Pillars of a Freedom Business

When contemplating the type of online business you want to get into, especially if you don't have a big idea upfront, don't chase the money!

It's really easy to be sucked into following a business model just because this guy says he's making $200,000 a month selling on Amazon or that gal says she's making $1 million per quarter with coaching & training programs.

For most of us those are pretty crazy numbers and the thought of making that kind of cash is pretty appealing... Making a lot of money is great - but don't get into a business just because you think you will.

You need to know yourself well enough first to understand that what you believe is for you actually may not be quite right.  Or it might just be the ticket !  So if you haven't been to this page yet, go to Freedom & You, to know what I'm talking about. We're not looking for perfection, just a good fit.

Pillars of a Freedom Business

OK, now that we've got that out of the way, let's talk about how to evaluate an online business according to the following foundational criteria.

In my view the Pillars of a Freedom Business are:

  • Mobility
  • Bootstrapping
  • Profitability
  • Scalability
  • Control

Mobility

Could you run your business from anywhere with just a laptop, smartphone, an Internet connection and your passwords? If you had to "bug out" in an hour or less is there anything other than your laptop and smartphone that would be critical to your business?

The answers to the above are "Yes" and "No".  If a business model doesn't fit the above, it doesn't satisfy the Mobility requirement.

Bootstrapping

If a business model needs you to borrow heavily on your credit cards or other sources that you won't be able to repay anytime soon, you're putting yourself in a precarious position. (I.e., don't take a second mortgage on the house...)

Bootstrapping means that you can use your own funds to start your business and also fund it until it becomes profitable. If the business fails or doesn't take off as anticipated, you won't have debt. If you borrowed though, you're now in a double bind. You don't have income and you have debt to repay!

So bootstrapping is the ideal way to start up. Borrowing has its place as the business grows.

Profitability

If you compare one type of online business to another, how do they rate for profitability? This might be a tipping point for selection if you're looking at two business models that you believe would suit you.

For example, a digital product if priced correctly, will almost always be way more profitable than a physical product. The physical product has all kinds of manufacturing, transportation, storage, handling, etc. costs that you don't have with a digital one.

Now you can't look at profit potential in a vacuum.  How much can you sell? You can have a physical product that sells 10,000 units a month at a net profit of $1 per unit, and have a digital product that has a much higher net profit of $50 per unit but only sells 100 copies per month.  In this case the physical product business wins!

The business' profitability is closely tied to sales volume. So you also need to know how big your market is and what it wants. And that's not as difficult as it might sound - more on that later...

Scalability

Scalability refers to a business' ability to grow and keep growing while maintaining (or even increasing) profit margins and service levels as sales increase.

Let's say you provide in-person training services to corporations. How much can you grow if you're the only trainer? You're swapping time for money at this point. You could also hire and train more trainers, but how about using technology to scale instead.

You could still be the only trainer but provide your service through online courses and membership sites. Record once, sell many times. And online you can reach a much larger global audience as well while keeping your costs down. No payroll, no HR issues...

And because of Amazon we're now able to sell physical products similarly. Ship your products to Amazon and they take care of fulfillment. However, you don't have the much higher level of control of your business as you would in the example above.

Control

I've left this one for last, but it's one of the most important requirements as far as I'm concerned.

If you depend solely on Facebook, Google, Amazon, i.e. third-parties to determine the fate of your business, you are taking on way more risk than is needed.  When you depend exclusively on third-parties you have to play by their rules. 

If Facebook decides to ban your account, too bad so sad.  If Amazon decides to double their fees, pay up or get out. There's no debating, no negotiating. It's their party...

So when choosing a business model always keep in mind how much control you're willing to give up vs the potential income/growth of the business.