You’ve likely heard a fair amount about white-label business opportunities. You’re keen to find a good venture to dive into. Before you do that, however, there are some things you need to be on the lookout for.
In this post, we’ll dive into what makes a white label opportunity good, bad or downright risky. So if you think you’ve found a good one, keep reading and see if it checks all the boxes.
What Is A White Label Business Opportunity?
White-label products and services are sold by a third party to brand and resell as you wish. This allows you to build a bespoke brand over an existing business solution.
It’s an excellent option for many investors because they can benefit from the security of a proven solution while expanding their own client base.
Here’s a list of benefits you can enjoy when contracted with a white label provider:
- Avoid risks associated with creating your own products or solutions
- Access to expertise that your team members lack.
- Less time and money spent launching your business.
- Access to quality products and services made by industry experts.
When you don’t have to worry about your own product development, you can spend more time on high-value activities (like selling and customer service, for example).
You get to focus on growing your business while others worry about manufacturing or updating software to stay current.
White Labelling Options
There are many different types of white-label business models out there. For now, we’ll keep it simple and focus on two major categories.
You can buy these physical products in bulk and add your own branding. You could even explore a white label dropshipping model, so you don’t need to store the products yourself.
One example of this is how everyone seems to have their own brand of coffee nowadays. Many of these are sure to have contracted a white-label provider!
This covers cloud-based products or services (or a mixture of both) that are commonly distributed to vendors on a subscription basis.
Active Campaign is a noteworthy example of white-label marketing automation software.
Some software solutions even allow you to build on top of the base they provide and create a new and unique solution. That’s only if you want to go all-in, of course, and either know how to code yourself or you wish to employ programmers.
Important Aspects To Consider
An informed decision is often a good decision. So think carefully and get all available information on the following points before choosing your next white-label investment.
Upfront Costs And Liability Risks
Do proper research on your chosen solution. What sort of up-front investment is needed? This could be a stock purchase or – in software – a subscription fee. You’ll also have a time cost while you get to know the industry you’re entering.
Calculate the projected return on investment and discuss any potential hidden or unforeseen costs with your provider.
Investigate the manufacturing or development procedures. Does your provider comply with all the relevant regulations? Consider safety, security, health, and liability risks. If you’re exploring a software solution, does it comply with digital privacy laws like the GDPR?
Think about how this can affect your business and potentially discuss your concerns with your potential white-label partner.
The Overall Market Potential
Market research is critical!
You never want to waste your time making assumptions. Shed light on the unknown by collecting data on your business solution, the prospective target market, potential competitors, and the trends that influence these. The nature of the market and the turnover of future competitors will be great indicators of how quickly – if at all – you’ll see a return on your investment.
If market research is a new concept to you, Hubspot has a great guide here.
Is It Sustainable?
Ideally, you want to invest in a solution that will stay relevant for more than a few months. Unless you want to start a fly-by-night operation, choose an investment with long-term earning potential.
Be wary of following trends – they’re short-lived. It’s as risky as dumping your life savings into a single investment – it could pay off, but you could also lose everything if you’re too late.
That said, you also want to get your money back as soon as possible. Going for the ‘safe’ investment is hardly worth it if you’ll only reap the rewards 30 years from now. The market can change entirely in just a few years – and you might never see your returns anyway.
So it’s best to toe the line between these extremes with a focus on sustainability.
Pro Tip: Tap Into Existing Client Bases
Already own a business? Consider cross-selling to your existing client base for quicker growth and returns. Consider investing in a solution that appeals to this crowd specifically and boosts your chances of conversion.
If you don’t already have a client base, keep this tip in mind for the future. Having an audience that’s ready for the uptake of new products or tools can prove invaluable in any industry.
Red Flags To Look Out For
Partnering with a white-label provider shouldn’t be taken lightly. It’s the very foundation on which you’ll build your future empire. Choose a robust solution that holds real value for your customers.
Here are some red flags that should send you running:
Sound business solutions require time, money, and effort. Double-check the quality of the product or service you’re looking to white-label. Check the company’s reputation online and test the solution yourself.
Quality products or services may cost a bit more and lower your profit margin, but it’ll enable you to build a sustainable and reputable brand. Be aware, though, price and quality aren’t always linked.
Don’t compromise your standards. Commit to quality and always aim to provide real value to your customers.
The opinions of your customers should take centre stage when devising your strategy. Incorporating ‘social listening‘ into your research will give you valuable insights into the solution you’re considering.
Pay attention to the reviews your chosen solution is getting. These are likely the same ones you can look forward to when selling their product.
Marketing can only do so much. If the solution’s core is defective, it will negatively affect everything built on top of it.
Lack Of Official Documentation
Seasoned entrepreneurs, look away now – this one’s for the rookies.
You’ve found your ideal opportunity. You let the provider know you’re interested, and they respond with a bolded request: ‘Please proceed to make a payment to secure your investment.’
Should you make the exchange?
Of course not.
Providers that request upfront payments without issuing samples or official documentation should spark your concern.
Scope out a prospective partner for as long as you need to. Payments and signatures should be the last steps you take when sealing a deal of any kind.
Your Next Step
We’ve got you covered if white labelling is for you, but you don’t know where to start.
If you’re keen on a software solution, consider Appenate. We provide DIY no-code apps to production, safety, manufacturing and field teams in all sorts of industries. We aim to empower workers to do their jobs more efficiently.
Our white-label program is easily the best in the industry – find out more here.