Before You Take the Entrepreneurial Plunge, Consider Various Business Models

There are some business models that are more accessible than others, to individuals who have little or no collateral, little or no cash, little or no entrepreneurial experience, little or no training, and little or no choice but to pursue an entrepreneurial dream without the benefit of resources which would ordinarily be nice to have. The purpose of this article is to briefly review some of the alternatives.

First, there are product oriented businesses versus service oriented businesses. In the case of the former, questions arise as to the source(s) of supply, how the inventory is to be managed, whether the product is perishable, and how the product is delivered into the hands of the customer. The business may need a substantial physical infrastructure. In the instance of a product like new cars, you need a lot, a parts department, service and cleanup capacity, and a sales, financing, and administration area. You will also need lighting, security, and other amenities to ensure that buyers have a sense of confidence in the business. If you’re selling ice cream, you need to keep it cold; this implies freezers and refrigerated trucks, perishibility, and substantial energy bills. If you’re selling clothes, you need display and storage space for a variety of sizes and styles. In all of these cases, you need the product itself in inventory. You might also wish to categorize this type of business as having one other similarity among others of like kind: these are “brick and mortar” businesses.

Service businesses may also require “bricks and mortar,” so just because a product is not physically stocked or otherwise identified as tangible, one must not jump to conclusions. A day spa, a bank, or a hotel, are all examples of service businesses that are also brick and mortar businesses. Generally speaking, brick and mortar businesses rely on a “place” where they must exist, and acquiring such a place requires capital. The “place” characteristics of a given business may carry great weight in the eyes of its customers or clientele. It should not be a surprise that many hotels and apartment complexes invest heavily in lobby and entrance areas when designing their facilities.

One might expect that professionals such as attorneys would charge significantly more, or less, simply judging by the type of offices in which their practices are located. Let’s compare two hypothetical situations. The first is the instance of an attorney whose office comes complete with marble floors, collectable paintings, and an attractive, albeit somewhat pouty, reception area representative. We could then compare this to another attorney, whose office is combined with an income tax service and a small engine repair business. The difference between the two is about $300 an hour. There’s a reason that high profile celebrity defendants hire so-called “dream teams” for representation: they get positive results.

Some businesses sell undifferentiated products or services. This means that the product or service offered by one business is the same, or substantially the same, as the one offered by competing businesses. A gallon of gasoline is probably a good example. (At the present time, it appears that every provider has the same goal: reap substantial profits from consumers.) One station may attempt to distinguish itself from another through slight pricing differences. Oil companies may proclaim “we do research to protect the environment with clean burning fuels that are better for your car”; but, a gallon of gas is a gallon of gas in the eyes of most consumers. Any slight price differences, auxiliary services such as clean rest rooms and a convenience store, and location largely determine where consumers will ultimately spend their money (in ever increasing amounts, it seems).

All business models require some form of promotion. The “person on the street” typically confuses terminology that is actually quite specific. The terms promotion, advertising, and marketing are often incorrectly used interchangeably, for instance. Marketing is inclusive of price, product, place, and promotion. A business can be promoted through word-of-mouth and referral; therefore, a good reputation and testimonials should be cultivated by any business. Some products require heavy paid advertising. “Paid” is the critical word here, in that it suggests that the advertiser has some choice in placing a message before a desired audience. By definition, advertising is paid, non-personal communication; ordinarily it is underwritten by an identified sponsor; it is meant to be informative, if not persuasive in nature. By far, most advertising is local, even though one might tend to first think of national advertisers and brands in an advertising recall test (a test of what someone remembers).

Another way to promote a product is through personal selling efforts. Some types of businesses use independent representatives for this purpose, because it makes sense. For example, suppose that one has a line of porcelain figures that are sold primarily through gift stores. However, as a small business, it would be hard to afford a staff of in-house sales representatives to call on thousands of gift stores nationwide. One could use a firm that represents several product lines (such as greeting cards, writing pens, and silver) and simply add the porcelain figurines to the list of products that might be presented to gift store owners and buyers during sales calls. In a small business, it is the management team’s job to make sure that someone is doing the selling. It helps if the owner is comfortable with this role, as his or her passion for the business can usually be leveraged. However, if you are a prospective business founder, and you are not comfortable addressing audiences one-on-one, in small groups, or behind a podium, you’d better enlist one or more individuals who are competent in this area, for the sake of your future success.

After reviewing more marketing and business plans than I can any longer count, I can just about bet that material under the heading “Promotion,” will be the Achilles’ heel in a majority of plans. Authors of these plans, who are often lacking adequate financial wherewithal, tend to sum up an entire treatise on promoting a proposed product, service, or business with: “We will use word-of-mouth to advertise [sic]…” Word-of-mouth is a fantastic way to promote, if is nurtured. A large “buzz” can be created with a great product that is professionally represented through an in-house sales force, or independent representatives. Companies selling encyclopedias, vacuum cleaners, and cosmetics were built through independent representatives who approached consumers directly. More recent examples have utilized network marketing, where an emphasis on building organizational teams has been made. Senior representatives’ roles are to mentor the development of new representatives.

There are labor and equipment intensive businesses, and there are knowledge intensive businesses. Either can be relatively easy, or relatively difficult for a competitor to duplicate. It all depends on the degree of investment and specialization necessary to get into a business. This concept also suggests that there are certain “entry costs” into a given line of business or industry, and these costs represent barriers that must be overcome. The opening statement to this article, where I outlined various “little or no” scenarios, should be reiterated here. You should find a business that meets the “little or no” test according to your set of circumstances. A personal service or consulting-type business is far less expensive to launch than a restaurant or a retail store. If you have speaking skills and a set of overheads and hand-outs, consider a training and development business. If you’re good at matchmaking, become a recruiter or a dating expert.

Most of my own prior business endeavors have been service oriented businesses that required some specialized knowledge. Building a clientele and personally servicing that clientele has been a central premise in each of these entrepreneurial instances. That has often entailed long hours, scheduling dilemmas, and few breaks in between: clients want what they want, when they want it, which, more often than not means “yesterday.” With the advent of the Internet, an entirely new realm of entrepreneurial opportunity was opened to me and millions of other would-be entrepreneurs around the globe. Recognizing some fundamental differences in business models, I registered the Internet domain name, “WebPreneurship.com,” along with numerous others.

The main difference in Internet business models has to do with the fact that one can create an online presence, with the capability to represent numerous types of products or services, many of which can be entirely transacted and delivered using the Web as a facilitator of that process. Digital products can be downloaded; physical products can be delivered through contracted fulfillment services. A related concept, known as drop-shipping, can allow an Internet business to overcome this latter obstacle as well. Drop-shipping means that when an order is generated on an entrepreneur’s Web site, the product supplier or manufacturer will receive the order and send the shipment directly to the consumer. There is a virtual presence facilitated by technology and strategic relationships, as compared to a physical presence with associated brick and mortar costs. Hence, my own working definition of “webpreneurship” began to take shape.

Information products such as electronic books and reports have also created yet another new term in our vocabulary, known as “infopreneurship.” Infopreneurship has to do with making a living (on the part of the infopreneur) by providing information of value. Prior to the advent of the Internet infopreneurs did exist, although they operated under a whole different set of constraints that had to do with the costs of advertising, mailing, shipping, printing, and other expenses that the Internet has largely eliminated.

Even those business types that cannot complete the full product or service creation, selling, and delivery cycle, can enhance their presence over the Internet. For example, you can’t get a haircut on the Internet, but you certainly can look at styling options, pricing and service options, and location information (including interactive maps and directions); subsequently, you can book an appointment time and date. Basic Internet businesses can be created at relatively low cost, and can be maintained with a flexible schedule, assuming that they are fully automated and sell a product such as information and reports as compared to one that requires a physical product to be shipped. An entrepreneur may exercise the drop-shipping or fulfillment services mentioned above, or handle this for him or herself in-house. Of course the latter situation, relative to business models, entails providing availability to customers that confines the entrepreneur to the business during its publicized hours of operation.

Franchises and business opportunities (including buying an existing business) provide one major advantage over other business ventures that are started from scratch: greater certainty derived from a formula that is “tried and true.” If you have no idea where to start, but you are trainable and ambitious with a few dollars to spend, consider a franchise. There are some franchises that use what amounts to a “promote from within” approach, favoring successful managers as candidates for franchise ownership (and providing a helping hand toward financing the franchise fees). Bootstrapping and sweat equity go hand-in-hand, and if you really want a piece of the action, there are individuals out there who are looking for partners–you could quite possibly earn your way into owning a share, or even all, of an existing business.

As for me, I have come to enjoy having multiple roles and avenues for personal as well as professional fulfillment. I teach entrepreneurship at a university, write, and engage audiences as a public speaker. I have invested in several Internet sites. I have created several of these sites myself, while others are turn-key sites. (A turn-key site is one where a system is already in place to provide a product or service as well as technical support, transaction processing, and customer service.) For instance, I have one site that provides Internet domain names, and that is a turn-key site which I purchased for less than two hundred dollars. I am also an independent consultant for a network marketing firm that offers consumable health, wellness and beauty products. A network marketing structure offers me the opportunity to develop, train, and mentor persons who are interested in growing a business opportunity. Meanwhile, as a continual learner myself, I can enhance my skills and knowledge and benefit from peers and individuals who have already blazed a trail before me.

Every business model implies trade-offs and unique characteristics as well as lifestyle choices. I enjoy teaching, but I also think that staying connected as an entrepreneur makes me a better teacher. I like to learn, so I am always pursuing new insights through casual as well as formal research (which I share through writing and speaking). I enjoy helping others, and teaching, mentoring, and guiding others is essential, to me. As a person of humble beginnings whose accomplishments have often been the result of starting from scratch, my most profound lessons have been acquired from the “school of hard knocks.” If I can smooth out someone else’s path, I’d like to do that. I also have enduring financial obligations, like most people, as well as responsibilities and love for friends and family members. Thus, any entrepreneurial decision has a direct impact on every aspect of my life.

In your own way and given your own set of circumstances, you will have to juggle to achieve your own unique entrepreneurial and lifestyle solutions. Before you take the entrepreneurial plunge, consider various business models and their implications completely. Your decisions will impact your life in ways that are to be considered just as seriously as the business models that you scrutinize. The right model will serve as a pattern for your fulfillment and success. Whatever you do, I suggest that you seek spiritual, emotional, and professional balance as a guiding light in your entrepreneurial journey. Making the right choices will enable you to find your “groove,” gain your freedom, and live the kind of life that you’ve always wanted, both on and off the entrepreneurial playing field.

Power Up Your Small Business – Transform With Technology

If you are a small business owner and you are looking to increase your ability to do more in less time, then harnessing the benefits of technology could be the answer. We take a look some of the ways your business can harness technology to help take it to the next level.

1. Automate Administration

Look to automate as much of your administrivia and backend procedures as possible. Start with any of the functions that are repetitive or time-consuming. Automating these processes will assist in reducing the amount of time taken giving you additional capacity to take on other functions. Typical applications you should consider are word processing and spreadsheet functions.

Using word processing applications allows you to set up templates, merge documents and create forms, or you can go one better and install software such as Microsoft Groove and create online forms. Email applications allow you to communicate quickly and easily using email

2. Formalise Finances

Installing Accounting applications, such as MYOB or Quickbooks, is a fantastic way to formalise your finances. It allows you to quickly and easily enter your financial information. It also allows you to work quickly and effectively with your accountant when it comes preparing Business Activity Statements, end of month financial reports and end of year taxation activities. This all helps keep your accounting fees under control. Another benefit is that you have the ability to create a raft of important financial reports, including cashflow forecasts, debtor aging, sales reports, etc which helps to provide vital information to assist in effective decision-making.

3. Corral Customers

Using software to establish a centralised customer database has enormous benefits for your business. Firstly, it keeps your information together, in one location, and becomes a single source of the truth. This ensures that your business is not at the mercy of one or two key employees and acts as a ready reference for new employees, enabling them to get up to speed quickly.

Having a customer database is the foundation stone for effective marketing. You will be able to analyse, profile and segment your customer database in order to better understand your customers, their needs and wants, which will enable you to better target and market to your customers and to develop new and improved products.

4. Open Online

Establish an online version of your business. A fully functioning e-commerce site is like having another branch of your business open. It allows people to research your business, your products and your services at their convenience. It also provides your customers the opportunity to shop from the comfort of their home or office, which could be local, national or anywhere in the world.

5. Master Marketing

Using online marketing techniques, allows you to design, develop and deliver marketing campaigns quickly, easily and much more cheaply than using traditional mail. Online marketing software allows you to automate campaigns at sign-on, for special occasions, such as birthdays and anniversaries, set up seasonal campaigns such as Christmas or holidays and can even automate the delivery of training and education programs.

6. Start Socialising

Use social media, such as Twitter and Facebook to market your business. These sites are a fantastic way to reach potential customers and to create a sense of community, which helps to create customer loyalty. Social media can also be used to build influence, improve your business or personal reputation and earn your customers trust.

7. Consolidate Communications

Implementing a centralised and online communications hub within your business enables you to gather your organisations communications in one place and provides ready access to all your staff members. Software such as Sharepoint can help consolidate all those important communications in one place. Documents you may like to include are standard operations guides, company policies, employee guides, Occupational Health and Safety Guidelines, memos, research papers, project information and status reports, meeting agenda’s and minutes – to name but a few.

8. Initiate Integration

Start to look at ways you can integrate these systems to make your life even easier. For example, you may want your online business automatically download transaction information to your accounting package, or your customer database to synch with your online marketing software.

Looking for ways to automate your business can help you to make your business operations, faster, easier and simpler. They can also provide additional capacity into cash strapped businesses with limited resources.

Continue to look for opportunities to power up your small business.

Developing Your Groove

As this subject comes up a lot during music business seminars, I thought I’d blog on it. So let’s take a look at this:

First it takes some courage! Yes courage to choose a profession notorious for its up and downs, rejections and long road and with no guarantees! I remember when I came to my crossroads – get a regular steady job or go for it as a pro musician. For me it was easy as my passion for music and dislike for most everything else made it a simple decision. But I had many around me, family and friends, constantly warning me about this choice and that I needed to have something to fall back on. But the more they warned me, the more I knew this was my choice.

The next ingredient is persistence; persistence to study and practice as much as it takes to become proficient on your instrument of choice in order to compete in the marketplace because after all……it’s all about your word of mouth. It also takes persistence to keep on going no matter what. Giving up is not an option. The goal is the top of Mt Everest and the conviction is the summit or die in the assault!

Next would be personal integrity which translates to being willing to be yourself, to play the notes YOU want to play and play them well and with confidence and intention. Sounds simple but not so easy to do yet therein lies the way for you to communicate YOUR inner self and that’s what people really want you to do, trust me. Don’t ever deny yourself; only YOU can deliver your message. Once you achieve this ability – to play honest notes – you are already successful! The rest will follow and simply takes competence and persistence!

The next and probably most important of all is the giving of more than expected! Yes that’s right – ALWAYS give more than expected and what was paid for as that’s what gives you great word of mouth, great PR. That’s how you get “call backs” and references. Success in the entertainment industry is a) being referred to a gig and than b) delivering the goods way beyond what was expected – home run! You’re on your way!

Re: Delivering the goods: This demands competence on your instrument and your ability to communicate effortlessly to an audience. You should spend a considerable amount of quality time practicing the fundamentals of your instrument whether it’s a music school, private instruction or self study or all of the above. In this stressful economy it’s even more important that you have the competitive edge so don’t skimp on your training. There’s still plenty of work for those who can really play and are willing to communicate.

Here are some tips for your success:

1. Always envision the ideal scene – your dream as accomplished. This means whatever you want to achieve, imagine it as already done and achieved in your universe until it is actually done in the physical universe.

2. Make sure you’re on purpose as an artist meaning you’re doing what YOU want to do. Passion is everything and if you’re not doing exactly what you want, how can you expect to have any passion? Audiences aren’t stupid; they know sincerity and passion. Example: if your passion is progressive jazz fusion than that’s what you practice and play and promote for. Never consult with anyone regarding YOUR purpose other than yourself! Anybody or anything that gets in your way should be politely ignored and/or removed as the case may warrant. Once you achieve what you wanted in an area, keep doing those things that got you there and/or move on to a new game or area.

3. Be very product and service oriented meaning finish to professional competitive industry standards all products – CD’s, videos, DVD’s, music instruction manuals, performances etc. The key thing here is finish so it can be released and exchanged with the public. (A CD idea in one’s head is not a valuable final product. You must confront the time and money and production barriers and finish the bloody thing! Waiting for that illusive record deal is totally being a victim. Wait for no one and depend on no one!) Professional industry standards mean how does it stand up to the standard that’s currently selling or has been exchanged in the past? One has to be brutally honest here, doesn’t one? If one is a singer and sings a little out of tune, then one handles this; if one is a drummer and one’s time is weak, well get it handled. Promoting a weak product and/or service doesn’t work. When and if it does, it eventually fails anyway and besides, pride and accomplishment and work ethic apply here – that’s what a pro is.

4. Always try and make your products and services a knock out so they produce an incredible effect on your audience and thus get great word of mouth. Always try and go that extra mile and give way more than what might be expected.

5. Do lots of personal research in order to develop the correct business relationships to promote your products and services to. Personal research means – contacting those who might be able to help in some way, surfing the internet, reading the trade magazines, going to concerts/clubs, jamming with others; in other words pay attention to your particular zone. Hoping someone will contact you doesn’t work. You must flow inordinate amounts of energy outwards for that to occur. Also, you must do it because you want to… not only for the money and/or fame. That’s why number two above is so so important.

6. There should be no such thing as giving up! Just keep on delivering your products and services until the tea kettle whistles. If it doesn’t whistle (rejection), never let it affect you for very long; never stop practicing and creating, never. Simply get even more determined and refine your products and services even further until it does.

7. Always keep in communication with your developed personal and business relationships and flow them back the energy they flowed you when they need it… this includes your fans!!!