Gennaro Cuofano's Blog, page 213

Who Is A Solopreneur? Mastering The Ultra-Lean Business Model

A solopreneur is usually (not always) a digital entrepreneur who leverages automation, work flexibility, and creativity to develop ultra-lean business models. Those can scale over the one-million-dollar revenue mark with a minimum business overhead, no venture capital funds, and mostly bootstrapped. Those solopreneurs start by mastering profitable microniches.

Clarifying the meaning of solopreneurship

In the business world the solopreneur is seen as the small business owner that does, from A to Z, all the functions and tasks the business requires to survive.

Yet a solopreneur doesn’t necessarily do everything on her own but instead focuses on devoting the whole focus on the most critical part of the business while contracting (if necessary) the remaining portion of the company.

Where the classic start-up entrepreneur (the Silicon Valley archetype) is about building a company with the grandiose vision of an exit. Either through venture capital acquisition or an IPO.

In many cases, the solo businesses will transition toward becoming a small company (like DuckDuckGo solo-business that turned out in a profitable and successful venture-backed business).

In other cases, the solopreneur might limit the growth of the company as a choice of freedom. In short, for the solo business isn’t just about money but also about the kind of business you might want to build.

Solopreneur vs. startupper

The solopreneur approach might well be the opposite approach compared to the Silicon Valley-type serial entrepreneur, which primary aim is to build businesses that scale but that also requires a lot of maintenance and large employees’ base.

The solopreneur makes the opposite choice. Thus, let me recap in the following points how solopreneurs might differ from startuppers:

Bootstrapping vs. funding: bootstrapping is the primary mode of growth of the solopreneur
Passion vs. business planning: the solopreneur is often fueled and build on top of passion and choice rather than opportunity alone
Non-linear income vs. financed and artificial growth: the solopreneur puts work in building scalable assets, due to the limitation in resources for the business, that is a key element for the success of the business
More key customers vs. more customers: due to constraints in terms of structure, finances and time, the solopreneur has to make hard choices very early on. Thus, giving up that part of the business or those customers which are not key to its strategic long-term success

Related: What Is a Business Model? 30 Successful Types of Business Models You Need to Know

Step one: Start from a business model rather than a business plan
[image error]A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

Rather than drafting a business plan, which is suited for those entrepreneurs looking for outside financial resources. The solopreneur has to look for simple tools to start and grow its potential business.

For the sake of it, using a business model, as a thinking tool, it can be way more effective, as in a page and in a few hours maximum, you can clear your mind.

Step two: Find your Microniche
[image error]A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.

Once found the gap in the market, it is then crucial to niche down. In other words, you have to drill into that specific segment of the market until you find a potential target audience (from a few hundred up to several thousand people), which will be your manna.

Related: Microniche: The New Standard In The Era Of Dominating Digital Tech Giants

Step three: Target  Ramen Profitability
[image error]

Serial entrepreneur and venture capitalist Paul Graham popularized the term “Ramen Profitability.” As he pointed out “Ramen profitable means a startup makes just enough to pay the founders’ living expenses.”

According to Tim Ferris, another way to look at it is to find a Muse by setting up in detail the TMI or target monthly income. Tim Ferris suggests thinking in detail about your monthly cash-flows.

In short, all the expenses that you are going to incur. Imagine, for instance, that you always dreamed of traveling the world. What does that mean? How many countries are you going to travel while setting-up your Muse? For how long will you stay in each country? How much would you pay off rent, travel and living expenses?

It might sound complicated at first, but once you set this up, your goals will be much clearer. In fact, Tim Ferris makes your life easier by making a great tool available: The Monthy Expense Calculator.

In short, this tool tells you line by line what expenses to take into account. After you have to divide by 30 (to get the daily budget) and add a 30% buffer (you must be ready for any emergency).

Step four: Bootstrap your way through
[image error]The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model.

Related: What Is Bootstrapping? Why A Bootstrapping Business Is The Way To Go

Step five: create options to scale

The most important concept to understand is that of creating options to scale.

As you build a successful solo business you also create options to expand from a microniche to an adjacent space. You also have the option to look for a niche, before going fora whole industry.

Another option as the solo business grows the cash the business unlocks can be used to build or grow other businesses.

Bringing it all together

Identify a microniche
Draft a business model
Bootstrap your way through organic growth
Create options to scale

Read next: The Digital Entrepreneur’s Guide On How To Start A Business

The resources you need to get started with your business model: 

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Snapshot: One Year Of “Business Model” Searches On Google In Review
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

Popular case studies from the blog:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

The post Who Is A Solopreneur? Mastering The Ultra-Lean Business Model appeared first on FourWeekMBA.

26 Best Businesses To Start With Little Money In 2020

Some business ideas to start with little money are Affiliate Marketing, Infoproducts, Email marketing, Google AdSense, Consulting, Branded stories, Paid reviews, Banner Ads, Sponsored Blog Posts, Members Only Content, Paid Business Directory, Become a Coach, Accept Donations, Charge For ‘Premium’ Content, Sell Your Blog, Build your SaaS, Speaking Gigs, Create & Sell Your Product, Write Tutorials & Guides, Live Workshops, Find Sponsors For An Event, Generate ‘leads’ for other companies, Create a job board, Advertise pages, Host paid webinars, Writing Gigs.

Ideas are overrated, yet they still matter to get started!

The dream of many is to be their own bosses, work a few hours per week, and have the chance to spend the rest of the day doing the things they are passionate about. But as the say goes “work hard and you will become rich.”

It is true that working hard is a good start, but do you want to work hard all your life just to reap the benefits when you’re too old? Although working hard is the prerequisite, working smart is the enhancer that can bring you to the desired success.

The past has been built over ideas. Ideas have changed the world; ideas are the foundation of a business. Is this really true? In part, it is, although we like to believe that great ideas change the world and that those who can conceive them will thrive, this is half of the story.

We, humans, are hard-wired to have business ideas, as Thomas Edison used to say, “I pull ideas out of the air.” Therefore creativity is far from being something special but rather something common to all human beings. This means that you too can have smart ideas and test them!

Ideas need to be tested in the real world, quickly!

Many of us have feelings at all times that people have stolen business ideas from us. Some of us to have the feeling at times to have thought about creating Tesla or SpaceX even before Elon Musk did.

What makes the difference between an idea, which succeeds, and one, which does not, is the willingness to test that idea in the real world, therefore to transition from theory to reality. Elon Musk had the desire to test ideas that seemed to make sense in theory but that are very hard to prove in the real world. This is where execution becomes key.

Many ideas will fail a few will become successful, those who do will become your cash cows

As the story goes Thomas Edison before discovering one of his greatest inventions had to try and fail 10,000. Whether or not the story is real, the point is that business ideas are worth not much if there aren’t people willing to test them out while being ready to fail many times before that idea may work.

History has shown us that many times great inventions come out of serendipity rather than a preconceived plan. In most cases, though you need an idea and a very actionable plan!

Welcome to the entrepreneurial age

We all assume that history goes from ebb and flow and in part this is true. In ancient history, Greeks were the fathers of our western civilization. Yet Hellenism (the diffusion of the Greek civilization) happened thanks to Macedonians, a small, barbarian population, located North of Greece.

Indeed, while Greeks lived in Theory-land for many centuries, Macedonians and in particular Alexander the Great in just a few decades spread the Hellenism culture throughout the ancient world. Alexander the Great was one of the primary examples in history of people with the entrepreneurial mindset.

Anyone can become an entrepreneur

If I asked you, “what is the best way to go from A to B?” You would mock me by thinking how trivial this question is. After pausing for few instants, you would answer without hesitation “of course through a straight-line.” Although many of us get the concept in Theory-land few of us apply this concept in reality.

This is due to our domain dependency. In short, we seem to be able to grasp a concept theoretically, but then we seem not to be able to bring this concept to the real world. With no surprise, many academics may have incredible expertise in their subject, but no clue of how that subject applies in the real world.

Therefore, the point here is that you can start at this moment to be an entrepreneur if you have the willingness to do so. I know what is the first objection you are going to move is, “Hey man, all you are saying here is very cool, but how am I supposed to start a business if I have no money?”

You need a few heuristics to be a successful businessman

Robert Allen in his book “Nothing Down” tells us how to start a real estate business with no money down. On the other hand, Robert Kiyosaki also tells us what the principles to follow to become real estate investors are.

Few principles are important when starting as a real estate beginner investor. Three of those principles are:

You have to buy your real estate at a 30% discount (at least)
You are not buying it for yourself
A property is an investment just if it has positive cash flows

As for the first point, anyone would agree with that. But how can you find a property, which is selling at a 30% discount? One of the most basic principles, which amateur investors seem not to grasp is that you have to make a deal when you buy rather than when you sell.

In other words, most amateurs make the mistake of buying properties and hoping them to increase in value over time. Indeed, you do not have to accept the price set by the seller as given, but rather to challenge that price.

Good real estate deals are available at any time. Therefore, do not get emotional if you are losing what it seems at first to be a good deal. Sure enough, you will find an even better deal moving forward.

How to find good deals? You have to find a motivated seller, someone who is trying to cash out, and that would accept 30% to 50% less on the property. Although occasional, those cases are fewer extra-ordinaries that you might think.

Here we go to our second point, which is “you are not buying the house for yourself.” Too often when buying a prospective property buyers get also attached to it, and they end up living in the property rather than treating it as an investment. Thus, once you buy the property, rent it. The property is a tool to become financially free. Let the property work for you rather than you sacrificing your life for the property.

The third and crucial point that few seem to understand is that “the property is not an investment unless it generates future cash flows for you.” In other words, assuming you buy an apartment for $150,000 and get a mortgage for the full amount; assuming a monthly rate of $1,000 you want to rent the place out for at least $1,200. In short, the rent has to cover for the monthly mortgage rate plus all the other expenses, so that eventually will have a positive cash flow.

Those are very simple heuristics. If you follow them religiously you can make it too!

26 business ideas to get started with no (or little) money down

In this article, we’ll see 26 business ideas to build a profitable small business online. The objective is to give you a list of easy to implement ideas that with low financial investment can work out.

It’s important to remark that to build an online business, initially, it is critical to put the so-called sweat equity.

1. Affiliate Marketing

For instance, Patt Flynn made $51,877.40 of affiliate earnings in September 2017. It is worth exploring the list of affiliations that smartpassiveincome.com shows on its reports to see what kind of affiliate links might work for you too:

Amazon.com (Book/Equipment Referrals)



AWeber (email marketing)



Bluehost (web hosting)



ConvertKit (email marketing)



Create Awesome Online Courses (online teaching)



Fizzle (online learning)



LeadPages 



LegalZoom



Libsyn



Long Tail Pro Keyword Research Tool



Market Samurai



Marketing Impact Academy with Chalene Johnson



Music Radio Creative



Samcart



SumoMe



Teachable



The FB Advantage



WP-Wishlist

2. Infoproducts

Info products are also a great way to monetize as they allow you to get a 100% cut of the revenues you make. Imagine you’ve produced an ebook or online course that sells anywhere from $20 up to $399.

A few dozens customers are enough to make you the passive income you need to do what you like and live a good life. Of course, easier said than done.

3. Email marketing 

When I speak to some of my clients they often ask, is email marketing still a valid way to make money?

The question comes from the fact that we all hear stories of AI and machine learning and tend to think that email marketing is too old school as a monetization strategy.

In reality, this is wrong! There are companies like AppSumo and digital marketers, like Tim Ferris and many others that still make a consistent amount of money through an extensive email list.

4. Google AdSense

I’ve never suggested AdSense as a valid monetization strategy unless you have such a large website that this strategy becomes profitable. If you have a small blog, Google AdSense won’t pay the bills.

Also, I honestly don’t like my users see banners all over the pages of my site when instead I can keep my content clean and more focused on user experience rather than make a few dollars with – at times – spammy banners.

5. Consulting

This is a viable alternative for anyone, from small to large WordPress websites. This is a strategy I’m testing as of the time of this writing. Of course, if you offer consultancy, this needs to be in line with the editorial strategy of your blog.

If you’re a food blogger, you can’t sell yourself as a business consultant, but rather as a food consultant. The only limitation of this strategy is that if your blog grows fast, then you won’t be able to get all the projects that come in.

However, if you wish to build a consultancy boutique and hire other people to help you out this might scale. If instead, you wish to keep a solo business this strategy will work only as long as you’re able to work on the projects that come in through the blog.

6. Branded stories

Many see sponsored content, not as a viable way to monetize a blog. I don’t think this is the case. If you offer value to your users, you can still offer content that is relevant, and that makes you money.

Let’s say a company pays you to talk about their startup. If what the startup does is truly interesting; if you have an honest interest and you know your audience would like that story, then this might be a great way to monetize.

Branded stories if your blog has qualified traffic can make you good money for minimum work.

7. Paid reviews

Like branded stories, the people from your audience are looking for tools and services that can help them grow their online business.

You can get paid by companies that offer those tools or services to post a paid review. Once again, this model works – I believe – only if you’re honest with yourself and your audience.

In short, I’d ask the following questions: do I use this service to grow my business? Do I find it valuable? Would my audience find it helpful too? If you answer yes to those questions then why not do it.

But don’t accept just the first person that knocks on your door. I’ve been receiving several offers in the past year to do paid reviews, but I didn’t do it because I either wasn’t using their tool, service or I didn’t think that would have been valuable to my audience.

8. Banner Ads

It’s tough to make money in an era where people developed a high degree of banner blindness. However, if you have a large website, with consistent traffic this also might be a viable option.

9. Sponsored Blog Posts

Just like branded stories or paid reviews, sponsored blog posts might work well as a monetization strategy.

Of course, you have to make clear what represents a sponsored content, and I believe you must do it only if you find relevant the sponsored content.

Otherwise, you risk undermining the trust your audience has for you. Plus, if you don’t believe in something this will be clear from your writing.

In short, a lack of belief in the product/service = bad writing = no conversion.

10. Members Only Content

If you have a small audience that follows you with determination why not make some part of your content only accessible to members?

11. Paid Business Directory

If you have a directory website that has gained substantial traffic, you can have areas of the site which are paid. Take for instance the listing of the 100 most popular business blogs.

You could ask those business blogs if they wish to pay a monthly fee to have an honest review of their blog.

Once again, this model works if you take the time to do proper research and you add value to your audience. Creating a listing only won’t add any value neither for the business listed nor for your audience.

12. Become a Coach

If you often write about self-growth and leadership, then you might be the right person to candidate yourself as a coach. Many people need a person that keeps them accountable.

Be it the creation of a blog, a diet or just professional growth, if you’re good at setting up objectives and keep people accountable, then becoming a coach might be a good monetization strategy.

Of course, do it because you’re passionate about helping others. Otherwise, this will reflect in your service, and you will not last long.

13. Accept Donations

Yes, that’s right. You only need a PayPal donation button to become a millionaire! As you might imagine, I’ve been cynic here.

However, adding the donation button won’t cost you any work, and it still gives people the option to thank you for what you do with a small donation. Why not try this out?

14. Charge For ‘Premium’ Content

Let’s say you’ve written a five thousand words tutorial on how to build an SEO strategy from scratch. Rather than make it accessible entirely, you could offer a sneak preview and ask your audience to pay to have the whole tutorial.

If you’ve spent time doing your research, people might pay for it.

15. Sell Your Blog

Well, if you got bored to write about the same topic, yet your blog is successful. Why not sell it? Some people make a living just by flipping websites.

16. Build your SaaS

If you’re building an online business, chances are you don’t want to set up a complicated business, that requires much work and responsibility.

That applies to a SaaS (Software as a Service). While this can be very profitable. It also requires a lot of work regarding the development and support of your customer base.

If you’re trying to have more freedom, this might not be for you.

17. Speaking Gigs

Many like to influence other people’s lives through speaking. If you’re one of them then why not start asking to get paid for a speaking gig?

The first time you might get only the reimbursement of the expenses, the second time a bit more than that.

Third, you’ll have a business.

18. Create & Sell Your Product

This is by far one of the most profitable monetization strategies. However, this is might also be the hardest to achieve.

Building your product means investing thousands of dollars in developing it.

Thus, it only makes sense if you have enough people willing to pay for it. One way to understand whether that is viable is to check whether people would be willing to finance your project? How?

With crowdfunding, for instance.

19. Write Tutorials & Guides

You don’t have to be a world-class expert to write a tutorial or a guide to a topic. Let’s say you’ve matured a competence that makes you in the top percentile of people in that industry you can sell your capability through tutorials and guides!

20. Live Workshops

People like live workshops. So if you’re recognized locally why not bring your audience off-line for a live seminar? This is a good monetization strategy to connect for real with your audience while making money

21. Find Sponsors For An Event

If you’ve been blogging for a while and you have a loyal, local audience. Why not host your event? Finding sponsors that can help you organize it might be easier than you think!

22. Generate ‘leads’ for other companies

For companies that sell certain services (think real estate, insurance or car dealerships) a lead might be worth also thousand of the dollar.

If you write about topics that are in the right context for those services why not help them find new leads, while you get a fixed rate for each lead you find for them?

23. Create a job board

Do you write about professional growth or how to freelance? Why not have your job board? Headhunters and companies offer great rewards for finding valid candidates to fill their vacancies.

24. Advertise pages

If you have a few, very popular pages. You can make those available to third parties to sell their services. The agreement will be on that specific page. In this way, you can experiment and offer a good ROI to the business that will use that page to have more leads.

25. Host paid webinars

Let’s say you’ve attended a webinar from another blogger that helped you get better at writing. You paid for that webinar.

Why not ask that person to host his webinar on your blog? He’ll get new customers, and you’ll get a cut of the revenues. In the end, your audience will also learn something new

26. Writing Gigs

Your blog is your professional portfolio. If people like what you write, why not have a CTA to offer a writing gig? If you don’t have a full-time job, this might be a great freelancing opportunity!

If you need business ideas for your next online venture you might want to check this out: 

Top 12 Business Ideas with Low Investment and High Profit:


Become a blogger
Become an online instructor
Become a professional photographer
Become a ghostwriter
Become a Chatbots maker
Become an affiliate marketer
Become a career coach, resume writer or LinkedIn profile writer 
Become a business development contractor
Become an infopreneur 
Become a websites flipper 
Become an SEO consultant
Become a contractor headhunter

Business resources:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?
Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

Business models case studies:

How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does WhatsApp Make Money? WhatsApp Business Model Explained
How Does Google Make Money? It’s Not Just Advertising! 
The Google of China: Baidu Business Model In A Nutshell
How Does Twitter Make Money? Twitter Business Model In A Nutshell
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Does Pinterest Work And Make Money? Pinterest Business Model In A Nutshell
Fastly Enterprise Edge Computing Business Model In A Nutshell
How Does Slack Make Money? Slack Business Model In A Nutshell
Fastly Enterprise Edge Computing Business Model In A Nutshell
TripAdvisor Business Model In A Nutshell
How Does Fiverr Work And Make Money? Fiverr Business Model In A Nutshell

The post 26 Best Businesses To Start With Little Money In 2020 appeared first on FourWeekMBA.

26 Best Business To Start With Little Money In 2020

Some business ideas to start with little money are Affiliate Marketing, Infoproducts, Email marketing, Google AdSense, Consulting, Branded stories, Paid reviews, Banner Ads, Sponsored Blog Posts, Members Only Content, Paid Business Directory, Become a Coach, Accept Donations, Charge For ‘Premium’ Content, Sell Your Blog, Build your SaaS, Speaking Gigs, Create & Sell Your Product, Write Tutorials & Guides, Live Workshops, Find Sponsors For An Event, Generate ‘leads’ for other companies, Create a job board, Advertise pages, Host paid webinars, Writing Gigs.

Ideas are overrated, yet they still matter to get started!

The dream of many is to be their own bosses, work a few hours per week, and have the chance to spend the rest of the day doing the things they are passionate about. But as the say goes “work hard and you will become rich.”

It is true that working hard is a good start, but do you want to work hard all your life just to reap the benefits when you’re too old? Although working hard is the prerequisite, working smart is the enhancer that can bring you to the desired success.

The past has been built over ideas. Ideas have changed the world; ideas are the foundation of a business. Is this really true? In part, it is, although we like to believe that great ideas change the world and that those who can conceive them will thrive, this is half of the story.

We, humans, are hard-wired to have business ideas, as Thomas Edison used to say, “I pull ideas out of the air.” Therefore creativity is far from being something special but rather something common to all human beings. This means that you too can have smart ideas and test them!

Ideas need to be tested in the real world, quickly!

Many of us have feelings at all times that people have stolen business ideas from us. Some of us to have the feeling at times to have thought about creating Tesla or SpaceX even before Elon Musk did.

What makes the difference between an idea, which succeeds, and one, which does not, is the willingness to test that idea in the real world, therefore to transition from theory to reality. Elon Musk had the desire to test ideas that seemed to make sense in theory but that are very hard to prove in the real world. This is where execution becomes key.

Many ideas will fail a few will become successful, those who do will become your cash cows

As the story goes Thomas Edison before discovering one of his greatest inventions had to try and fail 10,000. Whether or not the story is real, the point is that business ideas are worth not much if there aren’t people willing to test them out while being ready to fail many times before that idea may work.

History has shown us that many times great inventions come out of serendipity rather than a preconceived plan. In most cases, though you need an idea and a very actionable plan!

Welcome to the entrepreneurial age

We all assume that history goes from ebb and flow and in part this is true. In ancient history, Greeks were the fathers of our western civilization. Yet Hellenism (the diffusion of the Greek civilization) happened thanks to Macedonians, a small, barbarian population, located North of Greece.

Indeed, while Greeks lived in Theory-land for many centuries, Macedonians and in particular Alexander the Great in just a few decades spread the Hellenism culture throughout the ancient world. Alexander the Great was one of the primary examples in history of people with the entrepreneurial mindset.

Anyone can become an entrepreneur

If I asked you, “what is the best way to go from A to B?” You would mock me by thinking how trivial this question is. After pausing for few instants, you would answer without hesitation “of course through a straight-line.” Although many of us get the concept in Theory-land few of us apply this concept in reality.

This is due to our domain dependency. In short, we seem to be able to grasp a concept theoretically, but then we seem not to be able to bring this concept to the real world. With no surprise, many academics may have incredible expertise in their subject, but no clue of how that subject applies in the real world.

Therefore, the point here is that you can start at this moment to be an entrepreneur if you have the willingness to do so. I know what is the first objection you are going to move is, “Hey man, all you are saying here is very cool, but how am I supposed to start a business if I have no money?”

You need a few heuristics to be a successful businessman

Robert Allen in his book “Nothing Down” tells us how to start a real estate business with no money down. On the other hand, Robert Kiyosaki also tells us what the principles to follow to become real estate investors are.

Few principles are important when starting as a real estate beginner investor. Three of those principles are:

You have to buy your real estate at a 30% discount (at least)
You are not buying it for yourself
A property is an investment just if it has positive cash flows

As for the first point, anyone would agree with that. But how can you find a property, which is selling at a 30% discount? One of the most basic principles, which amateur investors seem not to grasp is that you have to make a deal when you buy rather than when you sell.

In other words, most amateurs make the mistake of buying properties and hoping them to increase in value over time. Indeed, you do not have to accept the price set by the seller as given, but rather to challenge that price.

Good real estate deals are available at any time. Therefore, do not get emotional if you are losing what it seems at first to be a good deal. Sure enough, you will find an even better deal moving forward.

How to find good deals? You have to find a motivated seller, someone who is trying to cash out, and that would accept 30% to 50% less on the property. Although occasional, those cases are fewer extra-ordinaries that you might think.

Here we go to our second point, which is “you are not buying the house for yourself.” Too often when buying a prospective property buyers get also attached to it, and they end up living in the property rather than treating it as an investment. Thus, once you buy the property, rent it. The property is a tool to become financially free. Let the property work for you rather than you sacrificing your life for the property.

The third and crucial point that few seem to understand is that “the property is not an investment unless it generates future cash flows for you.” In other words, assuming you buy an apartment for $150,000 and get a mortgage for the full amount; assuming a monthly rate of $1,000 you want to rent the place out for at least $1,200. In short, the rent has to cover for the monthly mortgage rate plus all the other expenses, so that eventually will have a positive cash flow.

Those are very simple heuristics. If you follow them religiously you can make it too!

26 business ideas to get started with no (or little) money down

In this article, we’ll see 26 business ideas to build a profitable small business online. The objective is to give you a list of easy to implement ideas that with low financial investment can work out.

It’s important to remark that to build an online business, initially, it is critical to put the so-called sweat equity.

1. Affiliate Marketing

For instance, Patt Flynn made $51,877.40 of affiliate earnings in September 2017. It is worth exploring the list of affiliations that smartpassiveincome.com shows on its reports to see what kind of affiliate links might work for you too:

Amazon.com (Book/Equipment Referrals)



AWeber (email marketing)



Bluehost (web hosting)



ConvertKit (email marketing)



Create Awesome Online Courses (online teaching)



Fizzle (online learning)



LeadPages 



LegalZoom



Libsyn



Long Tail Pro Keyword Research Tool



Market Samurai



Marketing Impact Academy with Chalene Johnson



Music Radio Creative



Samcart



SumoMe



Teachable



The FB Advantage



WP-Wishlist

2. Infoproducts

Info products are also a great way to monetize as they allow you to get a 100% cut of the revenues you make. Imagine you’ve produced an ebook or online course that sells anywhere from $20 up to $399.

A few dozens customers are enough to make you the passive income you need to do what you like and live a good life. Of course, easier said than done.

3. Email marketing 

When I speak to some of my clients they often ask, is email marketing still a valid way to make money?

The question comes from the fact that we all hear stories of AI and machine learning and tend to think that email marketing is too old school as a monetization strategy.

In reality, this is wrong! There are companies like AppSumo and digital marketers, like Tim Ferris and many others that still make a consistent amount of money through an extensive email list.

4. Google AdSense

I’ve never suggested AdSense as a valid monetization strategy unless you have such a large website that this strategy becomes profitable. If you have a small blog, Google AdSense won’t pay the bills.

Also, I honestly don’t like my users see banners all over the pages of my site when instead I can keep my content clean and more focused on user experience rather than make a few dollars with – at times – spammy banners.

5. Consulting

This is a viable alternative for anyone, from small to large WordPress websites. This is a strategy I’m testing as of the time of this writing. Of course, if you offer consultancy, this needs to be in line with the editorial strategy of your blog.

If you’re a food blogger, you can’t sell yourself as a business consultant, but rather as a food consultant. The only limitation of this strategy is that if your blog grows fast, then you won’t be able to get all the projects that come in.

However, if you wish to build a consultancy boutique and hire other people to help you out this might scale. If instead, you wish to keep a solo business this strategy will work only as long as you’re able to work on the projects that come in through the blog.

6. Branded stories

Many see sponsored content, not as a viable way to monetize a blog. I don’t think this is the case. If you offer value to your users, you can still offer content that is relevant, and that makes you money.

Let’s say a company pays you to talk about their startup. If what the startup does is truly interesting; if you have an honest interest and you know your audience would like that story, then this might be a great way to monetize.

Branded stories if your blog has qualified traffic can make you good money for minimum work.

7. Paid reviews

Like branded stories, the people from your audience are looking for tools and services that can help them grow their online business.

You can get paid by companies that offer those tools or services to post a paid review. Once again, this model works – I believe – only if you’re honest with yourself and your audience.

In short, I’d ask the following questions: do I use this service to grow my business? Do I find it valuable? Would my audience find it helpful too? If you answer yes to those questions then why not do it.

But don’t accept just the first person that knocks on your door. I’ve been receiving several offers in the past year to do paid reviews, but I didn’t do it because I either wasn’t using their tool, service or I didn’t think that would have been valuable to my audience.

8. Banner Ads

It’s tough to make money in an era where people developed a high degree of banner blindness. However, if you have a large website, with consistent traffic this also might be a viable option.

9. Sponsored Blog Posts

Just like branded stories or paid reviews, sponsored blog posts might work well as a monetization strategy.

Of course, you have to make clear what represents a sponsored content, and I believe you must do it only if you find relevant the sponsored content.

Otherwise, you risk undermining the trust your audience has for you. Plus, if you don’t believe in something this will be clear from your writing.

In short, a lack of belief in the product/service = bad writing = no conversion.

10. Members Only Content

If you have a small audience that follows you with determination why not make some part of your content only accessible to members?

11. Paid Business Directory

If you have a directory website that has gained substantial traffic, you can have areas of the site which are paid. Take for instance the listing of the 100 most popular business blogs.

You could ask those business blogs if they wish to pay a monthly fee to have an honest review of their blog.

Once again, this model works if you take the time to do proper research and you add value to your audience. Creating a listing only won’t add any value neither for the business listed nor for your audience.

12. Become a Coach

If you often write about self-growth and leadership, then you might be the right person to candidate yourself as a coach. Many people need a person that keeps them accountable.

Be it the creation of a blog, a diet or just professional growth, if you’re good at setting up objectives and keep people accountable, then becoming a coach might be a good monetization strategy.

Of course, do it because you’re passionate about helping others. Otherwise, this will reflect in your service, and you will not last long.

13. Accept Donations

Yes, that’s right. You only need a PayPal donation button to become a millionaire! As you might imagine, I’ve been cynic here.

However, adding the donation button won’t cost you any work, and it still gives people the option to thank you for what you do with a small donation. Why not try this out?

14. Charge For ‘Premium’ Content

Let’s say you’ve written a five thousand words tutorial on how to build an SEO strategy from scratch. Rather than make it accessible entirely, you could offer a sneak preview and ask your audience to pay to have the whole tutorial.

If you’ve spent time doing your research, people might pay for it.

15. Sell Your Blog

Well, if you got bored to write about the same topic, yet your blog is successful. Why not sell it? Some people make a living just by flipping websites.

16. Build your SaaS

If you’re building an online business, chances are you don’t want to set up a complicated business, that requires much work and responsibility.

That applies to a SaaS (Software as a Service). While this can be very profitable. It also requires a lot of work regarding the development and support of your customer base.

If you’re trying to have more freedom, this might not be for you.

17. Speaking Gigs

Many like to influence other people’s lives through speaking. If you’re one of them then why not start asking to get paid for a speaking gig?

The first time you might get only the reimbursement of the expenses, the second time a bit more than that.

Third, you’ll have a business.

18. Create & Sell Your Product

This is by far one of the most profitable monetization strategies. However, this is might also be the hardest to achieve.

Building your product means investing thousands of dollars in developing it.

Thus, it only makes sense if you have enough people willing to pay for it. One way to understand whether that is viable is to check whether people would be willing to finance your project? How?

With crowdfunding, for instance.

19. Write Tutorials & Guides

You don’t have to be a world-class expert to write a tutorial or a guide to a topic. Let’s say you’ve matured a competence that makes you in the top percentile of people in that industry you can sell your capability through tutorials and guides!

20. Live Workshops

People like live workshops. So if you’re recognized locally why not bring your audience off-line for a live seminar? This is a good monetization strategy to connect for real with your audience while making money

21. Find Sponsors For An Event

If you’ve been blogging for a while and you have a loyal, local audience. Why not host your event? Finding sponsors that can help you organize it might be easier than you think!

22. Generate ‘leads’ for other companies

For companies that sell certain services (think real estate, insurance or car dealerships) a lead might be worth also thousand of the dollar.

If you write about topics that are in the right context for those services why not help them find new leads, while you get a fixed rate for each lead you find for them?

23. Create a job board

Do you write about professional growth or how to freelance? Why not have your job board? Headhunters and companies offer great rewards for finding valid candidates to fill their vacancies.

24. Advertise pages

If you have a few, very popular pages. You can make those available to third parties to sell their services. The agreement will be on that specific page. In this way, you can experiment and offer a good ROI to the business that will use that page to have more leads.

25. Host paid webinars

Let’s say you’ve attended a webinar from another blogger that helped you get better at writing. You paid for that webinar.

Why not ask that person to host his webinar on your blog? He’ll get new customers, and you’ll get a cut of the revenues. In the end, your audience will also learn something new

26. Writing Gigs

Your blog is your professional portfolio. If people like what you write, why not have a CTA to offer a writing gig? If you don’t have a full-time job, this might be a great freelancing opportunity!

If you need business ideas for your next online venture you might want to check this out: 

Top 12 Business Ideas with Low Investment and High Profit:


Become a blogger
Become an online instructor
Become a professional photographer
Become a ghostwriter
Become a Chatbots maker
Become an affiliate marketer
Become a career coach, resume writer or LinkedIn profile writer 
Become a business development contractor
Become an infopreneur 
Become a websites flipper 
Become an SEO consultant
Become a contractor headhunter

Business resources:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?
Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

Business models case studies:

How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does WhatsApp Make Money? WhatsApp Business Model Explained
How Does Google Make Money? It’s Not Just Advertising! 
The Google of China: Baidu Business Model In A Nutshell
How Does Twitter Make Money? Twitter Business Model In A Nutshell
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Does Pinterest Work And Make Money? Pinterest Business Model In A Nutshell
Fastly Enterprise Edge Computing Business Model In A Nutshell
How Does Slack Make Money? Slack Business Model In A Nutshell
Fastly Enterprise Edge Computing Business Model In A Nutshell
TripAdvisor Business Model In A Nutshell
How Does Fiverr Work And Make Money? Fiverr Business Model In A Nutshell

The post 26 Best Business To Start With Little Money In 2020 appeared first on FourWeekMBA.

How To Start A Digital Business In Four Steps In 2020

To start a digital business with low or no cash, look for a business opportunity within a microniche. Before going all-in, you want to validate your idea cheaply. After validation, you can push on growth and as you grow, you create options to scale your digital business.

1. Find Your Business Opportunity By Starting With A Microniche

In the era of large digital platforms, it’s important to start adding value from a small audience, which can become the backbone for your next digital business. Indeed, that isn’t a single way to start.

However, if you have limited capital or no capital at all, it’s important to start from a narrow space, where you can add a lot of value. As a small player, you’ll be able to break the trade-off between cost and value, which is at the base of a blue ocean strategy.

[image error]A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

In the microniche space, you’ll be able to find the community that will help you build your next digital venture!

[image error]A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.
2. Validate Your Idea Before Going All-In

The digital world creates two illusions:

As you can talk to the whole world you end up wanting to talk to everyone
As you can start with little or no money, you’re willing to test anything

These two are indeed facts, but only for those established businesses that have powerful distribution networks, marketing, and R&D budget.

If you’re starting from scratch trying to talk to everyone, or trying to test all the possible options you have might not work.

Thus, you want to look at the key components of the business model you might want to build:

[image error]A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.
[image error]Where scientists use labs to test their hypotheses through experimentation. Entrepreneurs build business model experiments to test their business ideas in the real world.

At this stage, it’s important to validate your idea, to see if there is a niche market opportunity before going all-in!

If you already have an audience, you can test your idea by, for instance, proposing a product or service.

Let’s say you already have a blog that generates some traffic, and a newsletter, you can organize a workshop and see if people in your newsletter are willing to pay for it.

If so, that opens up the space for producing a digital product out of the workshop, which can help you get started.

Once you got the audience you can to start testing potential revenue streams:

[image error]A revenue stream is one of the foundational building blocks of a business model, and the economic value customers are willing to pay for the products and services offered. While a revenue stream is not a business model, it does influence how a business model works and delivers value.
3. Growth and traction
[image error]Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages of analyzing, ideating, prioritizing and testing.

You can use the growth hacking framework to accelerate growth once your idea has been validated.

Related: Growth Hacking Complete Guide

4. Create Options To Scale

Once you start from a microniche, you can look at it as the foundation of your business, which will give you options to scale as you dominate that microniche.

Therefore, as you grow you can create options for your digital business! This is at the core of bootstrapping.

As you grow, you tune your business with its key customers, and as you do, your key customers will become the most important stakeholders:

[image error]The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model.
Some Ideas To Start Generating Cash

Not all entrepreneurs can initially afford to build the business of their dream (at least not in the short-term). Therefore, it might make sense to look at existing opportunities out there that can help you bootstrap:

[image error]

Top 12 Business Ideas with Low Investment and High Profit

Become a blogger
Become an online instructor
Become a professional photographer
Become a ghostwriter
Become a Chatbots maker
Become an affiliate marketer
Become a career coach, resume writer or LinkedIn profile writer
Become a business development contractor
Become an infopreneur
Become a websites flipper
Become an SEO consultant
Become a contractor headhunter

Other resources: 

The Digital Entrepreneur’s Guide On How To Start A Business

Other business resources:

What Is Business Model Innovation And Why It Matters
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business

The post How To Start A Digital Business In Four Steps In 2020 appeared first on FourWeekMBA.

What Is A Heuristic And Why Heuristics Matter In Business

As highlighted by German psychologist Gerd Gigerenzer in the paper “Heuristic Decision Making,” the term heuristic is of Greek origin, meaning “serving to find out or discover.” More precisely, a heuristic is a fast and accurate way to make decisions in the real world, which is driven by uncertainty.

What is a Heuristic? Beyond biases and the prevailing narrowed vision of the mind

In a 1996 paper entitled “Reasoning the Fast and Frugal Way: Models of Bounded Rationality” psychologists Gerd Gigerenzer and Daniel G. Goldstein highlighted:

Humans and animals make inferences about the world under limited time and knowledge. In contrast, many models of rational inference treat the mind as a Laplacean Demon, equipped with unlimited time, knowledge, and computational might.

This is a very important concept to start with. Where modern psychologists and theorists of mind manufacture experiments in the lab, those experiments are tied to specific scenarios, that are hardly replicable in the real world.

Why is that? It all starts with a narrow theory of mind.

A narrow definition of rationality

Experiments are manufactured and often based on assumptions around how our minds work. For instance, if a psychologist will label rationality as the ability to optimize during a decision-making process (just like a machine would do) this requires the mind to gather all the possible information to come to a logical decision.

However, in the real world, decisions are made with incomplete information, a high degree of uncertainty and little to no understanding of what’s coming next. Therefore, when the psychologist mutters about the inability of the human brain to understand statistics or logic. In the real world, that means survival.

If surviving means losing some efficiency or avoiding optimization to prevent massive failure, our mind is working as it should.

Risk vs. Uncertainty

Another component that the conventional or prevailing school of thought is the lack of understanding of the domain in which the human mind is operating. That’s a key point to understand the difference between risk and uncertainty.

Risk is computable

Risk is a concept that analysts love. Why? It’s something that can be modeled. Thus, circumscribed to scenarios that have definite rules, like games. You often see in business books how game theory helped businessmen to be successful.

But that is a story crafted in hindsight. Game theory or your skills as a chess player might help you (in impressing others) in normal circumstances (assuming those exist) but they won’t help you much in the real world. Unless you have an alternative toolbox made of heuristics.

Uncertainty is not computable

When financial analysts evaluate risks they fall into the trap of thinking that we can understand the real world by modeling it. The modern approaches to entrepreneurship try to bring this same logic to the business world, with nefast consequences.

When there is a high variability of outcomes, it’s impossible to model the risk. If at all you need a simple set of rules of thumb to avoid the worst-case scenario because if that materializes that will be no risk-model that will help with that.

Indeed the consequences of an uncertain scenario might be too bad for you to actually even see its outcome because survival is at stake.

Unmodeling the real world

When psychological experiments are made in the lab, often times the psychologist starts with a preconceived idea of the human mind and she works her way back to prove it with an experiment.

When that happens experiments are “manufactured” (in many cases unconsciously) to produce a certain result (in short, biases are more a domain applicable to psychologists than of laypeople dealing with real-world uncertainty).

This has come up recently with what is called a Replication Crisis, which as highlighted on Wikipedia:

The replication crisis (or replicability crisis or reproducibility crisis) is, as of 2019, an ongoing methodological crisis in which it has been found that many scientific studies are difficult or impossible to replicate or reproduce. The replication crisis affects the social sciences and medicine most severely.

Part of this trend is in the use of statistical tools that are not proper for real-world analyses, and the fact that research sometimes turns into an attention-driven activity. As pointed out by Noah Smith in Bloombergs’ “Why ‘Statistical Significance’ Is Often Insignificant:”

In psychology, in medicine, and in some fields of economics, large and systematic searches are discovering that many findings in the literature are spurious. John Ioannidis, professor of medicine and health research at Stanford University, goes so far as to say that “most published research findings are false,”  including those in economics. The  tendency research journals have of publishing anything with p-values lower than 5 percent — the arbitrary value referred to as “statistical significance” — is widely suspected as a culprit.

To be sure, this is not to say those experiments aren’t valid. Worse than that, in some instances, they carry from the beginning assumptions about the psyche of the subjects that are biased themselves.

In short, the biases that we all talk about nowadays, especially in the business world, in reality, might easily be explained with a theory of mind that goes beyond the conventional definition of rationality.

This definition starts by thinking of our mind as an easily tricked machine, that due to its survival mechanisms isn’t well-adapted anymore to modern times. Thus, it can easily fall prey to dozens if not hundreds of biases that affect our daily lives.

That is we see anywhere today in business publications massive lists of cognitive biases that make us more “aware.”

Heuristics: dirt and quick? Not really!

As highlighted in “Heuristic Decision Making:”

The goal of making judgments more accurately by ignoring information is new. It goes beyond the classical assumption that a heuristic trades off some accuracy for less effort.

The main perspective for which heuristics have been studied and communicated to a mass business audience is through the fact that by definition a heuristic is quick and dirty. In short, our error-prone mind generates biases because we use heuristics that made us sacrifice efficiency for speed in the face of a sort la lazy mechanism of the mind.

According to this view, the mind might ignore important information in an efficiency-driven way, almost like it was optimizing for computing power. 

In reality, the mind might have learned that ignoring useless information is a more effective survival mechanism. Therefore, focusing on one key data point is way more reliable than taking more information. This completely changes the paradigm.

Where a lazy-driven mind avoids too much information because it’s not computably able to process it (thus sacrificing efficiency for speed almost like it was a computer). In a new paradigm, where heuristics and rules of thumbs become central as a necessary filtering mechanism of the mind that learns ho to ignore useless and irrelevant information.

In short, what matters is the outcome of the action, not the process neither the motivation that drives the process.

Conflict of interests, marketing, and manipulation

New media have enabled companies to communicate at large scale. When this communication is done right we can call it marketing. When that’s done wrong we can call it a conflict of interest or at worst manipulation.

Thus, many of what we call biases are also the consequence of the way the message gets framed to us. In short, it’s like playing a game where one player has to trick the other. As the other player learns the tricks of the first player, new strategies need to be found.

One there is a gap between the trickster and the tricked a bias might emerge as a better ability of the trickster.

Blind faith in technology

While planning a trip back to the city I live in, I was thinking to postpone the trip due to bad weather. While consulting my GPS which optimizes for shorter routes (not certainly for the beauty of the landscape or chances of survival) I risked to get to the end of the trip underwater.

In short, the GPS was giving me the time to destination with a bit of delay but without necessarily mentioning that I was getting there by risking to be flooded!

This blind faith in technology isn’t due to our inability to deal with it. Rather with the way these technologies are framed. When technology is built to optimize, and when it is marketed so that you believe that optimization is what matters in any context (optimization works in narrow ordinary situations) you end up relying too much on it.

The central problem with a two-system thinking model

Theories proposed by psychologists like Kahneman and Tversky have become central in the business world. The book Thinking, Fast And Slow has become a business bible and indeed that is a great read.

Yet the assumptions underlying these theories stand on a hypothetical optimization process humans should follow when making a decision. As highlighted in the paper “Heuristic Decision Making:”

As Kahneman (2003) explained in his Nobel Memorial Lecture: “Our research attempted to obtain a map of bounded rationality, by exploring the systematic biases that separate the beliefs that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent models”

This view might start with a wrong definition and interpretation of bounded rationality formulated by Simon. Bounded rationality is not about systematic biases, it’s about decision-making in the real world, which is unpredictable.

Fast, frugal, yet accurate

Another key concept to internalize to deeply understand this alternative view of bounded rationality is the concept of ecological rationality. Ecological rationality looks for strategies that are better suited for a specific environment and context.

The key point here is that there is no best strategy, or optimization strategy because that would not be possible in a large world made of uncertainty.

Therefore, the rules of thumbs we might be able to use for each circumstance will help us take advantage of the structure of the environment we operate within.

Thus in this sort of decision-making process, it is like we do create a small world but highly adapted to context and circumstance, which is the opposite of what classic theories of rationality do, assuming that our mind works in a vacuum, or in a sort of free-context reality.

The two sides of Bounded rationality
[image error]Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Based on what we have said so far, let’s look again at the concept of bounded rationality. According to the definition given by his father, Simon, bounded rationality has two main sides:

ecological
and cognitive

It’s ecological because “the mind is adapted for real-world environments.” Therefore, on the one side the mind make decisions based on the structure of the environment. And on the other side there is the computational capability of the decision-maker (cognitive side).

As highlighted by Gerd Gigerenzer and Wolfgang Gaissmaier in “Heuristic Decision Making modern psychologists have focused their attention on the latter (the cognitive side).

More precisely, the focus on the cognitive side has produced the misunderstanding that as the human mind has limited ability to process information, it produces a set of irreparable biases.

Part of this misunderstanding might be given by the fact taht those presumably simple heuristics that the mind uses to solve real world problems are not sophisticated enough to look interesting to the norms of classical rationality.

The importance of Ecological Rationality

Once you understand the other side of rationality, not the cognitive, but the ecological, it changes everything.

In an ecological rationality sense, less-is-more becomes a powerful heuristic to rely on in many of the real-world scenarios.

Redefining biases

In the conventional view, a bias is a cognitive error the mind makes, which is due to our lack of understanding of the real world driven by classic rationality. In the alternative way to look at bounded rationality a decision-making process, it needs to balance out bias and flexibility to produce overall an inference which is more effective than a system that has no biases at all!

In that scenario, less information, ignoring a big chunk of noisy information and make “biased decisions” might lead to better decision-making.

Building an adaptive toolbox for entrepreneurs

Once you understand all the principles highlighted above, you start tinkering with simple algorithms, that we can call heuristics, extremely useful for the businessman who doesn’t want to fall trap of complex thinking for the sake of it.

The FourWeekMBA analysis and study into this adaptive toolbox has just started, and we’ll be looking more and more into a set of simple heuristics to use in different contexts, by starting from when it makes sense to use them in the first place.

There are a few contexts in the business world were gathering more information, data and complex models can indeed help build a successful company (like at an operational level). But there are many other places (strategy and vision) where those complex systems not only do not work but are harmful.

For the sake of having a better toolbox for directing your business in the right direction, we’ll continue our investigation!

References:

Reasoning the Fast and Frugal Way: Models of Bounded Rationality, Gerd Gigerenzer and Daniel G. Goldstein, Max Planck Institute for Psychological Research and University of Chicago, Psychological Review Copyright 1996 by the American Psychological Association, Inc. 1996, Vol. 103. No. 4, 650-669
Heuristic Decision Making, Gerd Gigerenzer and Wolfgang Gaissmaier, Annu. Rev. Psychol. 2011. 62:451–82
Simon, Herbert, 1983. “On the Behavioral and Rational Foundation of Economic Theory,” Working Paper Series 115, Research Institute of Industrial Economics.
Simon, Herbert A., 1978. “Rational Decision-Making in Business Organizations,” Nobel Prize in Economics documents 1978-1, Nobel Prize Committee.

Other business resources:

What Is Business Model Innovation And Why It Matters
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?

The post What Is A Heuristic And Why Heuristics Matter In Business appeared first on FourWeekMBA.

Top 4 Business Trends To Look For In 2020

On FourWeekMBA one of the primary focus is to dissect important trends happening in the business world, that have the potential to affect and reshape current industries.

Thus, as a business person, you might want to keep an eye on the following trends.

Uberplatforms: The Platform 2.0
[image error]A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

In the FourWeekMBA interview to Jerry Cuomo, IBM Fellow and Vice President of Blockchain Technologies he highlighted how the Blockchain enables new business models: 

Businesses today aren’t structured to work in teams.Yes, there’s business to business, B2B. But even in a B2B transaction, you’re still responsible. Like if you’re in a B2B lending network, and you’re depending on a third party to vet the authenticity of a particular client that you’re lending money to, and they turn out to be a bad actor and the government comes after you for lending money to a bad actor, you can’t say, “Oops, it wasn’t me. It was someone I trusted in my network.” No, you are responsible. You go to jail, they don’t go to jail.

The big trick in the business playbook is to design business processes that can be worked across a team.

[image error]

In the Internet era, platforms rose as the primary catalyzer of business across the web. As a result of designing, building and maintaining a successful platform, those companies became trillion-dollar ecosystems.

A further step we’re going toward, thanks to the Blockchain, is the potential creation of super or uber-platforms. Those that can be built by combining the capabilities of several digital platforms.

Think of the Uber-platform as an enhanced version of a digital platform. This process will be ready and complete when Blockchain protocols will be mature enough to enable new global entities, as key players.

And the interesting point is those companies part of the uber-platform will act as a single, integrated entity, even though they will be independent companies. We can expect this trend to become mature in the next ten years.

Tip: There is no action yet to take on this trend. Yet it is worth to keep an eye on.

Walled gardens are back

As highlighted in the previous paragraph, uber-platforms might become the norm in the coming decade. There is a current trend though, which for the moment is extremely strong. That is about the platforms that dominate the world as of 2019:

[image error]GAFA is an acronym for Google, Apple, Facebook, and Amazon. Those companies emerged in the 2010s as the most powerful American tech companies.

Companies like Google and Amazon, when small startups, focused on growth. As they grew to become tech giants they focused on domination. Domination is achieved when the platform is able to cover the end-to-end journey of its users.

Where a company like Google could not offer a full journey from search to the transaction on its platform (due to technology, and business limitations), it limited itself to perform a core function (search).

When Google first launched, its presumably superior search capabilities were used to enable users to get out of walled gardens. Google‘s growth and distribution itself were propelled by deals like AOL (one of the first walled gardens of the Internet era).

Google‘s value proposition was compelling because it enabled users to get out of those walled gardens to finally explore the web. Google has been the “ten blue links” company for about twenty years.

Starting 2015-16, the company finally managed to roll out a set of features intended to cover more and more of the journey of the users. Today those features are the rule:

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The occurrence of Google advanced features covering more and more of the users‘ journey, according to SEMRush sensor.

As competition from other platforms grew, and search technology improved exponentially, Google became a walled garden itself.

While Google still uses open infrastructures (especially to enable contributions and faster growth on the AI side) its core platform is tightly controlled from a business standpoint.

And Google itself transformed in a walled garden, where users are locked-in and provided as much value as possible within Google search results pages. In this transition, Google invaded several verticals (from Travel to Shopping) to become the primary brand people deal with, from search to (almost) purchase.

Tip: This transition of digital platforms in walled gardens is concerning regulators (we’ll see it in the upcoming trend for 2020) and should concern you as a business owner. Any physical business has a component of digital nowadays.

If that is the case you need to understand how to surf this wave or be swept away by that. One way to take advantage of this trend is to look for microniches:

[image error]A microniche is a subset of potential customers within a niche. In the era of dominating digital super-platforms, identifying a microniche can kick off the strategy of digital businesses to prevent competition against large platforms. As the microniche becomes a niche, then a market, scale becomes an option.
Tech regulation

The several data scandals happened in the last years have awakened public concern around the safety of digital platforms. Probably one of the most iconic moments that we’ll remind in the coming decades is those of Mark Zuckerberg before the US Congress.

While Zuckerberg well symbolizes the tech monopolists that dominate the world today, he’s not alone there. Today we have more of a tech oligopoly of companies born and matured with the web.

Proposals have been made to break those tech companies. New technologies, like Blockchain, are awakening again dreams of decentralization. However, this is more of a cultural problem than a tech problem.

Where conventional wisdom assumes that the rise of machines is inevitable, the central questions become about when it will happen. Rather than about how and why it should happen in the first place.

Tip: Not much to do here, but to wait and see what it will happen and of course from a personal standpoint make sure to use those digital platforms with more consciousness.

Chinese tech domination
[image error]TikTok is a creative social media platform primarily driven by short-form video content. It launches challenges of various types to tap into the creativity of its users and generate engaging (if not addicting content). These challenges are accompanied by compelling music tracks embellished via effects and filters, and powered by AI algorithms that optimize both content creation, curation and recommendation. The company had grown exponentially and reached over five hundred million users at the beginning of 2018. Facebook has taken notice and might be building its own version, called Lasso!
TikTok is an interesting case because it is the first Chinese player to dominate a space and create a whole new industry (we can’t call TikTok a social media player, although it is stealing space from Facebook and Instagram).

The reasons Chinese tech companies might dominate the Western world isn’t just due to a lack of competition in their own marketplace from outsiders. But also, and especially by the features of the Chinese consumer market, which offers itself as the perfect lab for tech companies to rise and become global players in no time.

In the FourWeekMBA interview with Jeffrey Towson, he highlighted:

China is arguably the world’s most complicated consumer market now.

I mean you can look at 30 million Chinese consumers live in caves. You can find Chinese consumers in the far West where you’ve got several hundred million of them that looked like a different country.

You go to downtown Beijing, you get more billionaires in Beijing than New York City.

So there’s a huge fragmentation and complexity to them and it’s just getting more so because one, there’s a lot of them.

So when you get a lot of anything, you’re going to get a lot of complexity, and two, you still get this big spread between very, very developed market behavior like Beijing and Shanghai and behavior that’s out in the fields and in the mountains.

So it’s just this hugely complicated subject and the only wayyou can really understand Chinese consumers at this point is you have to go small.You have to study micro populations, Chinese moms, sports enthusiasts, inland consumers, dads.You just have to break it up that way and you find out people are very, very different.

Tip: if you have a physical or digital business look for ways to expand it to Chinese consumers.

Key takeaway

We live in an interesting era (I’m sure that many have said that in the previous decades and centuries as well). What makes it interesting is the fact our generation is living a transition between the old and the new cultural, political and economic systems.

The modern economy and political systems have been built starting the end of the nineteenth century when nations formed, and national consciousness became the primary cultural force to shape them.

As the web became commercially viable and commercially mature, it is now in a phase where it has to become culturally and politically so. This implies the transition from old systems and processes to new ones.

Thus, old assumptions become weak and prone to be replaced by new cultural norms. In a phase of transition, nothing seems to be true anymore, it’s all questionable and all relative. At this stage, new assumptions about the world arise, and as they do, new systems are built to replace old ones.

It is important that we are all part of this process and it starts with awareness.

Business resources: 

What Is Business Model Innovation And Why It Matters
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?
Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

The post Top 4 Business Trends To Look For In 2020 appeared first on FourWeekMBA.

Top FourWeekMBA Business Models For 2019

If you follow the FourWeekMBA you know we covered hundreds of business models in the last years. Every year we look at those business models for which our audience found most interest. In 2018, we looked at the most successful business models (or at least those that draw the most attention on our platform).

This year we’re doing the same. We’re looking at the 6 most popular business models on FourWeekMBA: Amazon, Uber Eats, DuckDuckGo, Netflix, TIkTok, Apple.

Amazon Business Model
[image error]Amazon has a diversified business model. In 2018 Amazon posted over $232 billion in revenues and over $10 billion in net profits. Online stores contributed to nearly 52% of Amazon revenues, followed by Physical Stores, Third-party Seller Services, Amazon AWS, Subscription Services, and Advertising revenues.
[image error]A company like Amazon has multiple value propositions, as it serves several target customers in different markets. With its mission “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online and endeavors to offer its customers the lowest possible prices,” Amazon value propositions range from “Easy to read on the go” for a device like Kindle, to “Sell better, sell more” to its marketplace.
[image error]Amazon is a profitable company. Its operating income and net income passed $12.4 billion and $10 billion respectively in 2018. The operating income was driven primarily by Amazon AWS, contributing $7.29 billion. Amazon has been consistently profitable since 2015 when it posted 596 million in profits.
[image error]According to eMarketer, in the US alone, digital advertising spending will be around $129 billion. Within this market the most significant players are companies like Google ($116 billion in 2018 from search advertising), Facebook (over $55 billion in advertising revenues in 2018), Amazon (over $10 billion in 2018 from product advertising), Twitter (with $2.6 billion in advertising in 2018), and Microsoft’s Bing (search advertising for about $7 billion in 2018)
[image error]Amazon AWS follows a platform business model, that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.

All you have to know about Amazon from FourWeekMBA resources: 

What Is Business Model Innovation And Why It Matters
What Is the Receivables Turnover Ratio? How Amazon Receivables Management Helps Its Explosive Growth
Amazon Case Study: Why from Product to Subscription You Need to “Swallow the Fish”
What Is Cash Conversion Cycle? Amazon Cash Machine Business Model Explained
Why Is AWS so Important for Amazon Future Business Growth?
Amazon Flywheel: Amazon Virtuous Cycle In A Nutshell
Amazon Value Proposition In A Nutshell
Why Amazon Is Doubling Down On AWS
The Economics Of The Amazon Seller Business In A Nutshell
How Much Is Amazon Advertising Business Worth?
What Is the Cost per First Stream Metric? Amazon Prime Video Revenue Model Explained
Jeff Bezos Teaches You When Judgment Is Better Than Math And Data
Alibaba vs. Amazon Compared in a Single Infographic
Amazon Mission Statement and Vision Statement In A Nutshell

Uber Eats Business Model
[image error]Uber made over $11 billion in dollars in revenues in 2018, and its profits were $987 million. It’s essential to notice that the profitability in 2018 was positively affected by divestitures in Russian/CSI operations and from gains on investments in the “Chinese’ Uber,” called Didi.
[image error]Uber is a is two-sided marketplace, a platform business model that connects drivers and riders, with an interface that has elements of gamification, that makes it easy for two sides to connect and transact. Uber makes money by collecting fees from the platform’s gross bookings.
[image error]Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay the small delivery charges, and at times, cancellation fee; Drivers earn through making reliable deliveries on time.

All you need to know about Uber from FourWeekMBA:

Uber Eats Business Model
How Does Uber Make Money? Uber Business Model In A Nutshell
Lyft Transportation-As-A-Service Business Model

How Does HyreCar Make Money? HyreCar Business Model In A Nutshell

DuckDuckGo Business Model

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DuckDuckGo Business Model 
How Does Google Make Money? It’s Not Just Advertising!

Netflix Business Model
[image error]FAANG is an acronym that comprises the hottest tech companies’ stocks. Those are Facebook, Amazon, Apple, Netflix and Alphabet’s Google. The term was coined by Jim Cramer, former hedge fund manager and host of CNBC’s Mad Money and founder of the publication TheStreet.
[image error]Netflix is a profitable company. It generated over $1.2 billion in 2018, a 116% increase compared to 2017, primarily driven by substantial growth in paid memberships. However, Netflix has negative cash flows as it invests massively on content license agreements and original content.
[image error]Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.

Read next: Netflix Business Model

TikTokBusiness Model
[image error]TikTok is a creative social media platform primarily driven by short-form video content. It launches challenges of various type to tap into the creativity of its users and generate engaging (if not addicting content). These challenges are accompanied by compelling music tracks embellished via effects and filters, and powered by AI algorithms that optimize both content creation, curation and recommendation. The company had grown exponentially and reached over five hundred million users at the beginning of 2018. Facebook has taken notice and might be building its own version, called Lasso!

TikTok Business Model
How To Integrate TikTok In Your Marketing Strategy

Apple Business Model
[image error]As of October 2019, Apple was worth over trillion dollars. Compared to other tech giants like Amazon, valued at over $869B, Google valued at 863B and Facebook valued at over $530 billion, Apple is primarily a product company, which made 63% of its revenues from the iPhone in 2018.
[image error]Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverages on the “Think Different” motto; reliable tech devices for mass markets; and in 2019, Apple also started to emphasize more and more about privacy to differentiate from other tech giants.
[image error]Apple mission is “to bringing the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2009 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”

Read Next: Apple Business Model

The resources you need to get started with your business model: 

Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
How to Write a One-Page Business Plan
The Rise of the Subscription Economy
How to Build a Great Business Plan According to Peter Thiel
What Is The Most Profitable Business Model?
The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
How To Create A Business Model
What Is Business Model Innovation And Why It Matters
What Is Blitzscaling And Why It Matters
Business Model Vs Business Plan: When And How To Use Them
The Five Key Factors That Lead To Successful Tech Startups
Top 12 Business Ideas with Low Investment and High Profit
Business Model Tools for Small Businesses and Startups

How To Use A Freemium Business Model To Scale Up Your Business

The post Top FourWeekMBA Business Models For 2019 appeared first on FourWeekMBA.

The Digital Entrepreneur’s Guide On How To Start A Business

I’ve devoted years of my life, putting together all the materials and resources that have helped me along the way of becoming a digital entrepreneur and head of business development for a tech startup.

I thought it just made sense to document those things along the way so that I could form a more in-depth understanding by writing about it, and you, my reader, could gain insights and expertise, without spending hours and hours of research.

In this post, I’m assembling all the resources you need to get going with a business if you’re ready to leap becoming a digital entrepreneur. I suggest there are four key areas when starting your business, which we’ll group under the acronym of MOVE, standing for:

Mindset
Operations
Velocity (momentum)
and Execution

Each of those areas needs to be mastered to design, launch, and iterate a successful business. This isn’t a size fits all model, neither the only one possible. But it is a model that can help you get “moving”.

Let’s look at each of them.

Mindset

When starting a business, in particular, a digital business, you should have a 10X mindset. The reason is you might be starting a venture in a competitive space; none knows your brand, you might be missing the budget to grow it steadily.

Thus, you need to think and act smart. You can’t rely on conventional wisdom, or already walked paths. While business best practices will be your baseline, you will need to have a growth mindset, where each action you take needs to be measured and deemed successful if it gives you massive traction.

Never run out of ideas

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A common belief is that ideas only come to creative people. In reality, we all have a flow of creativity wired in our minds. We just need to develop the right mindset, and for that reason, the guide below can help you achieve just that:

Why anyone can be creative
Getting into the Flow process
Creativity can be manufactured

Acquisition of creativity and interest

Curiosity and interest
Cultivating flow
Habits of strength


Mastering your internal traits
Apply your creative energy

Problem finding
Divergent thinking
Choosing a special domain




Funneling ideas

Don’t be scared to throw 99% of your ideas
Are you passionate about it? Or are you willing to put together the team that might be passionate about it? 
Idea validation: Is there a market demand?

If you heard that ideas are overrated in business, that’s correct. That doesn’t mean ideas are not important.

But just that in business you will never know whether an idea will work in the real world, until you don’t test it. That is why it’s critical to have a framework to test ideas quickly; keep those that work and that have the potential to become your next business!

Find your sweet-spot

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Starting a successful business is not an easy thing to do, as most startups fail in the first years of operations. For that matter, you need to have the resources to get going the first stage and have things take off as quickly as possible.

However, in many cases, a startup will really take off and become a mature and successful organization in at least 5-10 years from its inception. That requires a huge amount of stamina, passion, and resources to get going.

Therefore, in many cases, to launch a successful business, it is important to balance two dimensions:

Personal dimension: are you passionate about the business you’re stating? The problem it is solving? Or about managing the team that will solve that problem?
Financial dimension: is there a market ready to respond to your potential product? If not, do you have enough financial resources to get going until there will be a market-ready for your product?

Those two dimensions are critical to launching a successful company. Passion (either for the business or the team that will manage it) is critical to get going for the long-run and even when things seem not to work out.

The financial dimension is critical, either to enable your business to gain traction (if there is a defined, existing market to start with). Or to be able to get going even when the market is not ready yet. Think of the case of a high tech product, based on new technology. You will need funding to make sure you will bring that product to market effectively.

The third dimension, which is about feasibility is less important compared to the two above.

When you do balance those dimensions, you are on the right path.

In search of your blue ocean
[image error]A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

It’s easy to start a business in a crowded space. It doesn’t take to much searching or tinkering. You just need to look at what others are doing and fo for it. That’s the reason why everyone wants to start her own restaurant, even if it will hardly make any money.

And if you need to start a business as a means to give you the financial resources for you and your family that is fine.

However, if you have the option to build the kind of business you want, you might want to search for your blue ocean. A blue ocean is an uncontested space where you can build your business and become the key player.

Find your niche, or better yet your microniche

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Another common mistake when starting a business is the complete lack of definition of what kind of business you want to build and how you want to be recognized. In short, call it as you like, positioning, targeting, niche, or whatever.

What matters is to find your perspective. Building a successful business is about telling your side of a story, finding your unique perspective. What is that you do that makes you different, why would people both buy from you in the first place?

How do you pick a microniche?

Let’s start from a simple example. Let’s say you’re opening up a bookstore, looking for opportunities to kick off the store.

Where do you start?

The platform with the most data when it comes to books is definitely Amazon. You start from the Amazon broadest categories to start looking for opportunities:

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There was a time when it was possible to stop there. As the web was not such a crowded space for you to start a business. However, nowadays you need to a lower level to look for your microniche.

Thus, saying something like “I’ll start from literature, or historic fiction” isn’t enough. Those are too broad. So where do you start?

Go a level down:

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Within Amazon‘s literature and historical fiction, we can identify a further category for us to start with. For this example I took something like “historical fiction” and went a level down:

[image error]I selected for instance, “Reinassance” as the key area within the micro-target I’m picking to kick off my business distribution strategy.

Thus the process looks something like that:

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Within that microniche you can see how the bestseller has quite some substantial reach:

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The interesting thing is that what it might actually seem a very small audience it turns out to be a decent audience for a business which is starting out.

Indeed, by crossing the data from Amazon to the keyword volume for the book’s author “Johanna Lindsey” you can see how she is a micro-celebrity:

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Example of how a microniche analysis uncovers the audience around a micro-celebrity and it opens up opportunities to kick off your business distribution (data: SEMRush)

It is interesting to notice how we uncovered a potential audience made of over four thousand people each month, by just doing simple research on Amazon and by crossing that with keyword volume.

Thus, if you were to start a bookstore in that category you might want to make sure to have all the books of that author available, create a content strategy around it.

And for instance, invite the author for an off-line session with her fans. While for instance, also transmitting that live online so that you can reach a wider audience and create the first set of loyal customers for your bookstore!

Pretotype
[image error]Pretotyping is a mixture of the words “pretend” and “prototype” and it is a methodology used to validate business ideas to improve the chances of building a product or service that people want.

Another huge, and common mistake many entrepreneurs or aspiring entrepreneurs make when starting a business is to focus on technicalities instead of asking the most important question: do people want this?

In short, idea validation is extremely important. You can use several frameworks for that, as the lean canvas. Or you can use a technique called pretotype, which I covered with Alberto Savoia on the interview on the blog. 

Iterate up to market-fit

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When you get into the process of quickly validating your ideas, to get passed the most difficult stage; where you need to find that moment when customers finally get what you’re offering them, at the point that you need to barely explain what you’re selling, as they will buy with limited friction.

Businesspeople calls this product-market fit. Once again, the definition is not important. What matters is that you pass that stage to build a valuable business, quickly.

Operations

In a digital business, setting up the operations doesn’t necessarily mean to build up physical facilities. Instead, that is about drafting a business model that will allow you to be competitive in the marketplace.

This process isn’t a one-time thing. Indeed, before your business model would take off, you’ll need to iterate it over and over again.

When will your business model be competitive? Primarily when it has reached:

Recurring, sustainable income
Flywheel effects
And fat margins

In short, the right business model will be able to have a built-in monetization strategy that generates income, based on repeatable processes, that are sustainable in the long run.

Also, your business model will need to leverage on a flywheel effect, where monetization powers up your brand, rather than diluting it. In other words, when you start making money, that monetization needs to reinforce your brand, so that more people will want to deal with your company.

As your brand gains momentum, you can leverage it to enjoy higher and higher margins. When you enjoy fat margins (there isn’t a fixed percentage, but it depends on the industry and competition), that’s when you’ve mastered the operational part.

In general, the more the gap between revenues and costs increases (revenues grow faster than costs), the more you’re on the right path to building a long-term competitive advantage.

Stay lean

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Unless you got enormous funding for your business, you want to follow a lean methodology approach. This will help you to stay in business for as long as possible while tuning your business for the market.

Stay focused
[image error]Back in the 1970s, Intel was among the most respected and admired companies in Silicon Valley. During that time Intel’s CEO, Andy Grove, was the man who managed to drive organizational change.
Andy Grove did that via a goal-setting process called OKRs or objectives and key results. Where the objective is the direction, toward which the organization needs to be in the medium term.
And the key results are milestones, things that allow the company to get there. Those key results need to be easily trackable, understandable and shared across the company.

While you will be tempted to test many things out, and you do want to test many of them. You still want to keep a focus on 2-3 key objectives that can have a massive impact on your business.

Stay fast and frugal

Speed is critical in business and you need to be very quick, especially when you’re starting things out because in order for them to gain traction it will initially take a lot of push.

This business plan will help you to come up with a business model to test in the marketplace:

Velocity and Momentum

At this stage, before you go to the execution stage, it is crucial you know what distribution channels you can tap into. For that matter, you need to prioritize on the acquisition or growth channel that might work best, based on the strategy you picked.

Instead of trying to tap into all the possible distribution channels, mastering one, in the short run is probably the most effective strategy in many cases.

For that matter, you need to understand whether you might want to leverage business development, growth marketing, traditional sales, and marketing or else.

Switch on the engines of growth
[image error]In the Lean Startup, Eric Ries defined the engine of growth as “the mechanism that startups use to achieve sustainable growth.” He described sustainable growth as following a simple rule, “new customers come from the actions of past customers.” The three engines of growth are the sticky engine, the viral engine, and the paid engine. Each of those can be measured and tracked by a few key metrics.

Once all the conditions above are met, you need to push on growth. Eric Ries points out that you have, usually, three engines of growth you can leverage on.

Growth framework
[image error]Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages of analyzing, ideating, prioritizing and testing.

It’s very important that at this stage, you have a growth framework in place to pass the several stages of growth you need to build a sustainable company.

Execution

When you start executing, that is when you will be able to gather critical feedback to understand whether or not you’re moving in the right direction. This is the essential part of the MOVE model.

In this phase, you need to gather feedback on several areas:

Is the business gaining momentum? Remember, momentum will be judged on unconventional, two-fold, or 10X growth basis
Does the market like my business model? You can decide that by growth or profitability or both
How effective is my strategy? Is the real world validating it or do I need to go back and tweak my business model?
What distribution channel is working so far? You need to double down on what’s working
Am I spending too much time theorizing? If so, go back to the execution phase to gather more feedback from the marketplace!

Key takeaways

When you start moving, you also need to make sure you’re going in the right direction. That is why, in the execution phase, you need to reconsider whether what you’re doing is helping you achieve the 10X growth you were looking for at the beginning of the MOVE model.

Or whether your business model generates growing margins. Or yet, whether you need to leverage network effects to enhance growth. Moving back and forth in the MOVE model might help you gain traction to generate a long-term competitive advantage!

Tools, frameworks and additional resources

It is always important to highlight that tools and frameworks are things that need to help us in moving toward our goal. What tool and framework we might want to use is also based on the kind of business we want to build.

The power of the brand and your brand identity
[image error]An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.

In the business world, it is getting more and more prevalent the approach of testing all it’s possible to make your business successful and prioritize the things that work.

However, building up a successful business is also, and especially a matter of choice and identify. In short, if you’re building a company that might well be the representation of your ideas and belief applied to business.

As such, it is fundamental to have in mind what kind of business you don’t want to build. Therefore, you will need to set some boundaries in building up your company.

What’s your essence?
[image error]A Business Model Essence according to FourWeekMBA is a way to find the critical characteristics of any business to have a clear understanding of that business in a few sentences. That can be used to analyze existing businesses. Or to draft your Business Model and keep a strategic and execution focus on the key elements to be implemented in the short-medium term.

While business models are complex abstractions, when you start a business, that is the best time to define its essence. What are the core and critical characteristics you want to build your business around?

Master the problem

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Leaner Canvas by Ash Maurya of LEANSTACK

If you’re building a business, you need to master your customers, or being clear about the kind of customers you want. That might sound counterintuitive, yet from the way you design your business model, it will also depend on the kind of customers you’ll attract.

And the most important aspect you need to focus on is to understand what problems they have and solve them. That is the simplest route. Two things to highlight. First, solving a problem is not about functionality alone. Solving an emotional problem is as important as solving a functional problem in certain industries.

If you think about luxury items, a purse is not an object where a woman can deposit her stuff. A purse represents a woman’s status. In short, that woman will feel special, act as such by wearing that purse. This is the whole logic of brand building and demand generation.

Thus, as an entrepreneur, if you’re thinking about a bag as a functional object you’re missing the main point. Instead, you need to start from the psychology of your ideal customers and understand what problems and desires they have, which connects to the second point.

Second, from the encounter of functionality and demand generation, that is how you build a successful business. There are certain industries where functionality matters more than perception. And other industries where instead perception and the ability to generate demand can be very powerful.

Understanding when to leverage functionality and when to leverage on perception is a key element of your business strategy. For instance, in the digital world, we might think that most of the value is driven by algorithms that objectively score and rank things out.

However, that is not the case. Algorithms are driven by business logic, and perception is shaped to drive and incentivize users to act in a certain way.  For instance, in 2019, Twitter redesigned the whole platform.

In a story by WIRED about the Twitter platform redesign, Stone, Twitter‘s co-founder highlighted, referring to the past years,  “we were just working as fast as we could…we weren’t trying to make it look good at all.”

Yet when Twitter understood the importance of changing the perception on its platform beyond growth metrics, that is also when it started to invest massive resources on its redesign, to nudge people to act on the platform in a certain way. This is extremely important to understand.

Because a redesign is not just a piece of new code added to the platform, but it represents the essence of the business. How you want your business to be perceived and how ideally you want people to act in the context of the boundaries you defined with your core values. 

When you build a business you get your chance to build a context. Would you live in a context that you don’t like or agree with?

Design your business model
[image error]The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.
Blitzscale (if needed)
[image error]The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

In certain scenarios, the business might look like a war. In those scenarios of threat, where your business might not make it to the next day, a tactic like Blitzscale might work.

Key resources:

What Is Business Model Innovation And Why It Matters
Moonshot Thinking: When Growth Marketing Becomes All About The 10X Rule
How to Write a One-Page Business Plan
30 Successful Types of Business Models You Need to Know
Value proposition canvas
Business model canvas 
Lean startup canvas
Blitzscaling canvas 
Business model navigator
FourWeekMBA business model framework
Value Mix
The Complete Guide To Business Development
SEO Hacking Guide
Growth Marketing Guide
Marketing vs. Sales 
Business Strategy Guide

The post The Digital Entrepreneur’s Guide On How To Start A Business appeared first on FourWeekMBA.

Digital Transformation: Definition, Mindset, And Principles

Digital transformation enables existing businesses to leverage digital technologies for business model innovation. The process of digital transformation is not just about new distribution channels. It starts by better serving key customers, and it completes by developing a new business mindset required to succeed in the digital era.

Busting some myths around digital distribution

As any concept that successfully developed in the business world, digital transformation has been exaggerated and emphasized, and it has, in some contexts, lost meaning.

Digital distribution is not a digital transformation

Companies and practitioners might use the term “digital transformation” to mean that a traditional company advertises its products online. However, this is such a limited view that brings companies to talk about digital transformation when all they are doing is not even close to it.

Understanding digital distribution is the first step to digital transformation. But the process can’t be complete until the company hasn’t transformed its business model to those digital channels.

Technology does not imply digital transformation

While technology can be leveraged to have new insights about customers. Technology alone won’t help if a fundamental mindset shift won’t happen.

Therefore, technology, if properly used, it does help the process of digital transformation. Yet technology is an enhancer (which can also negatively affect your business), not the bonanza, or the primary driver of your business.

Digital transformation is not a side project

Many companies that approach the digital world are fooled to think that a little investment in time and resources will do. The problem with this approach is the lack of understanding of the core principles underlying digital business models.

Digital transformation is not digitalization

Imagine a successful printing publisher who starts publishing its content online. Even though the content is well adapted for physical printing and distribution, that is not thought for digital distribution.

The printing publisher comes to the conclusion that digital transformation won’t work because of that. Yet digitalization or digitizing something is not digital transformation!

Definition

Digital transformation enables existing businesses to leverage digital technologies for business model innovation. The process of digital transformation is not just about new distribution channels. It starts by better serving key customers, and it completes by developing a new business mindset required to succeed in the digital era.

Therefore, digital transformation starts by enabling a company that has born offline to a successful transition to the new ways of doing business.

Read Next: Business Model Innovation 

Dynamic thinking and dynamic markets 

Digital transformation implies a more dynamic thinking process. That’s because digital channels do add potential complexity to the mix. Thus, thinking about your business as a monolithic block might limit this process.

With digital channels and business models, it’s important to be aware of the core part of the business that needs to be controlled.

Mastering the key customers’ key behaviors
[image error]Digital transformation is really about evolving into a different way of operating as a business. So it’s not something that you run out of the project management office, with a sort of, three-year timeline. It involves understanding five key domains (customers, competition, data, innovation, and value). Companies need to be looking at customers and their interactions and their dynamic behaviors and how they shape the business.

In the FourWeekMBA interview to David L. Rogers, he explained how:

Across all different industries and across, really about fifteen years or so of the digital era. And what I found was that five common behaviors kept driving when and where customers would bring their attention and their energy and their investment and spend their money:

Access

Engage

Customize

Connect

Collaborate

Digital business models
[image error]A digital business model might be defined as a model that leverages on digital technology to improve several aspects of an organization. From how customers interact, to how the value proposition is derived, or how monetization happens.
Platform business models
[image error]A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.
Digital distribution channels
[image error]A distribution channel is the set of steps it takes for a product to get in the hands of the key customer or consumer. Distribution channels can be direct or indirect. Distribution can also be physical or digital, depending on the kind of business and industry.
Digital platforms business models

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Digital platforms are focused on creating ecosystems that enable interactions among key stakeholders. When those ecosystems thrive that is when you’ve built a successful business model.

The upcoming era of Superplatforms 

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As the digital world enables new business playgrounds (like Blockchain-driven businesses) the whole digital trasformation playbook evolves.

In the FourWeekMBA interview to IBM’s Jerry Cuomo highlighted:

The big trick in the business playbook is to design business processes that can be worked across a team.

Business model innovation
[image error]Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Read Next: Business Model Innovation 

Other resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
The Complete Guide To Business Development
Business Strategy: Definition, Examples, And Case Studies
What Is a Business Model Canvas? Business Model Canvas Explained
Blitzscaling Business Model Innovation Canvas In A Nutshell
What Is a Value Proposition? Value Proposition Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained
What Is Market Segmentation? the Ultimate Guide to Market Segmentation
Marketing Strategy: Definition, Types, And Examples
Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
How To Write A Mission Statement
What is Growth Hacking?
Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

The post Digital Transformation: Definition, Mindset, And Principles appeared first on FourWeekMBA.

How Does Airbnb Make Money? Airbnb Business Model In A Nutshell

Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. The platform also charges hosts who offer experiences with a 20% service fee on the total paid amount.

How much money does Airbnb make?

The digitalization that happened in the last two decades has facilitated the creation of peer to peer platforms in which business models disrupted the hospitality model that was created in the previous century by hotel chains like Marriott, Holiday Inn, and Hilton.

Airbnb made $93 million in profits on a $2.6 billion revenues. This means the company’s net margin was 3.58%. That seems a low net margin compared to 9% from the hospitality industry.

However, Airbnb is a startup gaining traction and market share over traditional players. Also, its business model is based on the growth of its user base.

How much is Airbnb worth?

In March 2017 the company was valued $31 billion. As of that date, the company had $5 billion at the bank, and it rejected an investment offer by SoftBank. Airbnb might be the biggest tech unicorn IPO in 2018.

What are the key partners for Airbnb?

There are three key strategic partners:

Hosts
Guests
Freelance photographers

There are also other partners, from which it depends on the platform’s success, like IT experts, and interior designers.

Guests (travelers) can easily find hosts (pretty much anyone with a private home for rent) through the Airbnb marketplace.

Also, Real estate agencies that have vacant units can use Airbnb as a way to rent the excess properties they were not able to rent on the market. Instead, freelance photographers can earn a living by joining Airbnb as independent contractors.

Airbnb mission and vision

Airbnb’s mission is to create a world where people can belong through healthy travel that is local, authentic, diverse, inclusive and sustainable.

This is how Airbnb describes its mission. And it continues:

Airbnb uniquely leverages technology to economically empower millions of people around the world to unlock and monetize their spaces, passions and talents and become hospitality entrepreneurs.

The key element of a platform and peer-to-peer business model like Airbnb is the creation of a viable ecosystem. In this case, Airbnb becomes a platform for other entrepreneurs or aspiring hospitality entrepreneurs:

Airbnb’s people-to-people platform benefits all our stakeholders, including hosts, guests, employees and the communities in which we operate.

Airbnb organizational structure

According to LinkedIn, of the over fourteen thousand employees connected on the professional network, most of them work in arts and design, operations, engineering.

And another good chunk work in business development, media, and communication, sales and marketing.

Airbnb value proposition to its key partners

There are several value propositions for both hosts and guests. And for freelance photographers.

Hosts

hosts to can earn an extra buck by renting additional space they have at home
hosts are provided with insurance and liability coverage, the “Host Protection Coverage.”

Guests

The booking process is straightforward and the digital platform very effective
travelers have affordable prices
guests can have unique experiences

For both hosts and guests

The review system for both hosts and guests guarantee standards of quality

For freelance photographers

Extremely flexible schedule, easy money

What is the revenue generation model?

Airbnb makes money in two ways:

1. It collects a commission from property owners, which is generally 3%. While it collects a commission fee from the same owners offering experiences, which is generally 20%.

2. It collects a transaction fee from guests of between 5% and 15% of the reservation subtotal

What are two key challenges to Airbnb’s success and further scale?

There are two main issues Airbnb has to face:

Trust

When hosts are listing their rooms and homes, they’re trusting the platform to put them in touch with good people. The same applies to guests. Would this trust be eroded over time so will be the value of the marketplace.

Customer retention

Travelers nowadays have plenty of options. If they revert back to hotels or other solutions, Airbnb loses momentum. Also, another risk might be that of losing guests that make friends with hosts. In fact, they might choose to organize their next transaction privately.

The paradox then is that Airbnb rather than strong incentive tie between hosts and guests. It has to create an experience so that both parties can trust each other enough to make the transaction but not so much to get out of the Airbnb marketplace.

Summary and Conclusions

Airbnb is a start-up unicorn that disrupted the hospitality industry. As of 2017, it made $93 million in profits on a $2.6 billion revenues.

Also, back in March 2017, it was valued at $31 billion. There are three key strategic partners: hosts, guests, freelance photographers.

The revenue generation model is quite simple and it’s based on a commission fee of 3% on hosts (while 20% for hosts is offering experiences) and a transaction fee of 5-15% over guests.

Two main risks that Airbnb faces as a peer to peer marketplace are trust and customer retention. The company is growing quite fast, and it is planning to get listed. Will this growth continue?

Airbnb Business Model Explained in an Infographic

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Airbnb first-ever pitch deck

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How Does Google Make Money? It’s Not Just Advertising! 
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The post How Does Airbnb Make Money? Airbnb Business Model In A Nutshell appeared first on FourWeekMBA.