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have you thought about starting a
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business or even if you're in business
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you'll know it's really tough most
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businesses fail and they're just about
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getting by there are a few percent that
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have been around for more than 10 years
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and are actually very profitable and I
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think they're profitable because they've
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got the right model the model sets you
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up for Success well in this video I'm
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going to go through six profitable
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businesses that have got great models
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that are going to set you up for the
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long term so you can be in business for
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a long time and actually make some
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profit let's break down those six
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profitable models now on the flip chart
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here I've got six different profitable
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business models that I'm going to break
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down for you and here's the thing I
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actually trade in some of these
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businesses so they come in from a place
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of experience if you're new to my
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channel I employ over a thousand people
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I trade lots of different businesses and
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I've been doing it for like 20 years now
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and I've been in some businesses that
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are just tough it's like pushing water
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up a hill and I just don't want that for
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you so I want you to think about this
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model mindset for success in
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entrepreneurship let's have a look at
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the first one that I've discovered now
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this is okay I've got 10 day nurseries
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and a few more in the pipeline I started
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this business nearly 20 years ago now
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what do I like about this business well
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you get a customer and they stay with
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you four to five years so you've got
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good average lifetime value now that's
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one of the most important things when
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you're looking for businesses to start
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or even if you're in business should you
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be growing the one you're in to the next
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level or should you invest in another
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type of business lifetime value average
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lifetime value is absolutely crucial
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what I also love about this business is
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people are paying you up front for the
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service so you haven't got to worry
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about cash flowing lending money to
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customers there's another great thing
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about this I love this business because
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it's regulated as well the government
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sets out a set of parameters that you've
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got to follow so all the competition are
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working to the same set of parameters
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and it's also really good because of OPM
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other people's money want to invest into
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that sector and that's one of the little
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cheats of seeing if a business model is
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good if Pension funds private Equity
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venture capital or even Bank want to
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invest or lend money into a sector you
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know that you're on to a winner winner
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chicken dinner because if you build a
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profitable day Nursery say it generates
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a million pounds worth of sales it makes
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two hundred thousand pounds worth of
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profit there's going to be a venture
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capital it's a private Equity person
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chomping at the bit to buy it from you
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or other business owners entrepreneurs
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that are in a roll-up phase of putting
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other nurseries together I've bought day
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nurseries from other people and rolled
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into our business that roll up thing is
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a real good sort of clue as whether it's
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a good business or not Banks love
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lending to profitable day nurseries but
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they don't for example like lending to
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profitable restaurants I mean yes a
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profitable restaurant will be able to
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get a loan but it's much much easier to
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get money from profitable child care
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because of average lifetime value you
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haven't got to worry about a Fickle
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Marketplace like the restaurant example
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you know a new restaurant opens in the
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town everyone's going to go and try that
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you've got someone in your day Nursery a
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new one opens in the town well they're
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used to your staff because they love you
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they want you they need you and that is
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is why this is a great business model as
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long as it's big enough and it's not too
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small you want to make sure that you've
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got enough children you've got enough
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scale in there if it's too small and it
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looks like a profitable job you won't
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get other people's money wanting to
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invest in you like a B and B you know a
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six bedroom Bed and Breakfast Hotel
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Adventure capitalist doesn't want to buy
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into that and roll that up but you own a
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70-bedroom hotel yes they're very
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interested very similar for child care
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you don't want to be too small you want
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to be of a nice size to get some
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scalability into it so I suppose
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scalability is another clue to what
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makes a profitable business model let's
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look at the second one a second great
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model that I love is Food Services
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business now imagine if you've got a big
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office block full of workers or a big
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Factory or even a big Secondary School
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the person that's got to feed or
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responsible for feeding all those people
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would need to engage a Food Services
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business now there's a massive massive
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businesses out there like Cisco their
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own breaks in the UK and they're a
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massive firm in the US as well and
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they're buying up and rolling up all
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these businesses all the time there's
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other people's money private Equity pens
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funds all going into this sector because
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of a number of reasons well you've got
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lots of repeat and regular customers you
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signed a secondary school up you know
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what they're going to be ordering you'd
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sign a factory up or a big office block
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you know what they're going to be
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ordering so it's quite good because a
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predictable cash flow do you sign a
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customer up and they continually
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regularly order from you you know if we
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go back to our restaurant sort of
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scenario that we spoke about earlier you
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know a restaurant might only have the
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customer go there once or twice a year
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you sign a Food Services business up
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that supplies the restaurant the
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restaurant I've got to find these new
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customers all the time but you don't
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need to find one restaurant a hundred
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restaurants to keep on buying from you
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to build a great business That's What I
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Love About Food Services business it's
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that predictable cash flow you can build
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it up and someone wants to buy if you
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build it to a scale when you exit it's
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just a great business so I do like Food
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Services business so much so that I
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started one myself and a little story
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about this I bought an ice cream company
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that was supplying restaurants and theme
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parks and also my attractions and then I
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bolted on Food Services business
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supplying all of my venues and that's
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turned into a really profitable business
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and very predictable let's look at
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number three this one is contract
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catering not to be confused with Food
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Services it's very different so if
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you've got a restaurant another
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restaurant analogy here you've got to
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wait for all these new customers to come
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to you well we contract catering you are
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the school you are the office block you
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are the factory that's buying all the
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food in from the Food Services business
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then feeding all the people now why is
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this better than a restaurant because if
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you know how many people come to the
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school and they come every day if you
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know how many workers come to the
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factory and you're providing the canteen
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services at the factory you've got very
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predictable Revenue this is one of the
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big things that we like about profitable
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business models it is predictable cash
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flow and that's what makes them very
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valuable models if we can know what's
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going to happen we can predict stuff
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which is just unusual in lots and lots
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of businesses most businesses start from
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zero each month they've got to find new
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customers all the time whereas contract
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catering you've actually the clue is
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here contract you've got a contract to
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provide the same service day in day out
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all the time so I do like contract
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catering I've bid for lots of contracts
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to take on contract catering in
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factories and in office blocks because I
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realize I've got a Food Services
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business so if I can have end-to-end
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supply chain or things could get really
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attractive and contract catering you
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build a big contract catering business
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someone's gonna want to buy it when you
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exit it because it's just so predictable
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it's not key person driven which is
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another clue about great business models
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if you can find a business where the
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owner the entrepreneur the founder Isn't
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So key to making it all happen and we
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can rely on beautiful contracts you're
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going to build something that's way more
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profitable and this again is predictable
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I just love it so contract caterings
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number three number four is commercial
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property rentals now when I started out
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in my entrepreneurial career I had a
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trading business I would funnel some of
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the cash out and put it into slow pounds
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which for me was buy to let property
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investment I would buy houses and flats
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and rent them out and enjoy some nice
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cash flow now if you're here in the UK
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watching this video you know the
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government have changed the rules on
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this and the tax efficiencies aren't
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there higher stamp Duty can't claim all
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the interest back yada yada yada so I
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pivoted into something that's so much
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better you need a bit more cash you need
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a bit more experience but that's because
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it's so much more profitable it's higher
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barrier to entry which is another clue
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in building profitable business models
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the higher barrier to enter you go the
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better the business is because you've
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got a moat around your business that
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protects you against competition and
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headwinds and that for me is commercial
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property rentals own industrial estate
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and lots of commercial properties on Fri
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leases this is fully repairing and
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insuring leases which means the tenant
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has to look after the building you can
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sign people up to 10 15 year leases you
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put in loads of capital allowances which
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is a good tax write-off against any
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improvements you make to the property
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you get lower stamp Duty you can put it
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into a pension and a self-invested
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pension fund there's loads of great
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things that you can do with commercial
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property rentals and you get really good
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yields you can put a million pounds out
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whether it's your money the bank's money
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or a mixture of both whoever's deploying
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the capital you can get at least a 10
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return if you know what you're doing so
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you put a million pound out you can get
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100 000 pounds worth of rent back
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there's all the tax efficiency which you
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just don't get with residential property
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and so you can build a really nice
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business out of commercial property
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rentals and I've always advised
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entrepreneurs and business owners look
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try and buy the property that your
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business operates out of first and then
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put some of your cash into this this
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slow pound building assets eventually
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this will turn into a lovely business on
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the side of your existing business so
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commercial property rentals buying a
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property renting it out to other people
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especially if it's um in small
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warehouses and storage units I just love
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that sort of business especially storage
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I mean storage oh my God what a great
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model that is as well so commercial
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property rentals not to be confused with
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residential property rentals which you
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think you're a much harder game right
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now let's look at the next one number
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five is Niche wholesale what do I mean
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by Niche wholesale there's a phrase that
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I use on my podcast and indeed here on
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the YouTube channel and that is Rich's
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niches if you can build a niche business
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you'll find that those particular
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businesses are protected against margin
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erosion what that means is big
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businesses are competing with you so
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you're driving down your margin to
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compete with them you end up competing
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on price what we want to do is not do
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that because we want to keep as much
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gross profit and margin in the business
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as much as possible and it's all about
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fishing you know it's a big enough
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industry that you could bring in some
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products that you import from around the
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world you can white label them or even
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manufacture them yourself it's a big
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enough industry that you could build
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eventually a 10 20 30 40 50 million
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pound business but it's probably not big
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enough for Amazon or Asda or
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supermarkets like Walmart to get in on
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the fishing game they might do some of
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the big most popular lines but you can
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do all the lines and compete and create
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your own brand in a niche and then
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wholesale it to other shops Etc now I do
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this in my business I created a niche
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toy business we do a make a bear
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business where we make teddy bears it's
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big but it's not Amazon big it's not
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Supermarket but I also make Children's
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Arts and Crafts again it's big but you
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know the biggest player in the world
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might be a 200 million pound business
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but Mattel one Hasbro the big toy
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companies don't want to get involved in
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it because it's not big enough for them
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so you want to find these niches that
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are big enough like a Goldilocks
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investor not too big not too cold not
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too hot but just about right so I like
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Niche wholesale businesses if you look
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at the ones that I've got my wholesale
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ice cream business you know it's niche
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it's not every type of food but nice
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good quality ice cream products if you
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look at my arts and crafts business and
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my teddy bear business their Niche
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they're big enough but they're not too
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big the Goldilocks Niche wholesale
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businesses find them and you're on to a
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winner number six is commercial hygiene
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and Waste Services now the clue is this
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magic word commercial here we're not
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talking about direct to Consumer what is
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this type of business well you need
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skips or you need waste taken away those
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commercial businesses if you build them
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up to a size you'll see Roll-Ups
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happening that's other waste companies
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buying them or other people's money I.E
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investors private equity and Pension
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funds buying them all up and creating
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bigger companies especially in the
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hygiene world so this would be all the
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nappy bins and sanitary bins that are in
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office blocks Schools public toilets etc
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etc there's usually lots and lots of
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little independent companies that start
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up through that and then they'll buy up
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each other and build much bigger
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businesses now I like these businesses
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for a number of reasons predictable
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Revenue other people's money want to buy
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it should you be profitable wish you
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went to exit very recession-proof people
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still need this stuff disposed of even
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in an economic downturn and because it's
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commercial businesses you're dealing
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with much bigger companies and it's very
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easy to value a business like this
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should you want to exit so I like
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hygiene and Waste Services now I've got
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a little bonus one but I also identified
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so this would be number seven but it's
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really another formula to think about
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and this is Prof National Services you
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know if you're an accountant you're a
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dentist you're a solicitor those types
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or Finance anything that's professional
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and regulated always has a value to it
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it's always easy to predict what its
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value is going to be should you wish to
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exit other people's money want to buy
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into it and invest in it and grow in it
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and it's actually trying to make your
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business look like it's professionally
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regulated business they are usually the
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ones that are more profitable higher
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barrier to entry predictable Revenue
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easy to Value other people's money want
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to get involved in it so there we go
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okay there's seven great ideas for
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profitable business models and if you're
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new to my channel don't forget come and
00:12:36
check out one of my seminars running a
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big one in London called business master
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class this is a two-day event where I
00:12:41
literally show business owners how they
00:12:43
can sort success tickets are only a few
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hundred quid and you can buy them online
00:12:46
website James sinclair.net there's also
00:12:49
a link in the video description can't
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wait to see one of our seminars see you
00:12:52
real soon bye
