I leave for two months, BOOM! does fine, BeeFriendly does fine…
But Smart Marketer cannot exist without Ezra Firestone; take me out of the equation, and it will cease to function.
It’s entirely a cash flow business, and only as valuable as next month’s revenue.
So as much as I love influencer businesses — and I really love Smart Marketer! — it’s just not sellable.
So why would I start an influencer business if it requires so much time AND it can’t be sold?
Because I enjoy it!
I’m chasing fun and pleasure, not success, and it’s super fun to share with you what’s going on in my life and in my work.
So What’s the Best Business Model Overall?
If it’s your goal to create a business that requires the least amount of support, can scale to 8 or 9 figures without needing all your time, and that you can someday sell…
Then I can tell you definitely: No other business model works better than a physical products ecommerce store.
And specifically, the ecommerce model where you private label a product and build your own brand — not dropshipping or wholesaling.
Ecommerce is flat out the best model to support the most pleasurable lifestyle, but it’s not the only one I recommend…
Influencer marketing — where you’re building a brand around yourself — is also super fun.
A service business, however, is hard to scale…
And SaaS is just plain hard. You really have to love what you’re doing if you’re going into the apps marketplace because it’s expensive and my goodness is it difficult.
The last pillar of business at scale that you should focus on, and that’s the marketing advertising and storytelling side of it.
Because every one of these business models will require that you do this well.
Highlights:
0:44 You reach “scale” in a business when you reached at least 6 figures in revenue and you have ongoing processes
5:00 SaaS business are very hard to scale
10:55 It’s a lot harder to support a SaaS business than it is to support an Ecommerce business
12:04 True wealth is generated through the liquidation of assets
13:50 An influencer business is not an asset, it’s cash flow
18:38 The number one business model to run at scale is Ecommerce
