Here are several profitable business ideas to help you make a sustainable impact. This was a talk I had a few years back with Elaine, but I figured the tips she shares could be applied to any business. Take these fundamental tips and apply them to your sustainable business.
Elaine Pofeldt is an independent journalist who specializes in small business, entrepreneurship, and careers. She’s the author of Tiny Business, Big Money, and The Million-Dollar, One Person Business, a book looking at how everyday Americans are breaking $1 million in revenue.
Now, on to my talk with Elaine.
How can we discover a million-dollar business idea?
Every entrepreneur has taken different routes, but one way to discover a million-dollar business idea is through doing low-risk experiments.
One perfect example of this is a story I wrote on Forbes about a young entrepreneur in medical school in Australia who wanted to do a side business and has a passion for fashion design.
So she designed a single bikini and called a lot of factories in China to make the bikini sample she designed. After finding one, she posted it online through a $5 medium-sized Facebook ad so that it would appeal to many women. One woman bought it, and then about 100 placed pre-orders.
Since she saw a demand for it, she returned to the factory and asked if they could make tiny production of her designed bikini. She’s been running that business for about two years now and has already made around $1.5 million in revenue.
This is very inspiring, knowing that she was still a student and had only invested about $200 to start her business. For someone who doesn’t have a lot of capital, they can incorporate her business approach.
Basically, she tested each of her ideas by getting a sample, posting it online, and analyzing what people were responding to. By getting and considering the feedback of her target audience, she got to know them more, especially their likes. This removes a lot of risk from her business.
In addition, this also made her discover that women of all ages like buying her products, so she could expand to different styles that would appeal to all ages. This helped grow her business model.
So this process of getting feedback, refining the idea, and then shaping it in a way that suits the demands and needs of her target audience was the reason she succeeded. She didn’t spend all her money doing it. Instead, she kept on experimenting little by little until she got it right.
When should a business hire contractors?
A business owner should hire a contractor when they already have enough cash flow to pay them, and there’s something that they can’t get done alone.
Many entrepreneurs are too busy with their business that they can’t finish other important tasks, like bookkeeping or doing taxes. The best way to solve this is to identify the tasks you’re not good at or hate doing and outsource them to someone who is both passionate and expert in it.
For instance, if bookkeeping is not your forte, you can hire an accountant yearly to do it. Then once you increase your revenue, you can hire more contractors to do important projects like investing in a real web designer to make your business more visible to your audience.
Remember that the key to making this outsourcing work is to ensure that you always pay other people on time and treat them with the same respect you’d want your clients to treat you. Show them that you appreciate their work and that you trust them.
When you bring someone into your business, they will have information about it. So there needs to be two-way communication and two-way trust.
One woman I interviewed from New York City who sells wine at art openings and museum parties hires freelance sommeliers to come in around the holidays, serve the wine to people, and do wine tastings.
Over the year, she hired about 2500 freelancers to do the work. While hiring too many people is not something you should do in your first year in business (because this requires strong managerial skills), it is very empowering to know that you don’t have to do it all yourself.
What is one helpful way to outsource successfully?
One important thing you should do is document your process. I learned this from Colin and Angie Raja, who built RIMSports, a million-dollar business in New York City.
Their business started when they noticed that a lot of sports gear was designed for men and wasn’t in colors that women would like. So they built their business around offering it in these great stylish colors designed for women. They now have earned about $2 million in revenue.
Before earning that much, they were doing all the work themselves. However, after realizing that they no longer have time for other important aspects of their personal life, like going to the gym, they started getting help from contractors.
To ensure that these contractors will properly do the work, Angie and Colin documented the process of how they did it, like customer service. This is very efficient in delivering quality work.
So they become very intense about documenting their process. Every week, she creates a list of things she could outsource to someone else. Then, they work on documenting how to do those things.
How can we choose the right and best business idea out of all the overwhelming options?
You can start by listing everything you’re good at and what other people want you to do for them. Then, look at how you spend your money and cross out the things you don’t want to turn into commercial interests.
One example for me would be yoga. While I love doing it, it’s not something that I want to be my business. I realized writing and journalism are what I wanted to be in my business, so my whole career revolved around that.
So you have to figure out how you’d like to make your money and what things are not part of that. Remember that certain activities you do just because you love them and do not need to be monetized.
How do we progress toward achieving our business goals?
Many books entrepreneurs have recommended have a similar philosophy: start by thinking about what you want from life first. If you were to look back at your life by age 80, what would you have wanted to happen?
Then dig further. Ask yourself: What kind of work would I like to do? How can I make an impact on the world? What kind of life do I want? Do I want to have a family? Do I want to travel the world? You have to think about all the different things that matter to you.
Once you have these things in mind, choose only the top 3–4 big things to focus on. This is better than pursuing 50 things at once (which is impossible anyway). Over time, your priorities and goals may change.
Remember that you don’t have to get stuck in one strategy or path to achieve your biggest goals. You can revise this as many times as you want. You can also reverse engineer it to see where you are right now and what you need to do to get you to your desired path.
Ask yourself: What would have to happen in the next ten years so I can progress with my goals over the next 20 years? Keep breaking your goals into smaller segments until you figure out what you have to do this year to contribute to your biggest goals.
Laszlo Nadler, a project manager, founded wisdom planners as an effective tool to keep him focused and progress toward his life’s biggest goals. There are many other tools available to help you with your goals too. You just have to find the right one for you.
How long does it usually take for businesses to generate profit?
If you are in the pre-making money phase, you can set a limit of six months to test the profitability of an idea. If you’re still not making money after six months from an idea, that may be a sign that you’re on the wrong path, or it’s just taking a long time to make a profit.
If it’s the latter, you have to be extremely patient. Some people told me it took them a year to generate $ 1 million in revenue, which is really amazing. This usually happens in E-commerce because you can advertise it in many ways.
However, you must not spend so much on advertising to the extent that you’re not receiving much profit. This defeats the purpose of having the business.
To ensure the profitability of your business, you have to weigh all the different elements of it. This varies for different businesses. Some took over ten years to generate $1 million in revenue, while others made it in a shorter or longer period.
Sometimes, this depends on the stage of life someone was in. For instance, running a business very quickly while taking care of your kids is hard. On the other side, if you’re experienced enough in your industry, you may have your million-dollar business up and operating in no time.
If you have been operating for months with no money coming in, you’ve got to reevaluate your business. Identify what you’re doing wrong and refine your strategy. Similarly, you need to determine what you’re doing right if you’re generating money and improve it as needed.
What is one resource you recommend to people who want to build a million-dollar business?
There are many resources out there to help them. But if they need help managing their finances, I recommend Denise Duffield Thomas’s book Get Rich, Lucky Bitch.
While this book is specifically designed for women, it contains an exercise where people can focus more on their finances, which is helpful for all entrepreneurs. When I tried incorporating her approach to my finances, the cash flow of my business improved.
I hope you enjoyed my talk with Elaine and that you took away some value. If you want to listen to the entire interview, click play below or head over to your favorite platform (Apple, Spotify, or Google.)