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.

1st Step In Starting A Business

As an Entrepreneur whose business enterprise turned 19 years last month, it may be good to share with readers some of the lessons encountered. The recent months I have been receiving queries on the secret for maintaining this business. Well it is no secret at all and I take pride in passing on important matters to those who sincerely want to commence or even those in business to restart the button as they say.

Primary Lesson: Mindset

Oftentimes, there are entrepreneurs who begin a business because of an opportunity. A deal may even begin with a mere restaurant napkin or even over some brown bottles. However getting into the groove of business must begin with having the proper frame of mind. There is a need to cultivate for the seed to germinate.

1st: Define the Purpose

It may be good to ask yourself the purpose of getting into business. I am not referring to identifying the business yet. Rather it will be more into probing the different layers related. One may say, “I want to be My Own Boss”, being your own boss entails several factors such as the ability to make a decision. To help further, it is recommended to be a relax mood and let your heartbeat be in a normal mode. Excitement or depression may not lead to better result

2nd: Start Writing

Letting our thoughts remain in our mind may be affected with other things. In my years till now, I have learned to always have a small pocket notebook. The first thing to do is write in BOLD Letters on top of each page the topic you are focusing. I call this Chapter of My Mind. There jot down things that may flash in your mind. You will be amazed to realize at the end of a week on ideas and perhaps reasons related to the focused topic.

3rd: Visualize The Business

Man has the most advanced computer chip in the universe. The Mind given the proper nurturing can create scenes. If there is a business opportunity, a person may begin to use his power of the mind to visualize how the business will go. This was one powerful tool I used to see for myself the present business I am in. I wanted to see in my mind how it will all work. Without being biased I was able to see both pros and cons.

4th: Instill Faith and Positivism

To be an entrepreneur entails risk. In fact this is what I call the point where it separates a Man from a Boy or a Woman from a Girl. There are no assurances of where and what the business will be. Try getting a copy of the popular song “Que Sera Sera” written by Jay Livingston and Ray Evans. This was made popular in 1956 as sung by Doris Day. One thing though is developing the ability to think Positive. Yes we keep hearing that word so much so it is deafening. Every waking up hour and even retiring, the entrepreneur brings with him or her business. Correlate the business to being like a Captain of Airbus 380. The responsibility is tremendous to be entrusted not just on the capital investment. It is more of the hundreds of lives. The Captain has operating manuals and a chosen and qualified team. What matter most is for the Captain to have the greater self-confidence of safely reaching the point of destination. Nobody is spared from having fears or sleepless nights thinking of certain situation of the business. What helped me through was the fact my faith became much deeper and stronger. To strengthen my positivism, I began always to think of good things and avoid being a pessimist or talking ill of people. Use your energy and resources wisely. Think that everyday you are getting better and better. Drive all your thoughts in contributing and making this world a happy place for everyone. Blessings come in many fold to those who do good.

Marketing Strategy – Getting the Marketing Groove

Wouldn’t it be great to have a year where your marketing efforts were streamlined and got the results you were after? None of us want to struggle with marketing, and yet this is the one topic that continues to be highest in the minds of small business professionals.

Let’s really consider some of the reasons that can sabotage our marketing efforts, and how we can turn that around.

Lack of a marketing mindset

We don’t see ourselves as in the marketing game. The truth is, if you are out there running a business, thinking like a marketer has to become your priority. It’s no use having a great service if nobody knows about it, or you.

Lack of knowledge is your enemy. Start by reading whatever you can. Speak to successful people in your field and ask them what strategies they use. The information you need is out there for you to take.

Lack of investment

For many small business owners, the focus on cost control prohibits them from ever investing enough money into marketing and promotion. These activities are seen as costs rather than as an investment. So this year I encourage you to reframe your attitude towards marketing. Once you know what marketing activity to do, and have confidence that it will bring results, spend the money enthusiastically.

Lack of focus

Perhaps you do spend time and money on marketing, but you aren’t happy with the results. Or your efforts are ad-hoc rather than carefully planned. Whatever it is, 2005 is the year to take charge. If what you are doing isn’t working – stop doing it! Ask a professional for help (not your friends or associates!). Or put yourself in your customers shoes and work out what’s going to attract them to your business. If an ad-hoc approach is the problem, take the time to complete the marketing plan in the ‘How to…’ section and become ruthlessly systematic this year.

Lack of over-riding marketing strategy

Marketing activity and tactics are all well and good but it is like driving a rudderless ship if there is no grander plan. Part of creating a marketing strategy is to clearly understand exactly where you are right now, and where you want to be. Your goal may be to have sales of $1,$5 or $50 million. Or you may want to revolutionise your industry. Or you may want your company to be acquired within 5 years. What matters most is that you have a clear, precise vision of where you are, where you want to be in 1year, and where you want to be in 5 years.

Not surrounding ourselves with the right people

All of the great books on success advocate spending time with people who are already successful at what you want to do. Why? By surrounding yourself with people several steps ahead of you, you can absorb the attitudes and values that made them successful, as well as picking up new strategies and ideas. So If you are hanging out with people who also lack a marketing mindset then it’s time to think about expanding your professional network to include those who are already down the track to success.

Marketing is more of an art than a science. Often times you learn by systematically trying different activities and approaches. The experts don’t always have all the answers . . . and this is exactly why you need to give plenty of personal attention to make sure your marketing is working as hard as it possibly can. If you want to get serious about success in business, then understanding marketing is an ongoing priority.

Here’s a quick list of 10 ideas to get you into the marketing groove:

1. Commit to reading one new marketing book per month

2. Start learning about how to market online

3. Make a list of people whose businesses inspire you, and carefully study their marketing techniques. How many of these are you using?

4. Make a list of successful people in your industry and check out their marketing strategy. Why not offer to take one of them out for coffee to learn more about how they got where they are (what’s the worst that could happen?)

5. Revise your marketing budget. Look at your previous investment in marketing, and ask yourself if this is the amount a truly successful business would be spending

6. Review all of last year’s marketing activities. Work out which ones brought new business in the door, or were successful in some other way (building credibility for example). If you can’t quantify how successful the outcome was, stop spending the money!

7. Implement an ongoing ‘keep in touch’ program with existing customers

8. Ask 10 or more of your most loyal customers for a referral

9. Stop doing those marketing activities that you know don’t work, but you do them anyway

10. Market research – ask 20 of your customers what value you provide to them. Use what they say in your own marketing materials