Three flaws that break businesses: ultra-low margins force a race to the bottom, relying on one sales platform leaves you vulnerable to algorithm changes, and lacking recurring revenue means constant pressure to find new customers instead of keeping the ones you have.
If you're doing these three things, you're building a business that will break you. Number one, you're selling super low margin products. If you are selling a product that is just cheaper than everybody else's, then your days are numbered. If you do not have enough margin to do a really good job for the customer, then somebody else is going to come out with a better way to do it or a cheaper way to do it and you are toast. Optimize for really good service, not for being the lowest price. Number two, you're beholden to a platform. If all of your customers or all of your sales are coming from one platform and you have no way to bring them into a place where you control or your product is not good enough to where people are voluntarily choosing you over everybody else, then the minute that there's a change on that platform, you are out of business. And number three, you have no backend. If you are only making money from the short term transactions that you are getting, then you are always just thinking about selling more rather than serving the customers you have. Real profitable long term businesses are thinking about how it can help one group of people accomplish their goals and that is where all of the backend money is made. So if you're thinking about just selling more product, your days are numbered. So a really bad business has low margins, is beholden to a platform and has no backend. A really good business has the opposite of all those three.
