How to Create a Home-Based Business Without a Product or Service
Use these four stops to create a home-based business that's not only lucrative and stable, but does not require the creation of a product or service.
Choosing the right model is a keystone moment in starting an online business. Such an imagined enterprise can sell goods or services, or a combination of both. A good example of a goods (or product-based) business is an e-commerce store that sells clothing or accessories — tangible products that need to be produced and shipped to a customer. Examples of a service-oriented model might be coaching, consulting, digital marketing or a professional service firm that offers specialized business, legal, tax or medical services — provided value that is intangible in nature and generally involves the transfer of knowledge or expertise.
Service-oriented businesses can be further categorized into "low-ticket" or "high-ticket". The former are those in which services are sale-valued at $2,000 or less, the latter those that sell for over $2,000. Starting a high-ticket service-oriented business generally involves a slightly steeper learning curve since the service being rendered involves a transfer of specialized knowledge, talents, skills or insights. An entrepreneur who starts one either has a professional designation and/or possesses advice and insights gained through experience.
An alternative path to creating a high-ticket service-oriented business without getting a professional designation or investing time and money to gain experience in a specific industry is to embrace a commission or referral-based model, which is straightforward: a commission is earned when you broker a deal between a service provider and their customer.
Lets go through the steps needed to form one:
1. Understanding the model
The attractiveness of this construction is that it does not require you to create your own high-ticket services; your business is the middle party that connects buyers and sellers. You earn a commission for facilitating a transaction. In one iteration, you will need to partner with high-ticket service providers willing to pay a commission for introducing them to a customer. In the other, you find the service provider’s ideal customers and facilitate the transaction. In essence, you are the matchmaker between buyer and high-ticket service provider.
2. Finding and partnering with high-ticket seller providers
In order to facilitate a transaction between a buyer and seller, you first need to identify and partner with high-ticket service providers that would be willing to pay a commission or referral fee for each customer generated through your efforts. Let’s pick an example to better understand how this process works.
• Identify a high-ticket service that has a large market demand and solves a major problem in the marketplace. As an example, we’ll select digital marketing and advertising services for solo and small law firm owners. Such owners are typically not trained in marketing or advertising, but need both strategies in order to share their expertise with more people and get more customers.
If you conduct a Google search for the phrase "digital marketing services for law firms", you will come across several marketing companies that specialize in this niche. You could also conduct a search on Facebook or LinkedIn to find a great many more service providers in this space.
• Visit the website of a service provider to understand what they offer, view testimonials from past customers and identify the key decision makers in the company.
• Connect with the key decision makers using email, social media or a phone call, and determine if they are looking for more customers and whether they are willing to pay a commission for customers that you refer. A message in that vein might be: "We are impressed with the services you offer and the testimonials of your customers. We would love to refer more law firms to you in exchange for a referral fee upon a sale. Would you be open to discussing this proposal?”
If the business is on a growth trajectory, the answer will most likely be “Yes”. The next step would be to schedule a call with the decision maker and negotiate a reasonable commission or referral fee (they typically run between 10% and 25% of the transaction fee).
• If the negotiation works out, the last step would be to create a simple contract or agreement to capture the terms of the negotiation and formalize the partnership.
3. Finding and referring the right customers
The objective here is to find the customers who are likely to purchase a service from the service-provider that you have partnered with.
• Ask yourself a few questions: Does the potential customer have the resources to pay for a high-ticket service? Does that service provider solve a major problem for the business owner? Is it relatively easy to get in touch with that customer?
Let’s stay with the above example. Solo or small law firm owners will typically have the resources to pay for digital marketing or advertising services and are usually not formally trained in advertising and marketing. It’s also usually relatively straightforward getting in touch with the decision-maker.
• Connect with solo and small law firm owners using Google search, Facebook, LinkedIn, YouTube, Instagram or industry-specific platforms. A preliminary review of a potential customer’s website would enable you to understand what services the law firm offers, its ideal customers, and even its current social media and digital presence.
Here is an example of a message that’s handy to use: “We came across your website and love the impact that you’re having in your community. We work with solo and small law firms who are looking to expand their digital footprint and offer a range of digital marketing services that can help you acquire more customers online. Would you be interested in discussing our services over a 10- to 15-minute no-obligation call?”
The key to success is to put yourself in the shoes of the business owner. The closer you get to understanding the pain points he or she faces, the easier it will be to have more focused and conversion-driven conversations. You could either speak to the owner directly before referring them to the service-provider or host a conference call with the potential customer and service-provider.
• Practice makes perfect. The more calls you make and the more emails you send, the more you facilitate these conversations, develop confidence and increase the chances of earning referral fees.
4. Absorbing the needed math
The final step in the process is to create a calculated roadmap to building that high-ticket referral-based business. For instance, if your goal is to earn $100,000 per year in this new endeavor, you need to earn roughly $1,923 a week. If you facilitate a $5,000 sale and earn a 20% commission, that’s $1,000 in earnings. You would need two conversions a week to accomplish your goal. Digging into your labor a layer deeper, it’s reasonable to assume that 20% of those who agree to have a pitch call with you would wind up purchasing a service; you’d then need to conduct 10 such phone sessions per week. Digging yet another layer deeper, assume 20% of people who received an initial outreach message actually booked calls; you’d need to send out roughly 50 messages per week, which translates to 10 phone calls, which translates to $2,000 a week in commissions earned. If you plan to work five days a week, then you need to send out 10 messages a day to reach that target.
Related: How to Forecast Revenue and Growth
Entrepreneur Editors' Picks
Crypto Doesn't Have to Be Serious. Just Ask This Comedian Who Organized a Conference About Failure in the Industry.
Want to Succeed? Turn Your Fixed Mindset Into a Growth Mindset.
Google's CEO Is Asking Employees 3 Simple Questions to Boost Productivity
'Greatest Storyteller Wins.' Katy Perry on the Surprising Link Between Pop Stardom and Entrepreneurship.
The 5 Personalities You Meet in a Coworking Space
'Man's Best Friend' — and Investment: The Thriving Industry of Pet-Related Franchising