People keep asking what is the most profitable business. What should I open? Where can I make more money? My answer is always the same, open something that you think you can tolerate during the bad times. Basically, start something you love doing. Having said that, not every one of your ideas is going to work out. So what do you do?
The only way to really know if something working is to test it out in the real world. Meaning let’s say you decide that you want to open a business Tutoring. You have many subjects you can choose from, therefore it makes sense you can have a lot of clients. But is it profitable? And can it scale?
You see, when you open a business you’re not really starting a new job. You looking for something that can generate profit even when you’re not around. Otherwise, you’re not really opening a business you just getting a new job. A job in which you’re your own boss
Where most people fail
Having an employee’s mindset, most people think of the income they generate as their net profit. Meaning when you open your own business you make $20 an hour you see those $20 as net profit (money you can go out and spend).
The easiest way to get around that is to have an Excel sheet calculating everything your business made and all your expenses. You have to start thinking of your expenses, spend your money wisely from the moment you open your business. Bus fair, gas, phone calls, almost anything you use is an expense. And your goal is to have profit left over.
Let’s get back to the tutoring example do you have the students come to you? Do you go to their homes? If you go to their homes you need to calculate your expenses, the gas you’re spending, paying for parking and so on. If you’re teaching those courses online you have to take into account your internet connection your computer, you get my point.
If after you calculate all your expenses, and your business is still profitable. Your next goal is to find out if your business can scale.
What is scale? And how do you test your business for scale?
Let’s assume that when you’re fully booked you’re able to 50 students. Scaling is basically growing that amount, your goal is scale without losing too much money. Allowing yourself to take vacations from your business and still have it generate income.
Ask yourself if 50 students are your limit how can you get to 500? How can you get to 5000? If you would hire employees to help tutor your students do you charge enough to pay them and still have profits? Is your selling point your low prices or is it the quality of your lessons?
That’s all folks
It’s as simple as that. If your business is profitable and is able to scale you chose the right business. If it’s only profitable and is not able to scale you simply replaced one job for another. If it’s not even profitable Cut and Run you chose the wrong business try again.