Choose Wisely! 6 Very Profitable Businesses to Start

Summary

The video discusses six profitable business models that have long-term potential. The speaker, with over 20 years of entrepreneurial experience, shares insights into industries like day nurseries, food services, contract catering, commercial property rentals, niche wholesale, and commercial hygiene and waste services. Each model is praised for its predictability, scalability, and attractiveness to investors. The speaker also highlights the importance of average lifetime value, repeat customers, and cash flow stability. A bonus tip is included on professional services being a lucrative business model due to regulatory barriers and predictable revenue.

Takeaways

• 💼 Successful businesses often have a solid model that ensures profitability and longevity.
• 🏫 Day nurseries are profitable due to long-term customer retention, up-front payments, and government regulation.
• 💰 The involvement of venture capital and private equity in a sector is a sign of a strong business model.
• 🍽️ Food services businesses are profitable because of predictable cash flow and long-term contracts with large institutions like schools and factories.
• 📊 Contract catering is valuable due to consistent, repeatable revenue from fixed contracts with organizations like factories and schools.
• 🏢 Commercial property rentals, especially industrial estates and warehouses, offer high returns and tax efficiencies compared to residential properties.
• 🎯 Niche wholesale businesses thrive by targeting specific markets too small for large corporations, allowing them to maintain higher profit margins.
• 🚮 Commercial hygiene and waste services are recession-proof, predictable, and often attractive for roll-ups and investor buyouts.
• 👨‍⚕️ Professional services like accounting and legal practices have high barriers to entry, predictable revenue, and are attractive to investors due to their regulated nature.
• 🎓 Attending business seminars can help entrepreneurs learn strategies to build successful, scalable, and profitable businesses.

Q & A

What is one key factor that makes certain businesses more profitable and sustainable over the long term?

A key factor is having a strong business model that ensures predictable cash flow and a high average lifetime value of customers. This allows businesses to retain customers for extended periods, making them more stable and easier to scale.

Why is the day nursery business model considered profitable?

The day nursery business is profitable because of the high average lifetime value of customers. Children stay enrolled for 4-5 years, providing predictable and long-term revenue. Additionally, the business benefits from being regulated, which creates a stable environment with less competition.

What does the presenter mean by 'other people's money' (OPM), and how does it benefit business models?

'Other people's money' refers to external investments from private equity, venture capital, or banks. It benefits business models because it indicates that a sector is considered profitable and scalable, making it easier to secure funding and grow the business.

How does scalability contribute to the success of a business model?

Scalability allows businesses to grow without significantly increasing costs. Larger businesses attract more investors and other forms of external funding, and they often enjoy higher profitability. For instance, larger day nurseries are more likely to receive investment compared to smaller ones.

What is the difference between Food Services and Contract Catering as business models?

Food Services involves supplying food products to businesses like restaurants or schools, where regular customers create predictable orders. Contract Catering, on the other hand, involves directly providing food services to clients like schools or offices under a contract, ensuring daily and predictable cash flow from a fixed customer base.

Why is commercial property rentals considered a good business model?

Commercial property rentals are profitable due to high barriers to entry, long-term leases, and tax efficiencies. Tenants usually sign 10-15 year leases, providing predictable income, and the owners can benefit from tax write-offs and lower stamp duties, making it a stable long-term investment.

What are 'niche wholesale' businesses, and why are they appealing?

Niche wholesale businesses focus on specific markets that are large enough to be profitable but too small for major corporations like Amazon or Walmart to dominate. These businesses benefit from reduced competition and can maintain higher profit margins by catering to specialized needs.

Why are commercial hygiene and waste services considered recession-proof?

Commercial hygiene and waste services are recession-proof because businesses and public facilities always need these services, regardless of the economic climate. They provide consistent and predictable revenue, which makes them attractive for investors and roll-up opportunities.

What is meant by 'higher barrier to entry' in the context of profitable business models?

Higher barrier to entry refers to businesses that require significant capital, expertise, or regulatory compliance to start. These barriers make it harder for new competitors to enter the market, allowing existing businesses to enjoy more security and profitability.

Why are professional services, such as accounting or legal services, profitable business models?

Professional services are profitable because they are often regulated, ensuring a steady demand. They have predictable revenue streams, and other people's money (investors or buyers) are interested in acquiring them because of their stable value and low risk.