Starting a business is hard and often requires skills and capital. These skills often take people years to acquire, so 9 out of 10 businesses fail on their first attempt (like we did).
This statistic can seem bleak for new entrepreneurs, but the good news is that there are a few (secret) business models out there that are hard to screw up and therefore ideal for beginners. They will allow you to make money FAST with virtually no skills or start up capital…
So what’s the catch?
The truth is that some of these business models are not the most scaleable. That being said, all of them are relatively fool-proof and perfect for beginners who are looking for quick wins.
So without further ado, here’s the list:
1. Drop Servicing
Drop servicing entails selling a service to a client at a marked-up price (say $100), then secretly outsourcing the work at a lower cost (say $50) and keeping the profit. It is essentially the same as drop shipping except you are doing it with a service rather than a product. Drop servicing with home services is the business model that we were able to make the most money with.
Pros
– Somewhat passive
– Scaleable
– Low cost to start
– Can be done globally
– Can be done with almost any service without the need to be an expert at that particular service
– No employees needed
Cons
– Requires you to deal with clients
– Potentially lower profit margins than doing it yourself or hiring employees due to outsourcing costs
– Dependence on external service providers for quality and timeliness. This can lead to issues maintaining consistent service quality and brand reputation
– Requires marketing and sales skills to sell a service for a relatively high price
Our Drop Servicing Case Study
There are various case studies that we have with drop servicing, but to keep it simple we will talk about one of the easiest ones we did. We went onto Fiverr and found a vendor who could do graphic design work for a relatively cheap price. We took the pictures and description from that gig and uploaded them into a Craigslist ad that offered graphic design services locally. I think we also reworded the description of the ad a bit to make it better and more unique in case Craigslist was going to ban us. A few days later, a guy contacted us saying he wanted us to design a logo for his soccer team. We sent the details to our vendor on Fiverr and he had the logo done for us in a day or 2 just as the customer requested. We then sent the logo to the customer who said that they liked it but needed some small modifications. I then had to relay the modifications back to my freelancer and act as the middle man for any communication between the customer and our vendor. This was admittedly a little tedious, but at some point if you trust your vendor enough you could just directly connect them with your customers. After a few revisions of the logo the customer was happy, and we made an okay profit on the project. That being said, we didn’t decide to proceed specifically with drop servicing graphic design because it was a bit too much work for a small profit margin. We have had a lot more success with drop servicing home services though, and would recommend drop servicing something like that rather than graphic design.
2. Retail Arbitrage
Sometimes you can find items in a retail store that are selling for less than their typical price. Retail arbitrage is the act of buying items that are selling in a retail store for a relatively low price and then selling them online for a profit.
Pros
– You can start small and gradually scale up as you find products that sell well
– Remote work possible
– Retail arbitrage can easily be done part-time
– Simple
– Can be done as “Drop Retail Arbitrage” to lower barriers to entry and risk
Cons
– Hard to scale
– Products can take time to sell if they’re not in-demand
– Items that sell well can be hard to find
– Deals with physical products that may need inventory space
– Items can go up in price, become unavailable, loose demand, etc.
– Items can be seasonal
Our Retail Arbitrage Case Study
We had the idea to list a bunch of items from Walmart.com on Facebook Marketplace for a higher price to see how well they would sell. I think we choose some items that were best-sellers and some that we thought would sell well based on our best guess. The plan as to see which items got the most interest and pre-sell them before buying any inventory. Basically, when someone would contact us trying to buy the product, we would buy it from Walmart assemble it and re-sell it for a higher price. And it ended up working. We eventually realized that a fire pit that we listed was getting a lot of interest even though it was about three times the price of what it sold for at Walmart. One of the keys to this strategy was that we listed the fire pit as just a generic fire pit. There was no mention of any brand name or anything so people couldn’t look up the price online. Additionally, the pictures we used for the fire pit was not the stock images from the Walmart website. Instead we used pictures that we found on Google Images that made it look like we actually took the pictures ourselves. Basically our story was that we bought the fire pit and never used it so now we are selling it. It worked, but was very slow money as products would take time to sell.
3. Free Section Flipping
Free section flipping is the process of finding items for free on classified websites like Craigslist and Facebook Marketplace and re-selling them for a profit. These items can be fixed up before selling, repackaged, or sold as is. In most cases you should not list the items on the same website you found them on. For example, if you find an item in the Craigslist free section you should list it on Facebook Marketplace as a paid item instead of listing it on Craigslist again.
Pros
– Low risk
– Can be done as “drop” free section flipping meaning that you list the items without even owning them
Cons
– Items can be in bad shape
– Free items are usually big items like a couch, so you will need a truck to haul them away. This is one of the main reasons people give things away for free.
– It’s possible to pick up items that don’t end up selling
– Free items can sell really fast so it requires you to be checking the free section regularly and acting fast.
– Hard to do with only one person because items are usually big
Our Free Section Flipping Case Study
We realized that there were a lot of couches on the free section of Craigslist because people who didn’t own a truck didn’t have any means of getting rid of them when they moved or got a new couch. So we listed a bunch of the nicer looking couches that we found on the free section of Craigslist on Facebook Marketplace for like $150 on average with free delivery. After a day or so we got someone interested in buying. So being the efficiency experts that we are, we borrowed our friend’s van and arranged to pick up the couch from the person on Craigslist and deliver it directly to the customer from Facebook Marketplace. It ended up working, but we did run into the following bottle necks:
1. The pickup location was an apartment complex which made it hard to pick up the couch because we couldn’t bring the van near the apartment. It would have been much easier with a house.
2. The couch was in slightly worse shape than we had anticipated from the pictures and the first customer we had arranged to buy the couch refused to buy it. Luckily, we had a backup customer ready just in case the primary one flaked.
3. The customer that bought the couch had a very small place so it was hard to fit the couch in their doorway. We actually ended up breaking something on accident when moving the couch in, but it ended up being okay.
4. General Flipping
The flipping business is simple… You buy an item for cheap and then you fix it up or just sell it as is for a higher price. It can be done with any niche but we suggest that you focus on specific niches so you become familiar with the products and know how to fix them up.
Pros
– Simple
– Fast money
– Cheap to start
– No website needed
– Can be done with drop shipping
Cons
– Not scaleable
– requires upfront capital to buy the products
– Can lose money if you’re not careful
– Need knowhow to fix certain items up and buy good products
– Need negotiation skills
– Need to be checking garage sales and classified websites like Craigslist every day
Our General Flipping Case Study
We used to go to garage sales and Goodwill to find items that people might pay more for. You simply check the price on eBay and how actively they are selling and buy them if viable. Once bought we would simply list them on Craigslist, OfferUp, and Facebook Marketplace until someone was interested.
5. Home Services Business
A home service is any service for a house such as a: electrician, handyman, roofer, landscaper, etc.
Pros
– Can be done with drop servicing
– High ticket
– Often recurring
– Easy to learn
Cons
– Can be somewhat expensive to start
– Can require licenses
– Can require expertise
– Can be somewhat competitive but usually isn’t too bad
Our Home Services Business Case Study
Back in 2015 there was a historic drought in California where we are based out of and people were hiring contractors to paint their lawns green to save water. We decided this would be a good niche because it’s fun and low competition so we made a website. We bought the equipment and painted a lawn for a family member first to prove the concept and it came out looking pretty good. The next thing we knew we had closed our first job from our website and we were in business.
6. Lead Generation/Pay Per Lead
Leads are the lifeblood of pretty much every business so businesses are willing to pay top dollar for them. “Pay per lead” (PPL) is a business model where your clients pay you a pre-defined amount for each qualified lead generated by you. A qualified lead can be defined as whatever you and your client think is best, but it’s usually something like a contact form fill or phone call.
Pros
– Can be passive
Cons
– Still requires dealing with clients
– Hard to scale sometimes
Our Lead Generation/Pay Per Lead Case Study
We ran a pay per lead business for years that was focused on generating leads for home service businesses. While it did work somewhat good, we prefer selling leads to affiliate networks or doing drop serviceing now as it’s easier and more scaleable. Here is one such case study that can be easily applied:
We found a handyman that was willing to buy leads from us and simply made a Craigslist ad for him that was optimized with a lot of keywords and renewed it every 2 days. This ad would average about 1 lead per day and we could charge about $20 per lead. It was a decent side-income for us as it required very little work. The main issue was getting him to pay on time so eventually we just had him buy the leads upfront.
7. Agency, Coaching, and Consulting
Coaching and consulting encompasses courses, coaching, and done for you services. Basically you are helping people achieve some sort of result that they are looking for with consulting.
Pros
– Scaleable
– Low cost to start
Cons
– Competitive
– Brand recognition and marketing is important
– Requires sales usually
– Requires expertise in a certain field
Our Agency, Coaching, and Consulting Case Study
We ran a marketing agency focused on helping home services businesses get more customers for years with some level of success. We focused mainly on SEO and Google Ads services and got our clients from word of mouth and our blog.
That being said, if we were to do this again, we would probably niche down more and solve a need for a specific market that isn’t very competitive. It can be anything from helping people who have a certain niche disease deal with it, to helping farmers choose what vegetables are the most profitable to grow on their land. The possibilities are endless but the goal is to find a target audience and find a major problem that they have and solve that problem for them. If you can do that in a low competition market, you can dominate the space and make a decent amount of money usually. Over time as people get results they will start leaving you testimonials, buying up-sells from you, and referring people.
8. Rentals
The rentals business is simply buying something somewhat expensive and then renting it out to customers. You may also need to install and maintain the item for the customer depending on the terms of the contract. One example of this would be photo booth rentals.
Pros
– Can be done with drop shipping/drop servicing
– Is really simple
Cons
– High initial cost to buy the items
– Price shoppers
Our Rentals Case Study
We had a client early on in our entrepreneurial journey that owned a party rentals business. They would rent basically anything anyone would need if they wanted to throw a large party like tables and chairs, generators, etc. We set up some Google Ads for them and from day one they started getting calls. The key to this business is to find specific niches that are low competition with somewhat high search volume in your area. You can do this by typing in “X rentals” into Google and seeing what Google auto corrects. You can start with “a” in place of the “X” and go though the entire alphabet until you find something that’s viable and low competition in your area. Then simply build a 1 page website on an exact match domain and get a Google Business Profile. If you judged the competition right, you should be able to rank on Google in no time and start generating leads. Perhaps you can also up-sell other event services like event cleanup to customers who are calling you for their parties.
9. Gig Freelancing
“Gig freelancing” generally refers to the concept of taking on specific short-term tasks on a freelance basis. These tasks are often facilitated by platforms and apps like Fiverr or Upwork that connect freelancers with clients. This has become popular with the rise of the gig economy in recent years. An example of a gig would be fixing someone’s excel spreadsheet.
Pros
– Can be done with drop servicing
– Cheap and easy to get started with
– Platforms do the marketing for you
– Snowballs once you get testimonials, referrals, and reviews
Cons
– Competitive
– Lots of price shopping
– Hard to scale
– Takes awhile before you’re making a significant amount
– Requires reviews to get started
Our Gig Freelancing Case Study
A few years ago there was a website that was somewhat popular and focused mainly on SEO freelancing gigs. It didn’t have much competition so if you posed gigs on there you would generally only be competing with 2 or 3 other freelancers for clients in most niches. That being said, the traffic on this website was nowhere near the traffic of a major freelancing website like Fiverr so there was limited potential. We posted a few SEO gigs on there and got a few orders. In addition to the orders we got directly through the platform, we also received orders by promoting our freelancing gigs on our blog. Some of these orders were fulfilled using drop servicing with trusted vendors and some of them were fulfilled by us. It ended up making some money but not at a large scale.
If we were to do this again, we would probably just post gigs on smaller platforms like Legiit and/or do keyword research to find low competition and high search volume gigs on larger platforms like Fiverr and Upwork. Keep in mind that you will need to post a large volume of gigs before a few of them are a “hit”. Also, you might want to keep prices low until you get reviews. Reviews are the lifeblood of a gig freelancing business as along with price, it’s the main thing people use to choose between freelancers on the website.
Bonus
These business models require more skills and capital than the business models mentioned previously in this article, but they are highly scaleable. These business models would be better as a second business after you have had success with an easy business model.
10. Blogging (Advanced)
Blogging is a business model where you write articles with the purpose of ranking on Google and then monetize those articles usually with Amazon affiliate links and display ads.
Pros
– Scaleable
– Passive
– Fun
– A good way to improve your SEO skills
Cons
– Competitive
– Requires solid understanding of SEO
– Takes a long time before you start making money
– Time consuming
– Too dependent on Google for traffic
10. Our Blogging Case Study
We built a blog in the music niche with over 110 SEO optimized articles on there. At its peak this blog was getting about 60k visitors per month from Google and urning around $2,800 per month. We ended up selling this website for about $8k once the traffic had dropped a bit. All and all it made a decent amount of money.