I'll start with the don't have models: associate and affiliate business models. Yes, it's true, you can be successful in business as a professional without developing or selling your own services and products.
1. The Associate Business Model
As an associate you deliver other people’s services. A typical scenario is where you would deliver a training course designed by someone else (or their company) at that company’s client. Generally, the training you’re delivering is owned (intellectual property or IP) by the company you’re delivering on behalf of. It’s also their client, so in a sense they own the client too.
Are there pluses? Yes, a few. Once you become a trusted associate all you have to do is turn up and deliver the training. You don’t have to do any marketing and you didn’t have to win the client. Also, you don’t have the hassle of invoicing and credit control. You turn up, deliver the service and get paid. When I managed a team of associates, we paid them well (about £400 to £600 a day). There’s something to be said for that, obviously.
Is it a good business model? Maybe, maybe not. It’s not your client, nor your IP, so although you’re earning, you’re not building equity or value in your business. It’s like renting versus buying. If you buy, the property can accrue value. It’s yours. If you rent, the landlord (business owner) benefits, you don’t. Also, associate work is inherently risky. You’re dependent on the company’s ability to get clients, which makes it feast and famine. During feast, you can make good money but get exhausted due to all the training and travel. During famine, you don’t make money and the anxiety makes you exhausted because of lack of sleep!
One final, key drawback - other business models are more scalable. As an associate you can only be in one place at one time. So you can do OK but you can never do great. This model is not entrepreneurial as such, it’s more about making a living.
Is it a good business model? Maybe, maybe not. It’s not your client, nor your IP, so although you’re earning, you’re not building equity or value in your business. It’s like renting versus buying. If you buy, the property can accrue value. It’s yours. If you rent, the landlord (business owner) benefits, you don’t. Also, associate work is inherently risky. You’re dependent on the company’s ability to get clients, which makes it feast and famine. During feast, you can make good money but get exhausted due to all the training and travel. During famine, you don’t make money and the anxiety makes you exhausted because of lack of sleep!
One final, key drawback - other business models are more scalable. As an associate you can only be in one place at one time. So you can do OK but you can never do great. This model is not entrepreneurial as such, it’s more about making a living.
2. The Affiliate Business Model
The affiliate business model is where you promote other people’s products and get paid a commission based on sales performance. Notice I didn’t say sales, I said sales performance. By and large you aren’t doing the selling, you’re doing the marketing (or pre-selling as it’s sometimes called).
Let’s look at a typical affiliate scenario. You’re interested in personal development and you come across a great website where they sell online courses (like Udemy.com for example). You sign up, take a couple of courses and think: “Wow, these courses are brilliant!” Then you discover they have an affiliate program, so you sign up for that too. This means you can now promote Udemy courses and make money.
How do you do that? Well, let’s say you have an email newsletter that you send out to a list of contacts every couple of weeks (or it could be you have a facebook page with a lot of followers). When you contact people (or post), you let them know about the great course you’ve found and include a special link to the course. This is an affiliate link you get from your affiliate program, which identifies you as the person who promoted the course. When people click the link it places a cookie on their computer, which means that if your contact subsequently buys the course (or any Udemy course for that matter) your affiliate program will know and you’ll get paid a commission.
That’s it really. All affiliate programs work in pretty much the same way. Nowadays you can promote almost anything. Just about every major company or brand has an affiliate program, including the likes of Tesco and M&S.
What about your profession though? Can you build an affiliate business specifically around that? Almost certainly. Because most professions cover a broad topic, there are usually many profitable niches associated them. To prove that, all you have to do is a keyword search using something like Google’s Keyword Planner tool (part of Google AdWords). With this tool you can use a seed keyword like “psychology” for example and see quickly how many people search for all the keywords associated with psychology. You’ll be amazed, not just at the numbers of related keywords but also the number of people searching for them. If there are a lot of people searching you know there’s a market - you can promote related affiliate products to those people and make money.
There are several advantages to the affiliate model. The start-up costs are low because you don’t need your own product or service. You can run the business from anywhere and you can promote whatever you want to whomever you want. There are any number of profitable number of niches around which you could build your business. There are also multiple channels you can use for marketing such as your website, email, facebook or YouTube. And you don’t have to sell as such. That’s the job of the company (or website) providing the product. All you have to do is to recommend or pre-sell. It’s very scalable, with no limit on what you can earn. There are a lot of people making a very large amount of money from affiliate programs.
If you’re unfamiliar with the affiliate model and would like to learn more about it, a great resource is called affilorama, which has a huge amount of educational resources on affiliate marketing. Check out the free resources first. If it looks like a good fit for you, they also have some great, paid learning programs you can sign up for that will teach you how to build a profitable affiliate business, step-by-step.
Some disadvantages too though…
Like any business, it takes hard work and time to build up. There’s a learning curve, especially around keywords and online marketing. If you’re prepared to put the hours in to learn and apply those skills, then put in the hard marketing yards (mainly in front of your computer), it’s got huge potential as a business model. Otherwise, it’s probably not the business model for you.
One final thing I should add about the affiliate model and this one’s a big plus. You can very easily integrate affiliate programs into your wider professional business. You can decide to devote a proportion of your time, whatever suits, to affiliate marketing, which brings in valuable, additional and regular income. Affiliate business therefore complements other models.
Now let’s look at 2 alternative models around running a business based on your own products or services. I’m going to discuss two business models, one focusing on services, the other on products, including digital products.
3. The ‘Own Service’ Business Model
This model is where you’re developing, marketing and selling your own services. This could be in-house training, consultancy, surveys, coaching, or therapeutic services like counselling or CBT. It’s a business model that’s been around for a very long time. It’s pretty reliable, but it has its challenges like all business models. For most of my business career, this is the business model I’ve adopted although that’s changing now. I’ve sold most of these services, but I’ve been most successful with training.
There are a number of reasons. Training is a simple intervention and straightforward to deliver. Clients can see its benefits, making it easier to sell. It’s also highly scalable, more so than say coaching or therapy. If you develop a training course for example, you can train other people, associates, to deliver it, meaning that your business can be delivering a service to many clients in different locations. Luckily, training also turned out to be a good fit for my strengths and capabilities.
There are a large number of niches you can exploit with training. For example, in around the year 2,000, I found that there was a gap in the market around training managers to manage stress risks at work so I developed and marketed a course that filled this gap, which went on to generate several hundred thousand pounds (UK currency) of revenue over a few years. I don’t say that to boast, merely to highlight that a course, if a perfect fit for a niche and marketed correctly, can be very lucrative.
I mentioned challenges. Those are significant with this model and I see a lot of professionals failing to understand or overcome them. One is that you need to understand your market. It’s no good trying to sell a service that clients don’t want, or perhaps more importantly won’t pay for.
Then there is all the work involved in business development and marketing, especially if you sell services to corporate clients. Before you get a training contract, you usually go through a business development process with a number of stages. A typical lead time from first contact to getting a contract is 6 to 18 months, sometimes longer. This causes cash flow problems as you can imagine. Often, people entering this kind of business are unprepared for these challenges, which leads to business failure or under-performance.
If the service you sell is training, one way of meeting some of these challenges is by setting up a public training event, using web-based event software like Eventbrite. You still have work to do marketing the event of course, but a big advantage is that people pay you in advance for tickets, so it’s great for cash flow. Events can also help you market other services to attendees. Another advantage is that you can create an affiliate program specifically for your event and have other people promote it.
I cover marketing with events in depth in another article. It’s a powerful and effective marketing strategy for selling services.
So, can you be successful developing and selling your own services? Definitely, but you need to have good business development skills (or employ someone that has). You also need good financial management, particularly in the early days when money is tight.
4. The ‘Own Product’ Business Model
In many ways, this is now the most interesting model, because of the ways that the internet has transformed marketing and the ease with which digital products can be delivered to customers. By product, I mean something that people can buy ‘off the online shelf’ without you or another person being physically involved.
A training course that you or an associate delivers is a service. But a training course that you convert into video and text and is delivered online is a training product. You don’t have to be there, and there isn’t a limit to how many times you’re training product can be sold. Also, there is no limit on where a training product can be sold. It can be bought by anyone, anytime, anywhere in the world.
I’ve already discussed the model is where you sell other people’s products as an affiliate and I hope you can see the potential of that. Here though, I’m talking about developing your own products, especially digital products. Digital products are essentially free to produce, requiring your time rather than a financial commitment. So they are highly profitable. If you do need anything equipment wise, it’s probably stuff you already have like a webcam and a microphone.
Most professionals have niche knowledge and expertise and that has become a major business opportunity. You can use that niche knowledge (and in many ways, the ‘nichier’ the better) to develop digital products such as e-books and video-based training.
How could you benefit? In the case of Udemy, which I already mentioned in the context of affiliate marketing, you could become an Instructor then develop and upload your own courses. (Certainly, I intend to do this.) If you do that, not only can you promote your own training product, but your courses can also be searched for by Udemy’s 5+ million users. Will people find and buy your course. It’s highly likely. Yes, that will require development work but you only have to do that work once (unlike a service where you or an associate has to be there to deliver it). Also, once you have an online training product, other people, affiliates, can promote it. You’ll have a little army of people doing the marketing for you.
A key point is that with digital products there isn’t the same business development process or lead time. If people like what they see on a website, there’s a good chance they will buy it, there and then. Impulse buying in other words.
Of course, your own digital products can help your business in other ways. You could use a free digital product like an e-book as a lead generator for your service. The typical way this is done is by having people opt-in on your website and give you their details in order to download your e-book. You can then provide them with valuable content or promote products and services over a series of emails (known as an autoresponder - a great resource for this is called Aweber). You could also embed affiliate links into your free digital product, generating additional income from products you’re happy to recommend.
If there’s a down side, again it’s the learning curve. You certainly need to be computer literate and understand digital products. And like the affiliate model, you need to learn about online marketing and social media.
From experience, my feeling is that most professionals haven’t yet seen the business potential of developing digital products. If you’re reading this post, I hope you don’t make the same mistake. I’d urge you to look into this business model and go through the learning curve involved. If you do, you’ll be miles ahead of the competition and it will open up income streams where you can make money while you sleep.
Conclusions
This post looked at whether or not you should develop your own products and services and discussed 4 viable business models associated with each approach. Each model has its pluses and minuses:
- As an associate, you're delivering other people's services. You can make a decent living as an associate and you don’t have to do any marketing, but there’s a limit to how much you can earn and you’re never building value or equity in your own business.
- As an affiliate, you’re promoting other people’s products and services. There’s little or no cost of entry to this business model and there no limit on how much you can earn. You can run your business from anywhere. However, you do need good online marketing skills and be prepared to learn. One big advantage is that affiliate marketing can complement other business models.
- Selling your own services is a tried and tested model. Training is a very saleable service and can be very lucrative if you find a good niche. Drawbacks include very long lead times and cash flow problems. Running events can help shorten lead times and speed up payments. Good business development skills are essential for success.
- Developing and selling digital products has become much easier and cheaper with advances in technology. Online training products in particular can be highly profitable. Like the affiliate model there is a learning curve, but once products are produced, they can be sold to anyone, anytime, anywhere. Digital products can be used in other ways such as lead generators for your service. Other people, affiliates, can promote your products, doing the marketing for you.
- Which business model(s) you choose will be governed by your strengths and preferences but never close your mind to new business models. There are multiple ways to make money and build a successful business.
Alan Bradshaw, Business Psychologist
Useful links, tools and resources related to this post:
Business articles
Affilorama (resources related to affiliate marketing)
Business mentoring
- Recommended business tools
- Business development toolkit for Professionals (free e-book)
