Six Principles Of A Good Business
There are so many ways to make money, whether it’s through information marketing, affiliate marketing, delivering services, building software, drop shipping and so on. The type of business you choose will determine which business model you’ll need to use. Regardless, there are six questions that you can ask whenever you’re identifying an opportunity, or looking at your own business, to determine if it is a good business model.
Is it profitable?
While this may seem like an obvious question, it’s something that many businesses fail to consider (especially when it comes to future profit). For example, drop shipping can be a good way to earn additional revenue in a business, but is not advantageous on its own due to low profit margins and lead acquisitions. Therefore, if you’re considering drop shipping as a business model, you should consider whether the profits are high enough.
Is it sustainable?
This is another vital question that people tend to overlook. It’s common for people to choose business models that are not sustainable, or have a short life expectancy. This is because they’re taking advantage of a loophole or relying on a particular system that won’t be effective indefinitely, which means that the length of their business is restricted from the early stages.
Is it ‘systematisable’?
While systematisable is not a real word, it makes sense when it comes to business. In order for a business to make passive income, things need to be systematised and automated, whether it’s through software or people. You want to make sure that your business can actually be systemised before going any further.
Is it scalable?
You have to realise that everything can only be scaled so far. So what you’ll need to consider if whether it will scale to actually meet your goals. Everybody has different goals; some are happy with reaching $1000 whilst others won’t settle for less than $1M. You have to ask yourself if the business model that you’re using (or going to use) is going to make it possible to scale to your end goal.
Is it proven?
You’ll want to do some research and find out how others have used the same basic business model that you’re using. This is important because many people don’t have the funds available to take huge risks. Of course, being an entrepreneur involves risk but there are still ways to make smarter choices. After you’ve identified others who are using the same business model, ask yourself what elements of your business have been proven by others and if it is sufficient enough to give you confidence to move forward.
Is it purposeful?
Does your business model have purpose? In other words, does it provide something of value (other than monetary)? While having a business model that makes you rich sounds ideal to many, it is a shallow goal that leaves many people feeling empty in the long run. Ask yourself if your business truly has purpose.
If it does, and if it meets the other five criteria mentioned in this article, then it could be the business model for you. Use the six principles of a good business as a checklist whenever you need to identify whether a business model is right for you. If it isn’t, then find ways to alter it so that it does. This will give you a much better direction to take your business.
This article touches on one of the many topics that are discussed in Leon Jay’s latest book: Create, Automate Accelerate. For more information, visit CreateAutomateAccelerate.com