#159 – Why lead generation is a HORRIBLE business model

Show notes from Episode #159 of the Sweaty Startup Podcast.

We constantly talk on this show about the gap in supply and demand of services. Whether it be lawn care, plumbers, cleaning services, or other popular industries, there’s a constant issue in people that are willing to pay for a service needing to jump through hoops to get the job done.

People reach out to Nick all the time with a seemingly great idea to create a service that ranks on Google and sells service leads to businesses. In short, they profit from helping those same plumbers, landscapers, and cleaners secure leads. However, this really isn’t a great idea and doesn’t offer the same opportunity that a traditional sweaty startup does for two reasons:

  1. Businesses have no shortage of leads

Businesses don’t need more leads, and we need to really grasp that. Service-based businesses are not at a shortage of leads, the customers are at a shortage of service providers. When seemingly every company can get away with profiting off unprofessional, inefficient, and delayed service, that means there are plenty of leads available. These customers don’t need to be shot off to a company only to be ignored, they need a new service that can act in a professional and efficient manner.

  1. Don’t Compete with Google

Google sells ad space, they sell leads already. If you base your business on getting found through Google, you don’t want to also compete with them for revenue. You have no control over your platform and Google can shift their algorithm overnight if they decide that you’re getting in the way of them selling ads. Compete instead with the local services that are run so poorly, not with Google.

Real opportunity is in providing the service that these leads need. It’s hard work, it’s not fun, it’s not scalable, and that’s why nobody wants to do it. But the leads are there. 

Relying on labor creates a level playing field for everybody, you can win the employee competition. Most service businesses don’t have enough great employees, and that’s their bottleneck. If you can master recruiting, hiring, training, and managing a great set of workers, you’ll free up time and stress for yourself and be at no loss for leads.

If you want to get serious about starting your own sweaty startup and hiring employees, check out the hiring series in these posts:

  1. 5 things you need to do before making your first hire
  2. Finding the ideal employee and convincing them to work for you
  3. What to look for in your employees (and why experience isn’t that important)
  4. Dealing with questions and nurturing talent from within

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About Me

I started the Sweaty Startup in December of 2018 because I believe the Shark Tank and Tech Crunch culture is ruining the real spirit of low-risk entrepreneurship. 

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