TSN #5 - Five different business types, that are not a startup.

When I started my career, everything that wasn't a corporation was considered a startup. How simple, yet how wrong that notion was.

There are about ten different alternatives to running a “startup” if you want to give entrepreneurship a try. I will cover my five most favourite alternatives and provide you with the following:

• Explanation

• Pros/Cons

• My favourite example

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So, what is a true startup?

In short, it is an experiment which, if it works, becomes extremely scalable, capable of double-digit month-on-month growth, must target a huge market, and is aiming for a 100x-plus exit to make it a worthwhile consideration for VCs. Paul Graham puts it nicely:

And if you need a more complex explanation, check this one out from a VCs perspective.

Startups are built to be sold at 100x-plus multiples and usually are not cash-flowing businesses. This means high burn rates for a long time, with an exit 10 years down the road in mind.

The actual question is, how many of you are knowingly signing up for this? If you tick all the boxes above, go for it. If you haven’t thought about it this way, you might want to explore other alternatives.

“Startup” alternatives

The alternatives to launching a full-on startup are usually cash-flowing businesses. Some can be started with $0 as side hustles and later scaled into a full-time gig.

1. Tech-Enabled Service Businesses

In plain terms, these are the typical “boring” businesses where you introduce a bit of tech. Power washing company using Ai to optimise? Yes. Bouncy Castle rental company using AI to lead analysis? Yes. Niche consulting service using technology to cut the use of human consultants by 80%? Yes.

Pros:

• Lower startup costs, can be started as a business of 1

• Can be bough from retiring older generation

• Utilizes existing skills and adds a bit of technology

• Cashflowing business

Cons:

• May be harder to scale quickly

• This one is not aiming for a

Example: Check out this power washing company, or our Bouncy Castle rental which I recently started with couple of friends.

2. Productised Agencies

Service businesses that package their offerings into standardized, scalable products are usually associated with recurring revenue, but not always. Examples include consulting, design, development, etc. To learn more I suggest this resource.

Pros:

• More scalable than traditional services/consulting

• Predictable revenue if on subscription plan

• Clearer value proposition and lower risk of “scope creep”

• Can be started as a solo business

Cons:

• It is still an agency business but packaged differently

• Requires a lot of customer interactions

Example: Well the most known is exampled is for example Design Joy. One of my companies, Kiuub, uses the same model.

3. Micro-SaaS Businesses

Small, niche-focused software businesses are typically run by one person or a small team. Sometimes, they are built by indie hackers. This is the type of business where you could learn a bit of no-code development to build something yourself.

Pros:

• Can start with minimal resources but must have deep domain knowledge

• Highly focused on solving specific problems

• Potential for passive income

Cons:

• Limited growth potential compared to traditional startups

• Requires some technical knowledge or partnerships

• Time investments

Example: A typical solo-preneur business, for example FeedLetter, which I use to collect feedback. Im pretty sure this is run by one person.

4. Fractional Roles

Offering high-level expertise on a part-time or project basis to multiple companies, especially those that cannot afford a full-time role or value external expertise. This includes roles such as Fractional CMO, COO, Co-Founder, CIO, etc. People successful in this type of business will have figured out a separation between time and money in this model.

Pros:

• Leverage your existing skills and network

• Flexibility and variety in work

• Potential for high hourly rates

Cons:

• Requires established expertise

• Need to manage multiple client relationships

• You might fall into the trap of exchanging time for money

Example: A pretty good CMO example here. Also, if you are in the market fractional roles, send me a message, I currently have a project in mind.

5. Content based businesses

These are the types of businesses where you use a large audience to sell products or services. You must be good at creating content and able to attract an engaged audience over time. Good to be started as a side hustle.

Pros:

• You can use your current expertise and monetise it

• Build services based on audience interests

• Can be recurring revenue

Cons:

• Content generation and distribution is a must

• You might fall into the trap of exchanging time for money

• Content is mainly a channel for your service, which you will still need to create

Example: My favourite example is Justin Welsh, he creates content about writing, runs courses and a private community.

All for this week. Monday is around the corner, let’s build!

- Slavo