As a business consultant, I get to meet business owners and entrepreneurs with fantastic ideas for businesses. However there is one major factor that can severely hinder the potential of that business thriving, and that’s their business model. This post will hopefully give you some ideas of what to avoid and how to pick the right business model for yourself.
Your Business Problems Could Stem From It
I see this a lot with websites from a potential client. Decisions in how the site is set up were made purely due to the client’s preference. Not that you want to conform your business to a particular web platform’s limitations, but oftentimes doing so can make things better in the end. The reason is that what a business owner sees as a “limitation” of a platform’s functionality likely is a standardized operating procedure. One example of this are clients that DYI their e-commerce website and create hundreds of product variants under a single item. This is a classic mistake that causes significant load time issues when you add non-standard product variants. My advice is to talk with an experienced e-commerce professional before creating your product lines.
It May Be the Right Model Eventually, But Not Now
An an entrepreneur, you may legitimately be onto a new and innovative way of doing things in your industry. While you have this clear vision, ultimate business model may not be possible right now for a variety of reasons (technological, financial, etc.). The story of the early days of Netflix comes to mind. You may have to adopt a more common or accepted business model to start while you are developing your business and gaining customers. If Netflix had jumped headlong first into their ultimate business model of video streaming and content creation, we wouldn’t have the Netflix we know today.
Just because they are doing it, doesn’t mean you should
In initial meeting with clients, I here so many comparisons to companies like Uber and WeWork, which is baffling. What is very disheartening is that these entrepreneurs don’t seem to understand that these startups don’t have sustainable business models themselves, and are hemorrhaging cash. Why would you base your business model on a failing business? Pick a business model based on sound market research end not on what some Silicon Valley think tank thinks Americans should operate.