Selling AI Systems vs Automations: Scaling Strategies for Future Growth

In today’s digital landscape, the buzz around AI automation agencies is undeniable. However, Ben, an AI entrepreneur, shares his journey and insights about the significant differences between starting an AI automation agency and selling productized AI systems. Here’s how to navigate these two business models to achieve scalable success while minimizing headaches.

🚀 Understanding the Basics: AI Automation vs. Productized AI Systems

AI Automation Agency:

• Core Offering: Custom workflow automations for existing processes.
• Revenue Model: Service-based, working closely with clients to enhance their current operations.
• Challenges:
• Requires deep understanding of each client’s unique processes.
• High client interactions leading to time-intensive relationships.
• Slender profit margins due to operational complexities.

Productized AI Systems:

• Core Offering: Pre-built AI systems designed to deliver specific business outcomes.
• Revenue Model: Can be packaged and sold multiple times, maximizing scalability.
• Benefits:
• Higher profit margins (up to 85%).
• Significant earnings potential with minimal client dependency post-launch.

🏗️ The Metrics: A Comparison of Profitability

Ben highlights the difference in revenue and profit margins. While his AI automation agency earned a mid-six-figure amount over 17 months, the productized AI systems started to generate profits in just 8 months with higher margins.

• AI Automation Agency:
• Revenue: Mid-six figures
• Profit Margin: ~40%
• Productized AI Systems:
• Revenue: Approaching the automation business in just 8 months
• Profit Margin: ~85%

🤔 The Upsides and Downsides

Upsides of AI Automation Agency:

• Quick to start with minimal technical knowledge.
• Fast revenue generation through immediate client engagements.

Downsides:

• Custom builds result in a lengthy process and complex pricing.
• Scaling relies heavily on hiring and managing a larger team.
• Many businesses lack structured processes, leading to additional groundwork before automation can begin.

Upsides of Productized AI Systems:

• Scalable as a single product can serve multiple clients.
• Generates income through sales rather than ongoing clients.

Downsides:

• Initial setup takes time and rigorous iteration to refine the product.
• Requires domain expertise to create effective AI systems that yield consistent outcomes across various businesses.

📈 Key Skills Required for Success

To excel in either business model, certain skills are vital:

• For AI Automation Agency:

• Expertise in hiring and team management.

• Strong client relationship capabilities to navigate extensive communications.

• For Productized AI Systems:

• Skills in product development and marketing.

• Ability to gather and analyze customer feedback to iterate successfully.

🌟 From Automations to Systems: The Transition

Ben suggests that starting with an AI automation agency can provide valuable insights and opportunities that lead to creating productized systems. Here’s how this can happen:

1. Start Small: Begin by executing custom automation solutions.
2. Identify Common Challenges: Work with multiple clients within a niche to pinpoint recurring issues.
3. Develop a Productized Offering: As you refine your solutions, package them into standardized systems.

🌐 Building Your AI System: A Quick Overview

To construct a profitable AI system, Ben advises following a structured roadmap:

1. Choose Your Niche: Select an industry you’re passionate about and understand well to streamline the creation process.
2. Determine a Business Outcome: Focus on areas of high demand, such as lead generation or recruiting.
3. Build Iteratively: Start with a Minimum Viable Product (MVP) that addresses primary needs, increasing complexity as you receive feedback.
4. Create Scalable Solutions: Transition from a high-touch agency model to out-of-the-box system offerings once the product proves valuable.

💡 Practical Tips for Implementation

1. Listen to Clients: Gather continuous feedback to refine your systems further.
2. Market Effectively: Ensure you’re reaching the right audience who will find value in your pre-built systems.
3. Keep Researching: Stay updated on industry trends and adjust your offerings based on new demands and technologies.

🧰 Resource Toolbox

Here are some valuable tools and platforms mentioned that can support your journey in launching AI systems:

• N8N: A powerful automation tool for developing workflows.
• Relevance AI: For enhanced data analysis and implementation.
• Prompt Cowboy: A free prompting tool for AI usage.
• Skyvern: A security tool for web applications.
• Sendspark: It helps create personalized videos for enhanced marketing strategies.

📚 Conclusion: The Path to Profitable AI Solutions

Navigating the world of AI systems and automation doesn’t have to be a daunting task. With a contemporary understanding of both models’ strengths and pitfalls, you can decide which pathway suits your aspirations. Whether you choose to start with a custom AI automation agency or directly dive into productized AI systems, the key lies in leveraging your strengths, continuously iterating on feedback, and positioning your solutions effectively in the market.

By following these insightful pathways shared by Ben, you can set yourself on a promising journey toward an AI-driven business future with sustainable growth and scalability.