The Difference Between Profitable and Unprofitable Businesses

Whether we can earn money in our jobs depends on the business we choose and its direction. In other words, the direction is more crucial to success than the amount of effort.

This principle is similar to fishing. The type and size of fish you catch depend on which fish you target and where you fish. Thus, while there are businesses where no matter how hard you try, you can’t earn much, there are also businesses where minimal effort can yield significant returns.

So, what distinguishes the two?

To understand this, we must recognize the characteristics of unprofitable businesses.

In conclusion, the difference lies in businesses with high fixed costs and limits.

Businesses with these two elements are like cars on a highway dragging an anchor. No matter how hard you press the accelerator, the anchor slows you down.

Of course, there are people who succeed in such businesses. However, clearing these conditions and achieving success is challenging. Therefore, for most people, it’s advisable to choose businesses with low fixed costs and limits.

Specifically, businesses with high fixed costs and limits are typically brick-and-mortar businesses.

For instance, consider opening a ramen shop. Before even starting, you have fixed costs like rent, tenant fees, and taxes.

These are costs you have to pay every month, regardless of how good your sales are.

Moreover, there’s a limit to the number of seats in the shop and its operating hours. So, no matter how popular it becomes, it’s challenging to earn beyond a certain amount.

On the other hand, online businesses and digital product sales have low fixed costs and can scale easily.

Profitable businesses have the opposite characteristics: low fixed costs and limits. To understand this, think of the difference between 「home games」 and 「away games」 in sports.

Home games are played on one’s own field, with favorable conditions. In contrast, away games are played on the opponent’s field, often with many restrictions and disadvantages.

Applying this analogy to business, businesses with low fixed costs and limits are 「home games,」 while others are 「away games.」

Examples include online tutoring platforms, YouTube, Netflix, and blogs. These businesses can provide services and information to people worldwide without being bound by physical location or time.

For instance, Netflix is like a massive cinema that operates 24/7 and is accessible from anywhere. Once content is produced, it can be played repeatedly.

Such businesses have almost no limit to potential earnings.

Similarly, with blogs, an article written once can generate revenue for a long time. It’s like planting a tree that bears fruit every year. Initial effort is required, but continuous revenue can be earned afterward.

In conclusion, in today’s digital age, understanding and adopting business models with low fixed costs and limits is the first step to success. After reading this, what kind of business are you considering starting?

I hope this information has been helpful to you. Thank you for reading. I’m aiming for 10,000 followers, so I’d appreciate it if you could follow, comment, or give a clap. It would be encouraging.