The World’s Best Small Business Model
23. Jun, 2010 
13 Comments
The best small business ideas are the ones where you have real clarity on how you are going to monetize your idea! Cash flow is a great basis for a sound business. Cash is king in this economy now more than ever as banks tighten their lending restrictions. They seem to seek to make only the best small business loans anymore! It is reasonably easy to see that many banks – even thought they have been given wide open access to cheap almost free government financing have been tighter loaning money than ever before. When you research the key reason this is happening – it is not because small businesses now are failing at fast rates but rather the banks are using the inexpensive funding from the government in an effort to shore up their own balance sheets to cover their asses from bad loans over the past 8-10 years.
There is one type of business that banks, venture capitalists and most sophisticated entrepreneurs seeks as the holy grail of small businesses. I am about to lay out the key principles of the best small business model and the best small business to start in 2010
In my years of working with very successful entrepreneurs in numerous types of business models – there has always been one that rings true and rules over all – one that is based upon cash flow and has the ability to grow that cash flow as the business scales. Ask any business expert you know – find one – meet one on a blog and ask them if 
a business model that cash flows and is able to scale that cash flow with growth of the business is not the world’s best business model.
We think there are three key components to the best small business model in the world.
One – The product development cycle itself – we refer to it as Create it once – deliver it many times. Huge leverage – think of things like publishing – write the book once deliver it to millions of customers. This is known as standardizing to optimize your product/service delivery – leverage!
Two – The business is built on a recurring revenue structure. The majority of revenue repeats. Sell it once – get paid many times. The revenues recur – the customers pay up front of delivery of product or service and then pay for follow-on service/product. If you are able to minimize your CAPEX (Capital invested in the business) and hold/manage OPEX (what you have to spend in order to keep your business running) at a flat rate with increasing revenue over time that is pure business leverage. This is why the publishing business model by itself is not the best business model any longer as the revenue does not recur – you sell it once – no more related revenue.
The third key feature to the best small business model is to identify a service or provide a service that retains clients over time with minimal churn. With low client churn – the result is increasing cash flow over time. If this is accomplished holding OPEX at a minimum – you have reached the holy grail of residual income from a small business. Everlasting income from a mystical source! This is usually where MLM businesses fail – the business owners are not focused on customer retention
Let’s see a few of these that are prevalent right now in our internet business world:
- Software As A Service Businesses
- Internet Recurring Membership Sites
- Internet Marketing Product Launches with recurring membership
- Some MLM Business owners that have identified how to minimize churn in their distributor organization
Think of any others? Chime in please
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Great post – so spot-on Cash flow is #1 and when you can make it flow on auto-pilot with the raving fan clients who pay for your service every month – its like having a fort Knox with real gold in it – A secure treasure
This article really does hit the target! getting cash flow from your business isn’t only nice to live from – but you must have it to invest and grow your business. As a struggling network marketer for so many years – I finally hit a level of success when I stopped seeing people quit in 90 days and worked with them to set realistic goals – realistic for what they were going to do and then helped them stay on track. Thanks!
Gary & Aisha
Thanks for your kind comments and feedback. Aisha congratulations that is the holy grail in network marketing for sure. It may take a while to get your business where you want it – extended support and leadership to your customers in network marketing is the best investment in your business you can make.
This really has the clearest formula for business success and the fundamentals of the worlds best business model I have ever read. Cash flow = leveraged product + leveraged sales + raving fan repeat clients. We all should make that our mantra – MLM, information marketing, ebusiness, bricks and mortar doesn’t matter – works for every business model and would make yours the best in the world at what you do- keep up the great stuff here
Glad I found your website – this article was really great -You did nail the outline of the best business model. So many mlm businesses don’t talk about the elephant in the room of distributor turnover and failure. I never see it as failure I call it quitting before your time. If you can nail that 3rd one and keep your distributors in the game improving. That is the gateway to real online success. The principles you stated so clearly are what currently many venture capitalists look for too in businesses they want to invest in. You just stated it clear and simple – thanks – i dugg this article
Wow great things going on here – this article is so right on – it just put some powerful business principles in an easy to understand format. I love how you simplified the worlds best small business model. I so agree with Aisha too – you have a real professional approach! Coming back soon
The three things you identified are absolutely critical to a successful business model. And maybe the most valuable advice you gave was right at the beginning about about understanding clearly how to monetize your idea! I see a lot of people getting into business opportunities and they don’t understand how to monetize the business and scale it! That being said the mlm business meets the first 2 components but fails miserably at the third.
As an entrepreneur we all should be spending more time working on our business – improving our business model – looking to make it the best business model in the world. Leveraging every part of your business is a worthy goal to have. Thanks for sharing your great ideas on the worlds best small business model
I love the ideas of create and sell one time! hehehe the definition of doing more with less! I think information marketing like so many of the product launches are really getting this idea from a product perspective. Seems like every day or two a new launch email with a recurring subscription is reaching my email! Almost anything internet related can model itself after this formula and if you build it with subscriptions and make it work for your subscribers you do have the perfect business model
What a great article!!
I have never seen in a blog such a clear & to the point article, making a complicated topic so simple.
Making complicated issues look simple is one of the biggest success in any business.
Keep up with these kind of tips, its awesome!!
Great concept! First off the internet is by far the best avenue for the create it once and deliver it many times. And second if you can provide the content to support the recurring revenue structure you most definitely have a used the system to the fullest.
I really like the way you put this information together. Its concise and to the point. You hit all the main points I would think of in a wildly profitable small business model. Cash flow, leverage, etc. Lots of great comments too!!
There is absolutely no doubt that cash is king especially in today’s business world. Any business that is paid in front before delivery of goods or performance of service has huge advantage.On top of that if you can have recurring income for the same, you can’t beat that. Though the great model it can take substantial consistent effort in terms of resources to make it a success before you can reap the cash flow.Nevertheless great business model.