How to Identify a Profitable Business

Thinking about a business idea in your head is easy.

Dreaming about building an extremely profitable company is exciting.

But how do you know it will actually be a profitable idea?

Here is how to identify if your business idea will be a profitable one:

Conduct Market Research:

Before you begin testing if your idea is good or not, let’s focus on research.

Analyze the industry.

Look for market trends.

Ask yourself: Is there a demand for this product or service?

Now determine who the target customers will be. How will you assess the competition?

The best way to build a profitable business is to understand people’s problems; then solve them.

Before building companies to $1.5M+ in revenue, I looked into the industry. I understood what was working and what was popular.

Sure, I made some mistakes along the way, but that’s part of being an entrepreneur.

Evaluate the Business Model:

You understand the market needs for your product/service, now what?

Build your business model.

What are your revenue streams?

Cost structure?

Pricing strategy?

Understand your audience and what they will pay for. If you have lots of competition, what are they doing right? What are they lacking?

I’ve spent 7 years building a brand around content creation. Built a community of over 300,000 people.

How did I benefit from this?

I built my business model. I identified the key drivers of revenue. Expenses. Evaluated the potential for growth.

Write this all down. Plan your success.

Assess Financial Performance:

If you are building your business from an idea, you can’t assess your current financial performance.

But what you can do is focus on historical trends and assess the potential for future growth.

I looked at hundreds of different companies and small businesses to evaluate their growth.

What did they do at the beginning to see financial success?

How did they maintain it?

What were the poor decisions they made to loose money?

These are all important questions to ask yourself.

Build a document of all of these ideas and write out what your business will look like.

Evaluate the Management Team:

I built my first company on my own.

It’s not simple.

I managed to make my first $100,000 in 5 years. This wasn’t an easy task.

What helped me do this even quicker these past few years?

Building a strong team.

The individuals you work with everyday will reflect your business.

Do they have the same drive as you?

Are they motivated like you?

Will they screw you over in the future?

Build a team with a track record. Understand your vision. And want to grow with you, not just for themselves.

Identify Potential Risks:

Taking risks is part of how I’ve become successful.

You don’t see anyone doing well that hasn’t had a moderate tolerant of risk.

Find your competition.

Changes in the market.

Regulatory risks.

How will these things affect your business long-term? Short-term?

I invested over $50,000 into building my first business. Obviously not all online businesses will take nearly that much. Just my example.

Yep it look a while to get there, but I understood the risks. I built my business model and knew exactly where I wanted to be and how I wanted to do it.

Being an entrepreneur requires taking risks.

Simply put.

Calculate Return on Investment:

Now for the important part.

What does your return of investment look like?

How many products/services will you need to sell to make your initial capital back?

Success takes time. Won’t happen overnight.

For 3 years I created content. Spent 12 hours a day live streaming, making videos, writing, and working on the side.

I didn’t make my money back for 6 years.

But once it clicked, I saw massive growth… Quickly.

Calculate your businesses financial performance overtime, watch market trends, and use analytics to follow your growth overtime.

Whenever you're ready, there are 3 ways I can help you:

1. ​The Growth Operating System:​ Join 400+ students and 50+ founders inside of The Growth Operating System. This course will teach you the system I’m using to build a massive audience on LinkedIn & 𝕏 as well as how I generate $15,000+ / month in income.

2. ​Alex’s Creator Club​: This is my private community where you’ll get 1:1 support from me. The value here speaks for itself. Try it for free.

3. ​Coaching Session w/ Alex: If you’re looking for most efficient way to take your online brand/business to the next level - 1:1 coaching is the way to go. Book a time that works for you and let’s take your business to the next level.