Another tweet which caught my eye was from a guy who we’ve talked about his tweets before on the podcast. I am going to attempt to pronounce his name today because I saw on Twitter he was telling people how to pronounce his name. So this is Jay Busson tha Rajha. And he was talking about if you’re starting out in business or you’re starting out in your entrepreneurial path and you’ve got no money. With which to sort of invest or do anything like that, like what’s the what’s the best path to follow in order to sort of like achieve success and achieve wealth? And his tweet was a hell I’m willing to die on. If you’re starting your first business and have zero dollars, you should start a service business. That is, if your goal is to build wealth through entrepreneurship. And essentially what he’s saying there is, is that when people start out, you know, they have grand ideas, grand plans, and they have things that they want to do. And even if you have, like, an amazing idea or you have a real urge to go into maybe some sort of direct to consumer product or a software as a service business or something, where your aim is to sell lots of items or lots of lots of services, products to a very wide audience. But for a relatively small amount of money. So let’s say you’re selling widgets for ten dollars a time if you’re trying to do that without any investment in terms of like marketing and things like that, it’s going to take a very long time for you to ramp up to where you want to be because you don’t have the ability to invest in the growth of that kind of thing. And so in SAS, the classic here is the long, slow sass ramp of death, which is, you know, it takes a very long time for that hockey stick sort of curve SAS to sort of kick in. And you spend ages and ages and ages at the low end just gradually fighting for each individual new consumer until you get to like a weight of. Knowledge like your brand is known in the market enough that you’re able to attract some sort of natural organic traffic to your site to actually sell to sell to these kind of people. And so what he’s basically saying is like, even if you’ve got these sort of grand plans for what it is that you want to do, or this great idea that the best place to start is you’ve got no money of the service business, because with service business, you can go and sell to relatively few customers and you can sell a very high ticket, relatively high ticket product. So, for example, you know, you could go out and you could try and find a thousand dollar retainers from 10 customers. And so you could then have ten thousand dollars income monthly, your servicing 10 customers. This is gonna be high touch sales. So you’re going to be doing it personally. You’ve got to go out, do it, but you can hit that 10 grand a month mark far easier and quicker by investing a lot of time in selling high ticket services than you can do in attempting to try and sell sort of very low ticket individual products or things like that. And then once you’ve got that income, you’ve then got some money that you can then turn around and invest into the smaller you’re the next stage of your sort of business, which is okay. This is the actual thing I passion about. This is the thing which I think is the real kind of moonshot, big ticket thing that I want to go after. I use the income from the service business to fund the next the next stage of your the next product business or SAS business or whatever it might be. You can follow the money into marketing growth and you get to kickstart that that curve. You can basically go into sort of you can move into wider markets and smaller ticket items. Have you had an experience like this?
Yeah, I agree on the advice because I went for it myself.
I started with digital relationships and then start be marketplaces and companies with teams and shareholders and all that.
So, yeah, it’s definitely very different. So the good thing nowadays, even if it’s also selling your service, is the way to go.
That is the fastest and cheapest for sure. And you get the best margins because all the oil goes to you. Basically, if a service provider and then you need it’s more time consuming, though, and therefore less scalable. So the agency, you only see if it’s yourself then as a freelancer or if you build an agency. So every time you need more people to provide more services, therefore the margins shrink. You need a year to build up a big business. You need to have a higher than hundreds of people or dozens. So you end up your role, end up being like a cha, more than like a service provider. So. So then. So it’s it’s harder to scale. But the service business is great because you don’t have all these stock inventory management on all these tariffs, which nowadays is a big issue. All the supply chain.
So all that crap. I’ll tell you always, buddy.
Yeah. That’s because I prefer a service business. It doesn’t mean so we. Services, though, the sales are less predictable.
Unless you have a subscription model. But as you said, it takes time to have a predictable income on a profitable Braco income on a subscription business model.
Whereas with products that demand these, you know, it’s out there.
So people eat food, for example, or buy stuff.
So and there is more of fine tradition on the retail end. No. Which, you know, is transitioning very quickly to e-commerce. But there are still we talked in previous podcast, an opportunity to get to some niche e-commerce for niche products or niche niche audiences. But as a starting point, I would agree. Services is the easiest entry option for entrepreneurs. And I also agree that you should build that safety net. You know our own experience as well. Or let’s call it positive cash flow or just cash flow. And then evolve into another larger investment idea. So if you need investment from third parties, then you can show some cash flow that will be useful.
You can also show experience and we’ll be more comfortable for you as well. On the transition.
So, yeah, it it you shouldn’t underestimate how much money takes from a distribution point of view to sell by more sophisticated probes or new brands.
So it takes a lot of time and money to market yourself out there. So it’s not all about the product. Even if there are Davidia. So you should be prepared for that long, right.
The best way would be with that cushion, you know, on some basic income or cash coming that you can, you know, a plan on more solid foundations.