Surely at some point in your life you wondered how profitable businesses are created or, if you already have one running, how you could improve its results to increase its profitability.
That’s why we’ve put together this guide to profitable business: to help you answer these questions (and many more) that relate to the different stages of creation, improvement and consolidation of a business that gives good results.
We hope that it will be very useful to you and that it will serve to enhance your success story. Shall we start?
Profitable businesses: how to start one?
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The first thing you have to do to achieve a profitable business in Mexico is develop a business conceptthat is, define the product you are going to sell, investigate the profile of your potential clients, detect who your competition is, how you are going to finance your project, among other things.
This means that planning is key to starting a profitable ventureand this is expressed through a business plan.
A is a fundamental guide for all people who want to start selling products, both online and offline. It provides a clear direction and understands both the strengths and potential weaknesses of the proposed business and allows various aspects of the future brand to be analyzed.
Therefore, in this section we are going to address each of these steps necessary to start a profitable business in Mexico.
What is a profitable business
A profitable business is one that generates more income than expenses.more profit than loss, and that is where all the people who want to undertake aim.
As we said above, to achieve this, it is first key to develop the business concept, that is, the different ways in which the company can create value and compete in the market. And how is it done? From an idea.
This idea usually arises from a real need of consumers that today is not being satisfied. For example, buyers who want to buy garments made from reusable fabric because they are in favor of caring for the environment and fair trade, and cannot find a brand on the market that meets their needs.
There is then a idea that can be converted into business. There is, then, a niche that can be occupied by a brand.
To create a successful business concept and aim for a profitable business, it is ideal to meet 4 requirements:
- There has to be a consumer group willing to buy the product at the offered price.
- Ideally, the market it must be large enough to support the business and generate profits.
- The person in charge of the trade has to differentiate his business from that of the competition.
- also have to be able finance your businesseither personally or through other funding sources.
Later we will explain how to turn this business concept into a business plan. Now let’s move on to analyze what are the types of profitable ventures that you can choose to start selling your products.
Types of profitable businesses
There are different ways to offer what you want to sell to your potential customers, the decision will depend on the style of business you want to create and its objectives. In general, we can highlight 6 types of businesses that generate profitability.
We are going to explain each one of them with some examples so that you can be inspired and define what style of business to undertake.
1. Craft production
This type of business is one of the oldest in existence. Consists of the transformation of raw materials into products made 100% by handsometimes with the help of simple tools.
These articles are made one by one, that is why it is said that none is the same as the other: They are unique pieces from start to finish and bear the author’s stamp. In general, craft production is carried out in small quantities and is aimed at a small audience due to the level of demand and time involved in the production itself.
For example, the Tiendanube sells products made by Mexican artisans, such as this typical huipil with embroidery from San Antonio:
And she is in charge of telling the story of each artisan and explaining the process of elaboration of each one of the pieces:
However, there are cases of brands that produce handcrafted products but have an important production team that can often support large quantities of orders, although it is not the most common.
2. Serial production
Unlike the craft, mass production involves the manufacture of homogeneous productsthat is, with the same characteristics among themselves, on a large scale and with the intervention of industrial machines. In this way, the production of articles is much faster and less laborious in physical terms. In addition, the times are considerably optimized and this allows to cover a greater demand within the market.
This type of business is what the Tiendanube carries out, an ecommerce of sweets that does not stop growing:
In order to be more competitive, it is recommended that the product in series has some differentialsome feature that makes it stand out from the rest so that it doesn’t get lost in the sea of available products.
This type of serial production usually occurs a lot in the fashion industry, mainly in the so-called fast fashion (fast fashion), where clothes and shoes take the lead.
It is worth noting that, in recent years, different fashion brands have joined the movement (slow fashion) which, in contrast to the previous one, involves the manufacture of garments made from environmentally friendly materials, respecting production times and based on fair trade.
Finally, it is important to mention that there are cases in which businesses that manufacture their own products (both traditionally and industrially) and sell directly to the final consumer, Generate a higher profit margin than other types of businesses, being many times more profitable than the rest.
3. Buy-sell
The purchase and sale of products represents a good option for those brands that want to market items, but not manufacture them. Production, both artisanal and industrial, involves investments such as labor, special workspaces, machinery and another series of characteristics that, in the business of buying and selling, are already resolved.
In this way, the brand only has to focus on how to sell those products.
Usually these brands and that’s why they get wholesale prices. Then, to those prices they add their profit (and other costs that we will detail in the next section) to calculate the total price at which it will be sold to the final consumer.
It is very common for companies that start to buy and sell products at retail to decide, at some point in their growth, to offer the option of selling wholesale. Such is the case of Tiendanube.
4. Consignment
Another interesting business to undertake is the consignment business, that is, delivering your product to a third party (another brand, for example) so that they are in charge of selling it (in their online store, their physical location, a show roometc) and receive a payment once the transaction is completed.
This type of business is ideal for those brands whose interest is not in the final consumer but in the product marketing chain. Examples of consignment business are clothing, books, fashion accessories, among many others.
5.Dropshipping
The is a type of profitable business exclusive to electronic commerce that consists of sell products to the final consumer without having their own physical stock.
Let’s graph with an example: suppose a potential customer is browsing your online store, sees an item that interests him, the price seems fair and decides to buy it. Leave your physical address for the shipment of the product and know that you will receive it in 3 days.
Immediately you receive a notification of this request and the notice that the money is already in your account. Next, you ask your drop shipper (distributor) that article and you detail the address where you have to send it (before you agree with him if you pay everything together at the end of the month or on request).
This means that you outsource the stock and deliveries of orders. In this way, you become the intermediary between the supplier and the client.
One of the main advantages is that you save the rent or purchase of a warehouse to store the merchandise, you also do not have to carry out the . As important disadvantages of this modality, you do not always have the guarantee that the product arrives in a timely manner at your client’s address (it may take more days), and the packaging they receive is generic and does not reflect the identity of your brand.
Tip: keep in mind that this type of business works better in brands that sell more commercial and less artisanal products.
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So, do you already know what kind of business you are going to start? 😉 If selling online is in your plans, we invite you to try Tiendanube, take advantage of it and grow your business!
How to create a profitable business plan
Surely different business ideas have already come to your mind that can be converted into profitable ventures. Once you define which one you prefer, and conceptualize it as a business, it is time to plan how to carry it out.
Putting together a profitable business plan may seem like a very complex task, but using the so-called Business Model Canvas everything is made easy! Shall we meet him?
The Canvas Model
The Business Model Canvas (Canvas Business Model) is a methodology that allows create a business plan in a few minutes and achieve a global vision of your idea. To do this, he takes into account nine fundamental pieces in the development of an enterprise and relates them to each other in a strategic way.
The same creator of this model, Alex Osterwalder, assures that the best way to describe a business is to divide it into those nine basic pieces that reflect the logic that a company follows to generate income. These pieces cover the four main areas of a business: clients, offer, infrastructures and economic viability.
So through the Business Model Canvas, you will be able to discover in a few minutes if your business idea is sustainable when it comes to taking it into action. We tell you what are those nine essential elements or pieces that you have to analyze:
1. Value proposition
At this point it is key to detail the features that make your product unique. In other words, why are you innovative? What sets your idea apart from the competition? Perhaps the product is the only one of its kind on the market? Maybe you have a brand of shoes eco friendly and that will be your hallmark: alternative materials to leather for consumers who want to care for animals and the environment.
2. Key partners
Here you have to describe those strategic contacts: the trusted suppliers you chose, a business mentor who was recommended to you and who will accompany you during the development of the company, your potential partners or an expert for branding your brand.
Do you want to start from home? Here…
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