It is obvious that while we are moving towards the 21st century, the information has become the new currency. We value information more today than we have just a few years back. Why is this important to you? Because you are in the process of looking to start a business and you are looking at the differences between a traditional brick-and-mortar business, MLM, and an Internet-based business. This can be the difference between you having a long lesson profitable career as a self-made entrepreneur or a disastrous one.
In this article, we are going to give you objective advice about these business models and hope that it will help you make a more informed decision for yourself in 2017.
Depending on where you put your money, in what type of business model it’s like investing in a good mutual fund or stock that will yield to the highest rate of return. Making a good, inspired decision will ultimately maximise your profits because you want to go into business to earn as much money as possible with a product or a service you provide.
The brick-and-mortar business model
From the onset, we must mention that those brick-and-mortar businesses right now are closing like crazy and the trend will continue over the next years.
According to the SBA, the Small Business Administration, 90% of businesses will close within the next five to ten years. Imagine having to close after an investment of $250k you have signed on the dotted line for that bank loan… for your business to fail. Unfortunately, those are the stats.
Thing is with the old business models you are limited to your local market. Stats say that a customer will not drive more than five miles outside the radios from the immediate home to go pursue a product or service. So keep that in mind. Not to mention that you will keep spending lots of hours in that business! And all that crazy work up to 18 hours a day just for two-three years later just to break into profit and earn about $300k a year? You’d better go and look for a job.
You want to be your business owner but there are different ways especially now in 2017 that you want to do.
The old MLM business model
This type of business has been around for many years. It’s a legitimate model, an alternative for somebody who is looking for an alternative to the status quo.
Multi level marketing business model is for that small-thinking entrepreneur who wants to dip the small toe into the water and get a little bit what have a taste of entrepreneurship. It’s not really geared towards high caliber of individuals that want to earn at least quarter of a million plus per year. According to statistics, this type of business has a 95% failure for that exact reason – while a typical entrepreneur understands that it takes money to make money, people who venture into the MLM business usually don’t have enough money to start with and they promise them the heaven. However, some people do succeed, but it’s a very small percentage, less than 5%.
The MLM business model is built on auto-ship type of products like lotions, potions, pills, and other things that actually require inventory as well – products that will require purchase on a monthly basis even though you don’t use them, just to make sure they keep the model alive. These products are usually sold at a premium because they need to pay certain level of compensation in that business model.
This model relies on you recording lots of people, including chasing family and friends. Of course, you will have bad leads and massive rejection because the way the business model operates is no longer effective in the new economy.
The new business model
The new business model, or the new economy is the way high-caliber, intelligent entrepreneurs are headed. It is also called the information-based business.
You can open a store and an e-commerce store and sell physical products or you can open an e-store and sell information. If you open an e-commerce store, you will probably be avoiding the high cost of expensive rents and storage but you will still have to cope with the high inventory of products that you have to carry to keep your business going. The difference between and e-store having an information-based business model online is that you do not have to carry any inventory.
What’s so magical about the information age? Today we value information more than we have ever before. People pay top dollar to find the information that they need when they need it, at the time that they need it, delivered to their computer at the time they request it. There is information about how to become better in finances, how to become a better parent, a better spouse, how to train your dog or whatever you want to name this kind of information.
Providing the right information to the right people can make you a millionaire over the Internet if you just know how to do it. Compared to a brick-and-mortar business, you have a very low start up cost. Rather than a quarter million dollars initial investment, you can set up a good information-based business for a couple thousand dollars. It also has a very low overhead; all you have to do is having a computer, a very good quality Internet connection, and a phone. No inventory, no community, no commuting. You can work from wherever you want in the world; there are no geographical restrictions.
What’s beautiful about this type of entrepreneurship is you command what you’re worth and by marketing information on the Internet, you can position yourself as an expert, earning what you’re worth. How much are you going to earn? It depends exclusively on your abilities, knowledge, and skills in delivering the information you are asked for.
Modern vs. traditional business models: Conclusion
All business models are built in a pyramid-type business model and it all depends on what type of business you come in. You will be positioned at the top or the lower part of the pyramid.
- In a corporation, you have to invest in a very expensive degree, anywhere from $50k to $100k and sometimes even more just to have a boss on the top of you all, get underpaid, follow a lot of office policies and bureaucracy, work long hours, have to deal with that commute to the city, and of course some small vacations.
- The old MLM business model it’s an alternative to working in a corporation but again, it’s not a profitable alternative. 95% failure rate, bad leads, cold-calling, rejections, small payouts, etc.
- Brick-and-mortar businesses are a little more serious. Somebody who wants to break free from the rat race is willing to invest their money and take their life to the next level. Unfortunately this kind of business comes with drawbacks such as limited market exposure, up to 80 hours a week working time, dealing with employees, dealing with the inventory space, insurance, liabilities, and no profit margins depending on what you are selling.
- The pro-way online business model positions you at the top of the pyramid, you do not have to deal with marketing products, you don’t have to worry about inventory space, etc. All you need is a sound online business structure that will allow your business to run on auto-pilot 27/7/365. If you learn how to do it right, you won’t have to deal directly with any of your customers. You start to live life on your terms.
We are now in 2017 in the information era. Information is the new currency. You learn how to build an e-commerce business around this and you are positioning yourself for success, living the lifestyle that you have always dreamed of.