Transcription
This is a definitive tier list for what business to start if you are a beginner. I know most gurus are telling you to do the whole “sexy passive income” thing—things like e-commerce, Drop Shipping, print on demand, digital products, affiliate marketing—but those are honestly the worst types of businesses you can start if you are a beginner. So let’s not do that. I don’t want you to waste your time or money starting the wrong type of business.
If I had no money and no experience, these are the types of businesses that I would actually look to start. These businesses don’t require much work experience; they’re not expensive to start; they won’t take years to make money from; they’re not high risk; and they’re actually long-term sustainable—AKA you won’t hate it in two months.
How do we know this? We put all the business options we could think of into a Notion table. I added in all of my experience with them; my team did a ton of extra research; and this is what we came to.
Now you’re probably looking at this feeling overwhelmed, feeling like there are a thousand different types of businesses you can start. But actually, all of these businesses can be boiled down, can be grouped into just three big types of overarching businesses. So let’s go through them.
So the first type is a product-based business. “Product” is really literally anything you can think of. You could sell cats—that’s a product. You could sell puzzles; you could sell a couch; you could sell pillows. Those are product-type businesses, right? And I already put these in D tier because the reality of product-based businesses is they are a great business model only if you have the actual experience to make them work and the money to invest to get them going. Because, again, product businesses require an upfront investment and if you have time to wait for money and results, because it will take a while.
Because product-based businesses, like most businesses, are way more complex than gurus will tell beginners they are. But they are a terrible business idea if you’re inexperienced and you want to make money somehow in the short term, because it is so high risk to start a product business. There is a very high rate of failure; way more complex than people think; and it takes way longer to be profitable than some of the other business models that we’ll talk about in the rest of this video.
Now to dive into a little bit more specific, there are two types of product-based businesses. There’s number one: physical products. So this is physical—physical products can be sold via like Drop Shipping, online store, print on demand. Now there are pros and cons to each of these. I want—I don’t want to be biased, so I’m going to tell you all the pros and cons just super realistically.
Pros: big financial opportunity if done correctly; there are very many million-dollar, multi-million-dollar, billion-dollar product-based businesses; you have a lot of autonomy as a CEO; freedom to do whatever you want; it’s really your thing; it’s very scalable once you get hiring and systems in place; and the results are pretty detached from your time; it’s not tied to how many hours you’re sitting there and doing the work, most of the time. Now my stomach is also starting to growl; I’m always hungry when I record.
But cons—so many cons! It really requires a high-level knowledge of most things in business, but specifically traffic and marketing. And that then requires either money—so investing in traffic, so paying for ads to your product because you need traffic—or an existing audience. So if you have 100K people on Instagram that would be interested in your product, you need something like that. Or you need the time and patience to actually build the audience because people will not magically show up to buy your product if you do not have the money to pay for ads or if you do not have an existing audience. So that’s just a reality check there. It’s very hard to start a product-based business if you don’t have one of those prerequisites.
It also requires a very high knowledge of product or time for you to figure all of this knowledge about product out. So I’m talking like validation—how do you actually make sure it’s a product that people want and that there is a clear enough USP so that actually it is competitive in the market that you are looking to go into? Also packaging, messaging, pricing, Logistics. I mean, I have never had a physical product business; might be the next business that I try to start, but I cannot even imagine how complicated it is to figure out things like Logistics, suppliers. I don’t even know the keywords—like that’s how unfamiliar I am with this type of business because I think there is just so much to it when you’re actually producing a product and then you’re trying to figure out how to do all of the shipping and returns. And I don’t know, it just sounds really complicated, but potentially my next challenge.
So all of this just means that it’s very high risk depending on your skill level; also tons of hard work upfront before you maybe even make a profit. It’s not even guaranteed that you’ll ever make a profit, but there will be tons of work where there might be months where you have zero income coming in. So unless you have a supplemental income source, I just wouldn’t recommend this, basically. It also requires initial startup investment; you have to invest in like producing the product, in setting up a website, and setting up I don’t know, traffic sources, starting to build an audience, paying for ads, whatever that looks like. Yeah, can take a really long time and potentially lower profit margins than the product type I’m about to talk about. So just some things to keep in mind.
Now, so the second type of product-based business—so physical is like physical, right, in my hand, a physical thing. The second type is digital. Digital is just something that is not like this—good explanation, too. So when it comes to digital products, I’m talking all things templates, tools, printables, workshops, online courses, events, newsletters—anything that’s like intangible, it might be more knowledge-based products essentially and transmit it over the internet.
Pros: it is cheaper and faster to make than physical products, right? It’s much cheaper to produce a PDF than to maybe like produce a comb. And because it’s cheaper and faster to make than physical products, it is a lower-risk type of product to make. It is also way more scalable; it has much better profit margins than physical products because with a digital thing you can duplicate it essentially for free. There isn’t like cost of whatever it takes the materials to make this comb, right? If I want to make a duplicate of an online course for another student, then the profit margin is super chill. There are also so many specific niches you can target with digital products, which I think is super advantageous because that gives you a huge competitive advantage, and it can be semi-passive. So some pros, but cons—and I cannot stress this enough—there are huge cons with digital products. Okay, and I have made a lot of money from digital products, so I want to be the first to say digital products are incredibly hard because they are so cheap and easy for anyone to make. The barrier to entry to make a digital product is very, very low, and so a lot of people make them. And what happens when a lot of people make digital products is there is extremely high competition. Extremely high competition means that your digital product has to be very diversified, very specific, very, very unique in some way to actually get a chance to be sold, or you have to have a high knowledge of traffic or have things like money to invest in paid ads or an existing audience already, or the time to build an audience of your own to sell your digital products to. People will not magically show up to buy an average digital product from you. Wow, that was kind of mean. I’m sorry; that’s I… yeah, I just wish I could tell more beginners this because I see a lot of beginners be like, “Oh, digital products are so easy; I’ll just make a digital product; I’ll try to sell it on Etsy.” But the truth is there’s just so much more behind that that I feel like these digital product gurus are not telling you.
Again, it requires a very high knowledge of product or time to figure it all out. There is a lot to digital products; it’s not just you make an online course and people will magically show up and bang down your digital door to try to buy it. Most of the time it requires things like a product validation, first of all—ensuring the thing that you’re creating people actually want; it’s actually unique. You need to think about things like traffic sources, potentially sales funnels if it’s a high-ticket product to nurture the relationship and build enough trust that people would actually give you a lot of money for a digital product—something that is not physical—and yeah, customer support, product fulfillment, ensuring that people are happy, optimizing the product. There’s a lot to it; there’s really a lot to it. And this is coming from somebody who’s made hundreds of thousands of dollars with digital products. So yeah, all that goes to say I think it’s very high risk depending on your experience level. I don’t recommend it to beginners; it can take months to—to make money, and many people never make money. Of course, you can say, “It’s faster to make, so I might as well try it.” Go ahead, try it, but I’ll just say this is not what I recommend to beginners, especially not as your first thing. You can do this like later on, on the side of stuff, but don’t make it your main thing where you’re counting on this to make you money to pay rent, essentially. Especially if you don’t have a specific skill set or specific experience with something. If you’re like a highly niched expert, then digital products might work for you, but again, this tier list is for beginners. Okay, I would slot digital products into the C tier because I think it is easier and cheaper than physical products to make, but I still think it is incredibly misleading in how easy it is to make money. I don’t think it’s easy to make money with a digital product.
Okay, so that was the first type of business: product-based. Now I want to talk about the next type of business, which I think is another one of these sexy options that often are sold as way easier than they are. The next type is a content-based business. So I’m talking about all people who make money off of content some way, shape, or form. Me filming this YouTube video—this YouTube video is content; the YouTube pays me a little bit of money depending on how many people see this and watch the ads. This is a content-based business, right? So content-based businesses: all things YouTubers, influencers, podcasters, bloggers. These are all content-based businesses because they create the content, whether that is a blog post, a video… Streamers on Twitch are also creating content in the stream; the stream is the content.
Pros: it’s a gateway to so many income streams, right? Ad revenue, sponsorships, digital and physical products; you can start a membership; you can start a community—so many things; you can have multiple income streams; you can build a community of like-minded people who love what you love. So cool, fortune, fun—all the things they tell you, right? Pros: very easy.
Pros, but cons—and this is coming from someone who’s been making YouTube videos for 3 years and making tons of other types of content as well for years and years and years—it is extremely competitive. Again, because I think so many people are sold like, “Oh, it’s very easy to become a content creator.” A lot of people try to become content creators, and thus the market is very flooded, and there is a lot of competition. Like if you go on TikTok, the fact that there is so much content you can scroll endlessly, which means you need a very strong competitive edge to stand out. And that means your personality or your authority or your editing style or your way of conveying information or your lifestyle is really interesting… I don’t know, you have really cute cats—that’s what I lean on. And of course, tons of upfront work creating content for free. Talk to any content creator and ask them, “How long did you make free content for?” and it will probably be months if not years before they ever saw any amount of money. It took me nine months to get monetized here on YouTube, and after that they were paying me like $20 a month or something. It takes time to learn how to be a good content creator, to create content, to get clarity on what niche you’re in, to get clarity on who you’re speaking to, to get clarity on what they are liking about your cont… even I’m not clear about that sometimes. So it takes time to figure all these things out. And of course, this all means it’s very high risk; many people do not succeed. So I would just recommend if you feel called to create content, do it on the side of something else that is bringing you income so that you’re not putting all of this pressure on the content to generate income immediately. And of course, it could potentially be hard for your mental health to feel like you are the product because essentially when you are content-based, when you’re personality-based, when you’re brand-based business, you are the thing that you are selling. So that means potentially if you ever don’t want to show up and be the face of your business anymore, your business will suffer because so much relies on the trust and relationship you have with the audience, essentially.
So that’s why I would slot all of these into B tier, especially for beginners. I think it’s a good option; I would do it on the side. And the reason that I have it above the products is because I think at least with creating content you are understanding how to get attention; you are understanding potentially more about how to drive traffic; you are potentially building an audience, which is really important if you want to start a product-based business, right? When you start making content, you get that like communication back and forth with your audience; you start learning what they need, what their problems are, what solutions you could potentially propose to them, how you can make that solution a really good fit for them; you learn messaging around how to communicate in a way that they will understand you. That is all superior knowledge if you ever want to start a product business, which is why I put it above the products.
Okay, so the third type of business—this is what we’ve been hyping up to; this is what I’ve been building you up to. I think this is the best option for beginners, and that is a service-based business. So a service-based business—there are two types of service-based business. The first type is a solo service-typed business, which you might know better as freelancing. Freelancing is when you do a service for somebody—like copywriting, you make a graphic in Canva, you help them manage a project—and they pay you for the time that you do doing that for them; the time you do doing that for them; the time you spend doing that for them.
Now I separated freelancing into two separate things: one is Junior freelancing, and one is mid-to-senior freelancing. So Junior freelancing roles are roles I consider you don’t need a lot of experience to start; you can just get started with it with a bit of Googling, with a bit of figuring out, with a bit of log common sense and good soft skills, essentially.
Pros here: yeah, sell your time. If you are worried that you don’t have experience, business owners will pay for your time. Business owners are very busy; they don’t have time; you can just sell them your time to figure things out—to figure out how Canva works to make a graphic for them, to I don’t know, go figure out how Zapier works and set up a Zap for them. There are so many things that business owners will pay for, and time is a huge component of that. So if you have time and you don’t have experience, sell the time; get paid to learn on the job. This is—and I know this doesn’t sound like it—but this is the biggest of all time. This is so, so, so important that this is a massive learning opportunity. I cannot overstate how insanely impactful this backstage pass is. I worked as a freelancer full-time for years and years and years; I was a business manager, so a mid-to-senior level freelancer for my clients; I eventually like was their fractional COO. I got to see exactly how all these businesses ran behind the scenes—like six- and seven-figure businesses. I knew exactly what types of products they created, why they created them, how they fulfilled them, how they got customers, traffic sources they use, pros and cons of different traffic sources, marketing, sales—everything. This is priceless information, and I was behind the scenes of 40-plus freelance businesses, so I got to see so many different types of things, so many different mistakes, failures, successes, what works well in different types of industries—invaluable experience if you ever want to start any type of other business. That is what you will use to make tons more money in the future because it’s an investment in the biggest asset: you. Of course, it’s fun if you work with clients in a niche you’re interested in, and of course, backstage pass—so important.
Okay, cons: unlike a typical job, you’re only paid for billable hours—so the hours you spend working for a client. It of course takes a little bit of time to get going with it, right, to make a decent income, maybe income insecurity in the beginning when you’re just trying to like find your footing and everything. Good thing I have over 100-plus videos here on YouTube about freelancing and how to get started on the right foot and everything I learned over 5 years and becoming a six-figure freelancer, so go and do that so you don’t have to stumble too much in the beginning. You might have to spend lots of time with client acquisition, especially in the beginning, but once you’ve signed a few clients, I think it gets easier and easier. And of course, like any other business that you might start, there is no traditional safety net like health insurance or a pension plan; you would have to set that up yourself. It’s not that complicated, but just something to keep in mind. One more con is I think it will take a lot of proactivity, taking a lot of initiative, and learning on the job, and you kind of have to just accept that that is how it will—will be. Everybody who starts their first work experience with zero work experience spends time learning on the job, and freelancing is no different. When you start, you’re like, “I have no clue what I’m doing; I hope nobody realizes that you just spend your time Googling.” That’s exactly what I did when I started freelancing with no work experience; I was Googling every single thing that came out of my clients’ mouths. That’s normal; that is how you learn, so do not shy away from that.
And next up is freelancing on a mid-to-senior level because yeah, I wanted to separate them because I think not freelancing roles were made equal. So, so mid-to-senior roles are things that require a little bit more of a specialized skill set. So I’m talking graphic design, copywriting, digital business management, web developer, photographer—things where you can’t just like start day one and be like, “I’m a copywriter.” Like it requires a little bit of studying or work experience or something to get going with it. It’s—it’s harder to figure out via Google quickly, is what I mean.
So pros and cons here: very similar to Junior, but pros here is mid-to-senior roles obviously get paid better, so you’ll make more money per hour, or you can start doing things like retainers or packages where your time isn’t directly correlated with your income. Like for me as a business manager, I was doing deliverable-based retainers, and so I wasn’t being paid for every single hour that I was sitting; it was more what I was producing for clients. You can also then start thinking about like profit share and stuff like that where you really benefit from helping a client’s business grow really big. Hate to learn on the job; it’s fun if you work with clients you really like; it’s a backstage pass most importantly to all of these types of businesses that you’re going to be working with. Yeah, and of course freelancing is super flexible, so you can do your work on your own time; you have a lot of location independence. I got to travel the world while I was freelancing full-time; it was super chill; I had a great time; I love freelancing; I recommend it to everybody. I don’t know if you can tell yet, I’m obsessed with it; I highly recommend it.
And then the cons for these: quite similar to the Junior ones. Of course, everything has pros and cons, so it really comes down to you and how badly you want something. If you are willing to handle the cons—by the way, all the cons that I’ve mentioned are problems that you can solve. You can solve it via Google; you can solve it asking questions; you can solve almost all of these problems; it’s just how much time they take to solve, so you kind of have to figure out what you’re comfortable with.
The other type of service-based business is businesses that are bigger than one person—AKA an agency. So I’m talking about like copywriting agencies, graphic design agencies, web development agencies.
Pros here: very scalable; lucrative if done correctly; you can take on bigger clients when you have a team to fulfill on lots of different things; you don’t have to take on as many hats as a solo freelancer might, right? Because you can hire different things; you could hire a business manager for your agency; you could hire somebody to help you with sales; and higher profit margins than solo potentially because you have a bigger team, bigger clients.
Cons: this is not as beginner-friendly as freelancing. I really think this is only for experienced freelancers. Ideally, you have been a successful freelancer, and then you start to get even more demand from businesses, and then you start an agency. That’s normally how I would recommend the flow. It of course requires more responsibility and time managing people and knowing how to hire and manage your projects, which again, you could hire a business manager to manage your agency easily. Also requires a higher level of skill, and you have to have a really good lead and sales pipeline to ensure people are flowing in to so that there’s enough work for your agency and all the people you hired.
So this is kind of how I would separate out the roles we just talked about into the tier list. I would put agency and mid-to-senior freelancing roles in A tier, and I would put Junior freelancing roles into S tier. So Junior freelancing roles are the best businesses to start for beginners. It doesn’t require much work experience; it’s not very high risk; you don’t have to invest a lot of money to start; you can figure out a lot of it on the job; and you can learn on the job. And then you can use that learning then to become a mid-to-senior freelancer if you want; you could start an agency if you want; you can use that knowledge to start I don’t know, creating content about it; you could start making digital products around your specialized skill set once you’ve learned more. And I don’t know if you’ve noticed, but you could use this as a pipeline—like a roadmap for what type of business to start at what time. You could start as a junior freelancer, and this is essentially the roadmap I did as well. I started as a junior freelancer; I learned a lot; I became a mid-to-senior freelancer; and from there I was like, “Let me start creating content about the things that I’m learning and that I enjoy.” Started creating content, and I also started making digital products around what I learned as a freelancer, as a business manager. I started teaching project team and systems management; created lots of products out of that. And now the only one that’s left to conquer is a physical product business.
As a special thank you to everyone who stayed this long, watched the video this long—did wonders for my retention, first of all. Big hug! Big, big hug. That was kind of awkward, but it was cute. If you want a copy of this Notion table that we made, which actually is super intense—business idea, business type, barrier to entry—so low is like low barrier to entry; it’s like pretty fast to get started; short-term income potential—so like how realistic it is to make money, let’s say within the next 3 to 6 months; long-term potential—so if you stick with it for years, how po—how much potential is there to make money; risk—so how—how risky is this; how many people actually like succeed with this; and then I also wanted to include a category—like a little tick box for whether having a big audience or ad money is actually required to succeed with this because I think that’s something that gurus don’t often mention is that yeah, some of these things you actually do need an audience to sell your thing to, and if you don’t have that, you need to pay money to like Meta or YouTube to place ads for people to actually see your product because people are not just going to magically show up on your website, right? Shout out to Kiren on my team. Kirsten actually went and looked up salary ranges for all of these different types of roles and tons of research to figure out what the salary potentials are, and she included them in here for you guys. So big shout out to Kirsten. Everyone say thanks, Kirsten! Thanks, Kiren! And we put in all the pros and cons here, and then of course the tier as well.
So if you want to grab a copy of that, I will link it down below. Now if you’re thinking about starting as a junior freelancer, I actually have a video on the best and worst freelancing niches; I will link that here if you want to go give that a gander. I don’t just say the role; I also tell you how I would get started with it if I were you and I picked that role, so I’ll put that here, and we can spend more time together. Yay! That was cheesy. All right, so that’s it for today. Thank you so much for watching, and I really hope to see you in the next one. Okay, bye.