It may be something that you have already considered, or maybe not. But whether you have considered it or not the question is almost always here what is a highly profitable business. While i can tell you that there are quiet a lot of businesses that are highly profitable, when you look at a listing like the BRW 1000, there are companies that have phenomenal profit margins. However for you and me, we just literally don’t have the financing for some of these highly competitive and often speculative industries.
So really the question comes down to where does this leave us. It leaves us with really two options, which is to either sell products, or offer your services. These two options really do almost encompass everything is that is available to the new entrepreneur starting out in business. There is some variation that can be sort of made available on each of these area’s but at the end of the day they will eventually fall into one category or the other.
Selling products can be both the best and the worst way to make money. It entirely depends upon the product, the competition and how good you are at selling. However selling a product does have one big downside to it, which is the potential to make 100% profit consistently over the long term, is practically not possible. This is because for the most part you need to purchase a product for anything from 5-90% of what you can feasibly sell it for.
The largest benefit in selling a product though is that it is quite easy to extend your reach so that you are not needed to be fully involved in the selling process every time. You can create a website that will sell for you, or make use of advertising to do all the sales work but take the order. Your sales potential for product’s is close to unlimited, at some point or some level you will run into time problems, but this is about the only limiting factor and can easily be overcome, through outsourcing. You can have your orders taken by an outside company, you can often have your products drop shipped by the supplier, and you could even potentially have your customer service looked after by an outside company.
All of this sums up to known costs on your cost per order, which are relatively easy to manage. If you do get to the size that you need to expand and use outsourced services, the chances are that you will be turning over quite a large amount and the small additional costs per order should be easy to write off as a cost of doing business.
Your other option comes down to trading your time for offering a service. This could be literally anything that you believe someone would be willing to pay you to do, garden care, computer repair, website design, or anything you can imagine. The primary difference between offering a product and a service, is that often you can achieve 100% profit for services, with a few exceptions, where you may need some tools or consumable products to offer the service.
While some services such as car washing may require additional products such as car wash liquid, rags, sponges, waxes, etc, to actually complete the services. Many services require nothing more then your time, for example computer services, often requires nothing more then your time and knowledge. The additional benefit that comes from many services is that you can often sell complimentary products alongside your services. For example with computer services you are repairing a computer with a broken power supply, the new power supply is your product, and you can make additional profit from this.
Really the biggest downfall with services is your limitation, the fact that you only have so many productive hours in your day. This is something that can be resolved by hiring another person that can do the same as you, however this often comes at a great added expense, which while leveraging your time to build the services business larger, does cut into your profit margin.
COMBINING FOR MAXIMUM PROFIT
You can see that potentially products offer the most flexible amount of profit, although services do offer the highest margin of profit. If you are to combine both you can get the best of both business types. You have a way to make money from your time, while upselling products, and selling products on their own. This combination can be the most powerful business and most profitable because of the key factor that you can be getting paid for one service while you are selling your product’s. Effectively meaning that you are creating the potential for greater then 100% profit from a single hour of your time.