Should You Sell a B2B Service in 2024?

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Welcome to another issue of Passionate Income.

Today we’ll be discussing the downside of launching a freelancer / agency / B2B service business in 2024.

While we discussed the positive side of this path in December, today we wanted to play devil’s advocate and explore the negatives.

Let’s dive in.

In a previous issue, we discussed the math surrounding why the best business model for beginners is to offer some kind of freelancing or agency service.

Overall, this argument is still valid if you’re a beginner who's trying to make your first $3k-$5k / mo online (so you can escape your 9 to 5).

But there a couple things we didn’t discuss in that issue.

See, yesterday I read a sales letter that got me thinking about competition within certain business models.

The basic premise of this guy's argument was that, yes, it's true service-oriented businesses are the “fastest” path to making enough income to quit your 9-5 (on a pure numbers basis).

But what he also talked about is how there’s been an exponential rise in the number of freelancers, contractors and agencies offering B2B services.

Understanding this is critical to your success because of the law of supply and demand.

To illustrate, below you’ll find a chart of the number of US-based small businesses that have launched since 2011.

Yes, things like social media and dropshipping have exploded the number of "Internet businesses" relative to the early 2000s. And yes, the numbers have jumped substantially since COVID.

But generally speaking, the increase is very steady.

Further, this image doesn’t tell the full picture re: how many of these companies are financially capable of hiring freelancers/agencies.

First, keep in mind most businesses fail in the first five years. Second, consider how few businesses make more than a couple thousand per month.

Combine these two realities, and of the millions of companies launched per the graphic above, it’s likely there are only a couple hundred thousand that generate any kind of meaningful revenue.

On the flip side, since 2017 alone, the number of Americans who’ve started freelancing has increased by a shocking 33 million!

And that doesn’t include how many tens of millions of people outside the US have started freelancing / agency companies targeting US businesses.

Now, you don’t have to be a math genius to understand Supply and Demand.

We’re talking about tens of millions of people trying to sustain themselves on the backs of a couple hundred thousand new businesses.

Sure, this example ignores the hundreds of thousands of small/medium businesses and Enterprise companies that were successful before 2011.

But even if that list has a million companies on it, those one million companies cannot sustain tens of millions of B2B service providers. Especially given the fact most large companies hire employees instead of freelancers/agencies.

Point being: The number of service providers who’ve entered the market over the last ten years has outpaced the number of new businesses by a factor of 200:1 (or worse).

Further, 99% of creators, digital nomads, and experts (which account for the exponential rise in companies launched since 2020) are not generating anywhere near enough revenue to hire other freelancers (let alone employees).

Meaning, the freelancing/agency industry is a pyramid where the bottom is disproportionately fat with beginners who cannot afford to hire anyone.

From there, rather than creeping up in a straight line like you would see with a regular pyramid, you have a J-shaped inversion where the number of businesses making $25,000, $50,000, or $100,000 per month or more becomes exponentially smaller.

In short, the B2B services play has become extremely saturated.

Now, understand I am not knocking this business model.

In the online community, I'd bet freelancing/agency stuff is how 90% of people sustain themselves.

But there’s no denying that relative to 10 years ago, the number of new service providers has exploded relative to the number of new businesses.

And similar to gravity, when it comes to economics, Supply and Demand is a Universal Law.

Which raises an important question: Is it still worth it to launch a B2B service?

The answer to this is not a simple yes or no.

Instead, it depends on a variety of factors, including:

1. What skills you possess

2. To what degree businesses will pay for those services

3. Your phone sales skills

4. Your commitment to generating leads in a hyper-competitive landscape

5. What niche/industry you choose to go after

6. And a variety of other factors

In addition, client services are heavily depend on relationships.

If you’re an extrovert who enjoys speaking with people – including dealing with angry/disappointed clients when your service doesn’t live up to its promise – offering a B2B service could indeed be a good option for you.

On the other hand, if you’re not much of a people person, it’s very possible client services could make you hate your life.

Avoiding this path is contrary to the advice I would've given in the mid-2010s.

Mainly because everything - from lead gen to getting clients results - was much easier back then.

Fast forward to today, and the situation is completely different. Mainly because today’s business owners have been burned by freelancers/agencies multiple times.

And because of that, they’re more skeptical about who they hire.

In fact, most hiring today happens based on referrals and/or reputation. Which means positioning yourself as an expert on social media.

If you’ve ever pursued this path, odds are you know how hard it can be.

While it’s easy to point to XYZ guru as an example of how it’s possible to grow a Personal Brand, what people don’t see are the thousands of people trying to do the same thing but getting little to no results.

In conclusion, there is no easy answer.

On a purely mathematical basis, getting one to two clients at $1,500 to $2,500 per month is the “easiest way” to escape a 9 to 5 job.

But as we've outlined above, there’s more to the story than just numbers.

So, if you're a beginner considering selling a B2B service, have a think on this stuff. Especially as it relates to whether or not you enjoy dealing with people.

Because if you don’t, but go this route because some guru says it's the fastest way to hit $5k to $10k per month, you could be in for a rough road ahead.

On top of that, the 6 to 12 months you spend trying to get your service off the ground is time you could have spent working on your dream business.

💡 Takeaway: On a purely numbers basis, launching a client services business is the fastest way to earn a full-time income online. But given how saturated the B2B services market has become, you may be better off launching a business that takes longer to build but is more aligned with your personality.

I'll leave you with this quote…

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