A Business Model Example | 4 Most Profitable Business Models
Today, we will be analyzing various business models according to the criteria that are vital to bringing you profit. Anyone can give you a “proven” business model example, but you must ask yourself. Will it be profitable? And how exactly can we know if the business model can be profitable before even trying it?
That´s a great question! Here´s a great answer. We will follow a proven framework from one of the highest-paid consultants and entrepreneurs out there! His name is Mr. Jay Abraham.
A 22 Billion Dollar Man! That´s right, he is richer than some countries out there, so you can bet that he knows what he´s talking about.
If you pick a business model that meets his 3 Profit Activators, then your chances to succeed are a lot of higher. And that´s all we want here right? We want to succeed. So, here are the 3 Requirements that every profitable business must have:
- Get More Customers
- Do Repeat Business With Those Same Customers
- Sell Higher-Ticket Product To Increase Revenue
Pretty standard stuff you say? Huh. Well, I will go through a lot of business model examples and guess what. A lot of will fail to meet those Profit Accelerators.
At the end of this article, we will look at the 4 Most Profitable Business Models that anyone can start building right after reading this article!
Excited? I sure am! So let´s dig in.
A Business Model Example That Is The Most “Popular”
Let´s have a little fun together. I will try my best to describe this business model and you will guess what is it. Okay?
So, the majority of our population is doing it from Monday to Friday usually from 9 am to 5 pm, well of course if they want to get a better paycheck the work overtime.
What is it? Oh dang…
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I used it in my description, I guess I´m bad at this game. Yeah, you´re right, its.
Daily Job (9–5)
I don´t want to offend anyone who is working with this. If you know at least a little bit about my story you know that I was raised to study hard and then work hard. And I did (at least the working hard part).
But when I saw that my parents, have found themselves in a bad financial situation after more than 30 years of hard work (overtimes, side jobs). I instantly knew that the 9–5 “business model” is not the safest route that you can (want) take.
Till that day I´ve followed the blueprint that my parents taught me. Find a good job, take a mortgage and buy your dream house, then pay it down before retirement.
What about my dreams? What about my kids? Wife? Parents? Who will take care of them, if my job is to pay down that mortgage and cover the monthly bills? That was my awakening point.
I will succeed! Or die trying!
Back to the topic…
This business model lacks all 3 Profit Activators. Because:
You don´t have any customers, you don´t have a business, you don´t have a product. What you are doing is that you are helping somebody else to build his business, to fulfill his dreams and to fill out his wallet!
Let´s not waste more time on this. Next, we have a business model example that is again very traditional and passion-driven.
Traditional Local Small Business (Brick & Mortar)
Let me tell it straight away to you. You can totally make money with the Brick & Mortar business. But businesses that meet the 3 Profit Activators, are just easier to run, most importantly the high-ticket backend products make your life so much easier as an entrepreneur!
With that being said, let´s look at the traditional local small businesses. Most often, those who open their local business (shop) tend to do so, because it´s their big dream. That´s why I wrote passion.driven a few sentences above.
However, does this business model meet Jay Abrahams Profit Activators?
Q: Can you get more customers with this model?
A: I don´t see a reason why not. So we can check this one
Q: Can you do repeat business with those same customers over and over?
A: Yeah, I must say that if a small business wants to survive, they must go hard on branding. And good branding = to high LTV — lifetime value of a customer. So, we can check this profit activator too!
Q: Can you sell Higher-Ticket Products to increase revenue?
Well, a lot of business models will fail to meet this criterion. If you are selling cookies for let’s say $20. You surely can sell bundles to increase AOV (average order value), but I don´t see a way how you could of selling a product that costs $500 and more.
If this is your dream, to open your little shop, then go for it! It is so much better than working for someone else. And we´ve only one life, so why would you waste yours doing something that doesn´t make you happy?
But if you want to open a brick & mortar business just to make money, then I must say that you have far better options out there. So continue reading!
Example Of A Business Model, That Every Blogger Loves! Amazon Associates
A.K.A. Low Ticket Affiliate Marketing.
You don´t know what it means? I´m sure that even if you are not familiar with these terms, you purchased something from someone’s recommendation.
Low ticket affiliate marketing with Amazon is a business model that is alive for a few years now. The whole concept of this model is that you are creating content video or blog, to review products from Amazon and recommend the best picks.
If someone purchases through your affiliate link (anything) in a period of 24 hours, you will get a commision. In other words, you´ll get a piece from the sale.
That´s AMAZING! Right?
That´s what I thought when I first learned about this model. But it has it´s hidden flaws. Here we go again, Michal vs Bloggers (please don´t eat me in the comment section).
The commision rate is 1–10%. Most often you´ll get 4–6%. It depends on the product, that you´re promoting.
Let´s say that you´re promoting a $100 carpet. From every sale that came through your affiliate ID, you´ll get $4-$6. Do the math, how many carpets you must sell, to reach a full-time income level?
I´ll wait..
Flaws of this business model
What a nice example of a business model right? I guess that Mr. Jeff Bezos laughed hard when they come up with this idea.
Literally, thousands and thousands of blogs are pointing (backlinks) to Amazon.com and doing the hard work for them (do the selling for them).
Not to mention, that it gets harder and harder to rank for any kind of a keyword on Google. It´s way easier on Youtube but then, are you comfortable being on camera?
And of course, when you do the video review, you gotta buy the product first. On the other side, you can bet that the majority of bloggers that do reviews never saw those products they are glorifying.
That´s exactly the opposite of what I teach! If you want to do the Affiliate Marketing the right way. Read this article! Or Schedule a free consultation with me.
Let´s look at how this model stands against the Jay Abrahams Profit Activators.
Q: Can you get more customers with this model?
A: Yes that´s the whole concept of it. You must try to tweak your SEO to get as much traffic as possible.
Q: Can you do repeat business with those same customers over and over?
A: If you do it correctly, then YES. You can acquire the email addresses of your readers and then market them though email sequence.
Q: Can you sell Higher-Ticket Products to increase revenue?
NO. Big NO. You must do volume to gain some decent income from this model.
For example, someone can sell a $5000 coaching program with a 30% commision rate. In order to match this payout, you as an Amazon Associate must get 300 sales, if we take our little example of a sale ($100 product — 5% commision rate).
Therefore, I don´t recommend you to use this business model as your main stream of income. On the side, yeah that would be nice. But even then, try to promote products above $200.
MLM — Multi-Level Marketing
Even, if you are living on the Moon, you must know what MLM means. This is an example of a business model that almost everyone has tried.
Or, did your family member or friend pitch and present you the only amazing product on the market? Today for 50% OFF! HAHA
A very similar type of business model than affiliate marketing. And also, most of these “entrepreneurs” are selling products that they´ve never used.
A big NO-NO for me. Let´s not waste time on this one.
Q: Can you get more customers with this model?
A: Yes, if you have a lot of friends and family members haha. The Internet plays a big part in it.
Q: Can you do repeat business with those same customers over and over?
A: Yes! If you are selling products that really help people solve their problem. If you are selling crap than guess what, that initial payment was the last that you´ve gotten.
Q: Can you sell Higher-Ticket Products to increase revenue?
NO. I don´t see this option to be viable.
eCommerce (Shopify, Amazon FBA, WooCommerce)
The most popular business model without “quotes”. This was the first business model that jumped at me when I wrote to Google “How to make money online” 2 years ago when I´ve started my journey to financial freedom.
To be precise. It was Dropshipping. That´s a business model example of eCommerce. The benefit of it is that you don´t have to hold a stock of the products that you are selling. This means — low starting costs!
When a customer buys a product at your store, all that you gonna do is contact your supplier and order this product from them (with your customer’s shipping address). This means that you never even touched that product. (No shipping, handling, manufacturing).
All you need is around $1000–1500 to start driving traffic and a laptop (in most cases smartphone).
Again, a very shiny business model, Right? Well, I´ve tried it and after 2 fails I was able to scale my third store to $116 000/ month revenue.
Well, because I didn’t know that much as I know today (not even close) about funnel steps, AOV, LTV I was left with roughly $8 000 in net profit (after taxes). A bid drop, really tiny profit margin!
Well, even if this has a lot to do with the business model itself. However, you should be able to get to a 20–35% profit margin with a propper upsell sequence, follow up sequence and retargeting.
Let´s look at if Dropshipping & eCommerce meet the Profit Activator rules.
Q: Can you get more customers with this model?
A: Yes, doing volume is how you scale your eCom business
Q: Can you do repeat business with those same customers over and over?
A: We must give this one to eCom. Branding is a big part of successful stores.
Q: Can you sell Higher-Ticket Products to increase revenue?
Another business model gets slaughtered here… And believe me, that I´ve tried to upsell a high ticket.
Additional eCom Tips a.k.a. How to make eCom work even if you can´t sell High-Ticket
Many can disagree here because there are many gurus that teach High-Ticket Dropshipping (dropshipping products over $500).
However, the concept of this highly profitable model is to hook a customer with low ticket front-end funnel. And then sell him higher ticket products. This is called “taking your leads through a value ladder”.
This model is so successful that it can grow a company from 0 to a billion-dollar empire in less than a decade. Without taking on any kind of debt, or going public. (stock market). Self-funding monsters like Clickfunnels, Legendary Marketers prove this strategy being right.
What´s working for them and many other millionaires can work for you too.
Back to eCom. I really love this business model even though it doesn´t meet all 3 requirements. You can still run this business profitably and make a ton of cash.
With an order bump and 2–3 upsells continuity program which means recurring revenue (subscription product) you can increase your AOV through the roof. I´ve seen it many times when we´ve increased the AOV of a Shopify store 3–4 times using a sales funnel with Clickfunnels.
Some Ninja Tactics from — I Will Succeed Academy
You also can merge it with the most profitable business models such as digital products and affiliate marketing. For example, you can create a stack of ebooks and upsell them with your physical product. The expense of the digital product are close to 0. That´s an insane profit boost.
Further tips? ……
If you want to read the full article with the Youtube video, please click HERE (you´ll be redirected to my blog)…
