4 Business That Can Take Advantage of Fear Factor And Distress

Recently, i was reading one of the research papers on Indian Business. Quite interestingly, the author highlighted that Indians are not willing to pay so easily. Be it a paid advice, convenience or online shopping. As i keep highlighting that one of the reasons for e-commerce boom is deals and discounts. The mobile wallet providers are surviving because they are burning cash. The research paper also mentioned how the business of one of the online grocery store collapsed by 40% after they introduced delivery charges of Rs 30 for orders below Rs 499. In other words, people are not willing to pay a 30 Rs extra for convenience. It’s a different matter that all the online grocery stores are now charging delivery charges for survival.

On top of it, the failure rate of Indian startup or business is increasing. At the same time, due to grim job scenario more and more people will join the startup bandwagon in next few years. Isn’t it bit confusing? That is okay as the world is now the more complex place to survive. The biggest question for any budding entrepreneur is to find a winning business idea. It is not that easy but not that difficult also :).

These days i am doing a study on behavioral investing or finance. Therefore, i applied the same behavioral approach to identify business ideas. Though it is not a rocket science but in layman terms, what it implies is to create a business idea around the behavior of the customer. For example, e-commerce revolves around a behavioral trait of a customer to save money and convenience factor.

During this fight of ideas in my mind, i thought of business ideas that can take advantage of fear factor and distress of a customer. The best part is that these businesses can charge a premium. Besides fear factor, the premium pricing is possible only in dedicated high-profit-margin business. Also to add that only fear factor cannot help you. If this would have been the case then selling an insurance policy would have been the cakewalk. It is not the case. The point i am trying to make is that you need to market the fear factor to create a successful business model :).

Let’s check out how you can take advantage of the fear factor and distress to charge a premium and create a successful business.

4 Business That Can Take Advantage of Fear Factor And Distress

1. Astrology:

Astrology is flourishing online business riding purely on fear factor. A yantra costing Rs 300 can be sold for Rs 3000. Though it is a sensitive topic to touch but just to clarify that here i am only discussing this from a business perspective. Therefore, you should only look through professional spectrum else you may skip to a point no 2 :).

Recently, i met one of my school batch mate who invested in an Astrology venture. They started it as a YouTube channel. Now they have approx 10,000 subscribers in just 6 months. According to him, average daily income is around Rs 50,000 i.e. 15L per month through consultation only. Besides that they sell approx 80-100 astrology related products on daily basis with an average margin of Rs 500. Therefore daily net income of Rs 1,00,000. Even assuming he might be exaggerating 50% as some businessmen might do, a net income of Rs 50,000 per day is too good. In other words, a monthly income of approx Rs 15L or 1.8 Cr per annum. This is equivalent to the salary of a CEO of a mid-size company.

When i studied astrology space, i observed that biggest mistake by entrepreneurs is a failure to find the right mix of blended model i.e. consultation (Paid + FREE) + E-Commerce. These models cannot succeed in isolation. Therefore, a right mix of all three is crucial for the success of this business.

2. Coaching:

Now you must be wondering it is overcrowded sector and only an idiot can venture into this sector. I agree it is overcrowded and only big players are taking advantage of commercialization of education. In my opinion, the 2 critical success factors are to create a niche and to exploit the fear factor.

Now you must be wondering what is the fear or distress factor in this sector. The answer is FEAR of FAILURE. Because of this reason businesses in competitive exams are really doing well. Here i am not suggesting to open a study center for IIT coaching as you will find it in every nook and corner. You have to find or create a niche for yourself. One of my friends opened a coaching institute for the entrance of MD/MS. It is super niche area and he is earning a bomb.

In another instance, one of the entrepreneurs specialized in Bank Clerical Exams coaching. The reason being, there is a big market out there in small cities and towns. Secondly, he is leveraging the fear or distress. The advertisement in his institute questions the potential students “What will you do if you fail the exam?”. The next line mentions that “You should think about it if you are not enrolling with our institute”. It creates fear/distress in the mind of the student.

Education especially coaching is one of the sectors wherein people don’t negotiate and are willing to spend provided you can deliver results.

3. Credit Agency:

Here by a credit agency, i mean an agency that helps the borrowers in distress to avail the loan. It is a relatively new concept in a true sense. Recently, one of my clients paid Rs 50,000 as professional fees for similar service. Some of the agencies are working on commission basis. They act as a bridge or link between the borrower and lender. They charge X % commission from interest rate to arrange the loan. Now it is a very vast field and there can be numerous business models. P2P lending is one of the models. Personally, i am more convinced with private lending. The trust factor is high in such cases and it may not face a regulatory hurdle.

At the same time, i would like to add that it is HIGH RISK Business model. The biggest headache is how to handle the payment default. There are various ways to handle payment default in each scenario. If you understand the tricks of the trade then you are home.

4. Management of Online or Social Media Presence:

Imagine your insurance provider increased your policy premium just because you posted your pic of paragliding activity during the last vacation. In another scenario, you are refused a job offer because you are a member of late risers group on social media. You must be laughing at me but these scenarios are a reality in some of the countries. You will be under distress and might need professional help to manage social media presence.

Management of social media presence is a subset of online reputation management and will be one of the most successful business ideas in near future. Currently, it is at very nascent stage. Only big companies or top guns of the companies are hiring this service. As an individual, you cannot control who is posting/tagging/mentioning what about you online as anyone and everyone can post anything. As we move from reality to virtual world, we will be more concerned about social media presence in near future. Therefore, management of online or social media presence will be one of the big business ideas for future that will take advantage of fear and distress. In fact in my post, 5 Future Business Opportunities i highlighted that online reputation management as one of the big business ideas for future.

Words of Wisdom:

In my opinion, it is perfectly okay to create a business model around fear and distress provided you are not taking undue advantage of an individual under fear/distress. It is not necessary that to start a business shared in this post, you should possess required skill sets. In the case of astrology, my friend is not a professional astrologer. He hired a professional astrologer to create a business from astrology services. Therefore, you can team up with professionals to realize your dream.

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