The best businesses are ones where you have the highest margin and also sell for the highest dollar amount.
Table of Contents
Start a Business That Pays You Big on Every Sale
If you’re going to put in the work to build a business, you might as well choose one with high margins.
High-margin businesses let you reinvest more cash, scale faster, and protect yourself when the market gets rough. The smartest founders pick models where each sale brings in maximum profit and the cost to deliver stays low.
Here are the four business models I’d bet on in 2025.
1. Product Business
Typical Gross Margin: 50–60%
Physical products can be hugely profitable, but only if you avoid the common traps that kill cash flow.
Three Rules for a Profitable Product Business:
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Pre-sell – Use Kickstarter, Indiegogo, or similar platforms to validate demand before you produce.
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Go direct-to-consumer – Selling through your own store or Amazon lets you avoid retailer markups and delays in getting paid.
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Invest in brand – Use premium materials, gather strong reviews, and generate press to build a flywheel of word-of-mouth growth.
You have to pre-sell so you can validate demand for the product without losing money.
2. Agency or Service Business
Typical Gross Margin: 60–70%
Agencies are one of the fastest ways to monetize skills you already have. The difference between an agency that scales and one that traps you in a low-paying job comes down to how you structure it.
Four Keys to Scaling an Agency:
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Solve a high-value pain – Businesses will pay more if you solve problems that save or make them money.
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Productize your service – Sell a fixed deliverable instead of trading hours for dollars.
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Create recurring revenue – Package your service into ongoing contracts.
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Build systems – Document processes so you can hire and delegate without losing quality.
If you sell just work for time, you’re always going to get paid for your hour. What you want is to get paid for an outcome.
3. Coaching or Consulting
Typical Gross Margin: 70–80%
Coaching is about turning your expertise into a profitable, high-impact business. It works for any founder who’s achieved results others want.
Three Must-Haves for a Successful Coaching Business:
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Sell your expertise – Don’t undervalue your ability to shortcut someone else’s path to success.
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Give away your best ideas – Education-based marketing builds authority and attracts paying clients.
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Build a community – Create spaces for your clients to connect, learn, and grow together.
The transformation happens at the transaction.
4. Software Business
Typical Gross Margin: 80–90%
Software is the ultimate high-margin business. Build it once, sell it infinitely, and your cost to serve each new customer is almost zero.
Four Keys to Profitable Software:
| Key Area | Why It Matters |
|---|---|
| Sticky product | Daily-use tools keep customers paying for years. |
| Boring industry | Less competition, more loyal customers. |
| First-time user experience | Onboard like a video game tutorial so users get value fast. |
| Retention focus | Keep the customers you have to maximize lifetime value. |
You want to build a tool that solves a problem in a business where they have to use it every day.
Choose a Model That Works for You
Each of these models can change your financial trajectory, but the real magic comes from committing to one and going deep.
Pick the model that matches your skills, validate the market, and execute relentlessly. The right business model will give you leverage, freedom, and the ability to scale without burning out.
Frequently Asked Questions
What type of business is most profitable in 2025?
Software businesses typically have the highest gross margins, often between 80–90%. They require upfront development but cost almost nothing to serve additional customers, making them extremely scalable.
Is it better to start a product or service business first?
For speed and lower risk, start with a service business. You can generate cash flow quickly, then reinvest into product or software plays.
How do I know if a business has high margins?
Calculate gross margin by subtracting the cost to deliver from the selling price, then dividing by the selling price. Anything above 70% is considered strong.
Can I combine these business models?
Yes. Many founders start with a service or coaching model to fund development of a software product, then run them in parallel for multiple income streams.
What’s the biggest mistake when starting a high-margin business?
Scaling before validating the market. Always pre-sell or prove recurring demand before investing heavily.
More Resources
Tools Mentioned
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Kickstarter – Crowdfunding platform for validating product ideas.
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Indiegogo – Alternative crowdfunding platform.
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Amazon – Direct-to-consumer sales channel for product businesses.
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Clarity.fm – Marketplace for paid expert advice calls.
Full Transcript
I Discovered the Best Businesses to Start in 2025 – YouTube
https://www.youtube.com/watch?v=mD6fI4pjwzc
Transcript:
(00:00) these are the best businesses you can start in 2024 Warren Buffett says great businesses have high gross margin so what is gross margin essentially if I sell a product for $5 but it cost me $1 to make then my gross margin is $4 or 80% see the best businesses are ones where you have the highest margin and then also sell for the highest dollar amount what you don’t want to be is like a restaurant where the gross margins are only 45% you want to be on the upper end of 70 80 even 90% % gross margin and to do this you need to understand all the
(00:33) industries that’s why I’ve spent a lot of time analyzing all the best Industries and evaluating all the gross margins from lowest to highest that you can start today with very little experience to make this year the best year of your life the first business is a product business typically these companies have 50 or 60% gross margin now I’ve been involved in some incredible product companies like paila that does a biodegradable phone case or laundry sauce which is a modern-day detergent company or Lomi that does a
(01:02) food composting device and I mean these are literally some of the best companies out there but I’ve seen people lose their shirt Building Product companies because they don’t understand how to get distribution how to get sales how to build a product efficiently and essentially they take all their savings put it into a product don’t get any Revenue so if you want to make a product business work great these are the three things that you need to do right number one is you have to pre-sell see most product companies use Kickstarter or
(01:31) Indiegogo or other crowdfunding platforms so that they can validate demand for the product without losing money now I know you’ve probably been burned by investing in some of these crowdfunding campaigns but the best ones know how to do them promote them Market them get the money and then use that to actually build the product the second thing is you have to do direct to Consumer and the reason why is you got to skip the retailers because if you go through a wholesaler to a retailer by the time you actually get paid and
(01:59) there’s the big cash flow issues it’s very hard to make a product business work that’s why Amazon has been a big category for a lot of people that are getting into the product space and the third thing is you have to invest in the Brand This Means making sure that you use premium products meaning that you care about Word of Mouth that you focus on reviews that you look for opportunities to get pressed to drive traffic to the business because that’s what’s going to create the flywheel to make a product business work the second
(02:27) business is an agency or sometimes a service business business the margins are between 60 and 70% now I’ve learned over the years that the easiest companies are ones where you take a skill that you already have maybe as an employee and then offer that skill to other businesses and get paid to either do for those businesses what you currently do or teach them how to do it for themselves now I’ve seen a lot of people launch different types of agencies social media marketing agencies Etc and the ones that actually scale and
(02:56) make money not just have a low paying full-time sometimes dou double full-time job they focus on these four things number one is they focus on a strong pain in the market if you think about it you could start an AI company today where you go and you analyze businesses and all the inefficiencies and then introduce them the AI tools to solve those problems and you would make a ton of money because businesses will pay for anybody that can show them how to save them or make them money using AI is a modern-day way of them getting leverage
(03:28) and you can even negotiate where you get paid more based on how much money or time you save them number two is productize Services see if you sell just work for time then you’re always going to get paid for your hour what you want to do is get paid for an outcome and to do that you got to focus on one thing if you’re a designer focus on Logo designs if you’re a programmer focus on the onboarding experience if you’re a salesperson focus on the Discovery call teach people how to do one specific thing so that you can productize it and
(03:58) as you grow you can buy back back your time by having somebody else support different aspects of that productize service number three is focus on reoccurring Revenue see too often when we start we just want to like get paid to do the thing problem is that every month you got to get paid to do the thing over and over and over again so you start at zero at the beginning of every month what you want to do is sell a service an ongoing reoccurring Revenue Service for whatever that work is so that you come in you evaluate it you
(04:25) support them you keep doing more work and that way you can sign them up for 3 months 6 months 12 12 months of service and you start building the revenue Base number four is you want to scale with systems the whole philosophy is build a business you don’t grow to hate the way we do that is by replacing yourself using a system a checklist for how you deliver on that agency work and then that way you can hire people to get them to do the work following your process that guarantees the results for the customer the third business is coaching
(04:54) and the margins are between 70 and 80% now this is also consulting or information online online training courses that kind of business and I know this one incredibly well I run one of the largest coaching Organization for software CEOs I’ve been involved in creating multiple courses and trainings and seminars and all this stuff for some of the largest coaches that you know of online and even for me I hesitated launching this I mean I even built a whole technology company called clarity.fm because I was too scared to
(05:22) call myself a coach and I put it off I mean this platform we built I did over 1,300 Clarity calls over a 2-year period and never gave myself permission to call myself a coach and I want to tell you it’s been one of the most rewarding things deciding to go all in on being a coach and really working with some of the best CEOs out there and I want to encourage you to consider it but if you’re going to do it these are the three things that you have to do right or you’re going to eventually end up hating being a coach number one is to
(05:50) learn to sell your expertise I mean this one is a fascinating one cuz I know people that are worldclass in what they do they’re literally the fittest person I know or they’re incedible networkers or they’re so talented in their art but they would never feel comfortable getting paid to teach somebody else to do the thing they’ve done which is crazy I mean at the end of the day you’ve become great at the thing you’re doing and people have noticed I want to encourage you to allow other people to pay you for that advice because in doing
(06:19) so you’re actually helping them often times the transformation happens at the transaction so them investing in themselves by hiring you to teach them how to become world class at what you do is actually where a lot of the value is created number two is strategy see most people think that I know this information so I can’t give it away I’m going to tell you something controversial I want you to give all of it away okay it’s called education-based marketing see I believe that information wants to be free and then you get paid
(06:49) for the support of the implementation so you want to teach everything you know around the topic for free on social media at seminars get on stages speak share it all the best stuff and by doing so you’re going to build an audience of people that want to learn more from you and they will pay you for the implementation number three is build a community see I had a coach once and she was incredible her name was Marcy I learned so many things she had brought a company public and just an incredibly valuable coach the challenge was is that
(07:22) I knew she was working with other incredible entrepreneurs and I never got to meet them never once did she organize a dinner or a Meetup or things so that I could also get value from meeting the client she worked with I’m telling you if you are a coach having a community where other people from that same coach can connect and meet each other that’s where a lot of value as a coach will come from to help you with keeping people in your world and also allowing you to send their support as you grow the business the fourth business is
(07:52) software and the gross margins are between 80 and 90% if you think about it having a new customer use your software costs nothing literally it’s like server data storage on some computer now I learned this personally back in the 2000s when I started writing code in building software and over the years I just found it so amazing that I can build some software once and the more it grows the less it costs me and as long as the servers don’t change that code will run the way it has forever now I have a lot of friends that want to get
(08:23) into software but what they miss is these key points to make the software work because if you don’t have people using and loving it the way you need to then it’s not going to create the margins cuz customers are going to come and they’re going to go number one is a sticky product you want to build a tool that solves a problem in a business where they have to use it every day think about things that are painkillers not vitamins you want to create something that’s a musthave problem solve not a nice to have like a vitamin
(08:50) think you know dating sites where it’s just like a oneandone or taxes where they do it once a year those are not tools that are going to have daily usage like a Dropbox or slack so you want to look for problems that are sticky in regards to the product solving those problems and keeping them around number two is boring industry see most people build software for marketing or sales because it’s what they know but the problem is the customers are going to be swapping off of your product to your competitors every 3 to 6 months you want
(09:18) to be in boring Industries like local services lawn care Body Shop software government is definitely a fit you want to find customers that aren’t always looking for the latest whizbang but you can solve a core problem in their business using software number three is firsttime user experience also pronounced fouy the key is is you want to look at your software as like the level one of a video game you know when you start playing a video game they don’t just like drop you in and say start fighting or start racing like they
(09:48) walk you through the process and they actually teach you you’re not playing the game but you’re kind of playing the game that is the same concept you want to do with your software so you don’t overwhelm people and get them to what’s called activation or receiving core value most people try to add too much to the product especially when people just sign up and it confuses the customer so you want to focus on that firsttime user experience to make sure they activate and receive the value you promise on your homepage number four is focus on
(10:15) retention see too often people want to focus on the chocolate which is marketing and sales and getting more customers and leads and just trying to get as many people into the thing but the real broccoli of software is retention and keeping people from turning out figuring out of the people that leave why did they leave try to keep them back because the more you can keep the customers that you’ve got the higher the lifetime value will be of your customers over time which will massively increase your gross margin and
(10:42) what makes software so powerful those are the best businesses you can start in 2024 and if you want to learn how to go from Z to a million in 60 days click the link and I’ll see you on the other side