As you probably remember, I worked with an old business partner for my first offline business.
He made his fortune in wholesale business, whereas our first venture together was a retail business.
He was actually against retail business, but he told me only after our venture had failed.
He said he didn’t want to kill my enthusiasm.
Had he told me earlier, maybe I wouldn’t have lost $50k in the business. But I don’t blame him. It was a lesson I had to go through.
He later revealed to me why he didn’t like retail business.
His father was in food retail business selling desserts. It was in the 1960s.
Everyday, his father had to wake up very early to prepare the ingredients.
When business was good, his income didn’t really increase much because the ingredients he had prepared was limited. The seats available in the shop were also limited.
His dad wasn’t rich, but his dad taught him a good lesson. He learned that he should not get into a business that cannot be scaled easily.
So, he went into wholesale business because it was easily scalable.
He gave me an example.
In 1980s, Philips wanted to purchase some heating elements from him. The order was huge. His company was small at that time, but he was able to take the order because it was simply a matter of arranging for the shipment from the manufacturer’s to the buyer’s warehouse.
That had made him his first pot of gold.
And he had several similar windfalls in his years of doing business.
Although his experiences were in the 80s and 90s, the same logic applies today.
One of the reasons why I decided to sell digital products was because it was very scalable.
Imagine selling an ebook or a training course. You will not run out of ebook or seats when the business was good. Neither will you run out of time delivering them because everything is automated.
So, if you want to get into a business, get into one that is easily scalable.
