The BEST Businesses To Start In 2024

Welcome to the Growth Stacking podcast. This is Dan Martell. These are the best businesses you can start in 2024. Warren Buffett says great businesses have high gross margin. So what is gross margin? Essentially if I sell a product for $5, but it cost me $1 to make, then my gross margin is $4 or 80%. See, the best businesses are ones where you have the highest margin and and then also sell for the highest dollar amount. What you don't want to be is like a restaurant where the gross margins are only 45%. You want to be on the upper end of 70, 80, even 90% gross margin. And to do this you need to understand all the industries. And that's why I've spent a lot of time analyzing all the best industries and evaluating all the gross margins from lowest to highest that you can start today with very little experience to make this year the best year of your life. The first business is a product business. Typically These companies have 50 or 60% gross margin. Now I've been involved in some incredible product companies like Pela that does a biodegradable phone case, or laundry sauce, which is a modern day detergent company, or Elomi that does a food composting device. And I mean these are literally some of the best companies out there. But I've seen people lose their shirt building product companies because they don't understand how to get distribution, how to get sales, how to how to build a product efficiently. And essentially they take all their savings, put it into a product, don't get any revenue. So if you want to make a product business work, great, these are the three things that you need to do, right. Number one is you have to pre sell. See most product companies use Kickstarter or Indiegogo or other crowdfunding platforms so that they can validate demand for the product without losing money. Now I know you've probably been burned by investing in some of these crowdfunding campaigns, but the best ones know how to do them, promote them, market them, get the money, and then use that to actually build the product. The second thing is you have to do direct to consumer. And the reason why is you got to skip the retailers because if you go through a wholesaler to a retailer, by the time you actually get paid, and there's the big cash flow issues, it's very hard to make a product business work. That's why Amazon has been a big category for a lot of people that are getting into the product space. And the third thing is you have to invest in the brand. This Means making sure that you use premium products, meaning that you care about word of mouth, that you focus on reviews, that you look for opportunities to get press to drive traffic to the business. Because that's what's going to create the flywheel to make a product business work. The second business is an agency or sometimes a service business. And the margins are between 60 and 70%. Now I've learned over the years that the easiest companies are ones where you take a skill that you already have, maybe as an employee, and then offer that skill to other businesses and get paid to either do for those businesses what you currently do or teach them how to do it for themselves. Now I've seen a lot of people launch different types of agencies, social media, marketing agencies, et cetera, and the ones that actually scale and make money, not just have a low paying, full time, sometimes double full time job. They focus on these four things. Number one is they focus on a strong pain in the market. If you think about it, you could start an AI company today where you go and you analyze businesses and all the inefficiencies and then introduce them the AI tools to solve those problems. And you would make a ton of money because businesses will pay for anybody that can show them how to save them or make them money. Using AI is a modern day way of them getting leverage. And you can even negotiate where you get paid more based on how much money or time you save them. Number two is productized services. See, if you sell just work for time, then you're always going to get paid for your hour. What you want to do is get paid for an outcome. And to do that you got to focus on one thing. If you're a designer, focus on logo designs. If you're a programmer, focus on the onboarding experience. If you're a salesperson, focus on the discovery call. Teach people how to do one specific thing so that you can productize it. And as you grow you can buy back your time by having somebody else support different aspects of that productize service. Number three is focus on reoccurring revenue. See too often when we start we just want to like get paid to do the thing. Problem is that every month you got to get paid to do the thing over and over and over again. So you start at zero at the beginning of every month. What you want to do is sell a service, an ongoing reoccurring revenue service for whatever that work is so that you come in, you evaluate it, you support them, you keep doing more work and that way you can sign them up. For 3 months, 6 months, 12 months of service and you start building the revenue base. Number four is you want to scale with systems. The whole philosophy is build a business you don't grow to hate. The way we do that is by replacing yourself using a system, a checklist for how you deliver on that agency work. And then that way you can hire people to get them to do the work following your process that guarantees the results for the customer. The third business is coaching and the margins are between 70 and 80%. Now this is also consulting or information online training courses, that kind of business. And I know this one incredibly well. I run one of the largest coaching organization for software CEOs. I've been involved in creating multiple courses and trainings and seminars and all this stuff for some of the largest coaches that you know of online. And even for me, I hesitated launching this. I mean, I even built a whole technology company called Clarity FM because I was too scared to call myself a coach. And I put it off. I mean, this platform we built, I did over 1300 clarity calls over a two year period and never gave myself permission to call myself a coach. And I want to tell you it's been one of the most rewarding things deciding to go all in on being a coach and really working with some of the best CEOs out there. And I want to encourage you to consider it. But if you're going to do it, these are the three things that you have to do right or you're going to eventually end up hating being a coach. Number one is to learn to sell your expertise. I mean, this one is a fascinating one because I know people that are world class in what they do. They're literally the fittest person I know, or they're incredible networkers, or they're so talented in their art, but they would never feel comfortable getting paid to teach somebody else to do the thing they've done. Which is crazy. I mean, at the end of the day you've become great at the thing you're doing and people have noticed. I want to encourage you to allow other people to pay you for that advice because in doing so, you're actually helping them. Oftentimes the transformation happens at the transaction. So them investing in themselves by hiring you to teach them how to become world class at what you do is actually where a lot of the value is created. Number two is strategy. See, most people think that I know this information, so I can't give it away. I'm going to tell you something controversial. I want you to give all of it away. Okay. It's called education based marketing. See, I believe that information wants to be free and then you get paid for the support of the implementation. So you want to teach everything you know around the topic for, for free on social media, at seminars, get on stages, speak, share it, all the best stuff. And by doing so, you're gonna build an audience of people that wanna learn more from you and they will pay you for the implementation. Number three is build a community. See, I had a coach once and she was incredible. Her name was Marcy. I learned so many things. She had brought a company public and just an incredibly valuable coach. The challenge was, is that I knew she was working with other incredible entrepreneurs and I never got to meet them. And never once did she organize a dinner or a meetup or anything so that I could also get value from meeting the clients she worked with. I'm telling you, if you are a coach having a community where other people from that same coach can connect and meet each other, that's where a lot of value as a coach will come from to help you with keeping people in your world and also allowing you to send their support as you grow the business. The fourth business is software and the gross margins are between 80 and 90%. If you think about it, having a new customer use your software costs nothing. Literally. It's like server data storage on some computer. Now I learned this personally back in the 2000s when I started writing code and building software. And over the years I just found it so amazing that I can build some software once and the more it grows, the less it costs me. And as long as the servers don't change, that code will run the way it has forever. Now I have a lot of friends that want to get into software, but what they miss is these key points to make the software work. Because if you don't have people using it and loving it the way you need to, then it's not going to create the margins because customers are going to come and they're going to go. Number one is a sticky product. You want to build a tool that solves a problem in a business where they have to use it every day. Think about things that are painkillers, not vitamins. You want to create something that's a must have problem solve, not a nice to have like a vitamin. Think you know dating sites where it's just like a one and done. Or taxes where they do it once a year. Those are not tools that are going to have daily usage like a Dropbox or a Slack. So you want to look for problems that are sticky in regards to the product. Solving those problems and keeping them around. Number two is boring industry. See, most people build software for marketing or sales because it's what they know. But the problem is the customers are going to be swapping off of your product to your competitors every three to six months. You want to be in boring industries like local services, lawn care, body shop, software. Government is definitely a fit. You want to find customers that aren't always looking for the latest whiz bang. But you can solve a core problem in their business using software. Number three is first time user experience, also pronounced fatui. The key is is you want to look at your software as like the level one of a video game. You know when you start playing a video game, they don't just like drop you in and say start fighting or start racing. Like they walk you through the process and they actually teach you you're not playing the game, but you're kind of playing the game. That is the same concept you want to do with your software so you don't overwhelm people and get them to what's called activation or receiving core value. Most people try to add too much to the product, especially when people just sign up and it confuses the customer. So you want to focus on that first time user experience to make sure they activate and receive the value promise on your homepage. Number four is focus on retention. See, too often people want to focus on the chocolate, which is marketing and sales and getting more customers and leads and just trying to get as many people into the thing. But the real broccoli of software is retention and keeping people from churning out. Figuring out of the people that leave, why did they leave? Try to keep them back because the more you can keep the customers that you've got, the higher the lifetime value will be of your customers over time, which will massively increase your gross margin. And what makes software so powerful. Those are the best businesses you can start in 2024. And if you want to learn how to go from zero to a million in 60 days, click the link and I'll see you on the other side. If you like this week's episode, be sure to visit itunes, leave a review that'll help us get in front of other founders just like you. And if you're looking for more resources and video trainings, be sure to check out Dan Martell. 2L's the Martell.com to subscribe. Keep up the hustle, keep stacking your growth and I'll see you next Monday's episode. Peace, bro. Peace. Bye bye.