Because of technology, there many more business models that you can choose from as compared to 50 years ago. With technology, you can start a business full time, part time, from home, online or in the usual brick-and-mortar shop or office.
The key is to choose a business model that will be in sync or harmony with your life plan. This will help you determine the precise number of hours you’d like to work each week, decide the appropriate level of risk you’re comfortable with, suitable for your financial level, and provide the adequate returns-over-investment in terms of profits and success that you’re looking for.
First things first, you’ll have to decide how much time would you want to spend on your business on a daily, weekly, monthly and yearly basis. If you go on a full time business model, you’ll likely leave all that you’d been doing before and commit yourself entirely to your start-up business. If or when you make such a decision, you can expect to spend more hours working than you ever did working for a corporation.
You can also start-up a side gig part time, or on the side to suit your existing lifestyle. With this approach, you wrap your side gig into your current schedule such as existing day job, parenting responsibilities or whatever keeps you from making your start up a full time project.
Now that you’ve decided, here is a list of business model approaches that you can consider. We will discuss their nature and their pros and cons of each business model. Read through until you’ve decided on at least one that is most preferred.
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Leveraging on technology, you can create a competitive and legitimate business from home or from your laptop. It’s a large and growing part of our lifestyle and culture now, and accounting for more than half of all businesses. Home-based businesses can be full time or part time, and may or may not be internet or web based. Some examples are like providing accounting or book keeping services from home, providing on-call services etc.
Upside: less risk and low start up cost allows you to “test the waters” before having the need on spending money on staffing and rental etc; easily scalable to be as big or small as you’d like to suit your lifestyle; and it is easy to outsource to keep things simple at home by sub-contracting to other personnel or companies.
Downside: customer traffic is restricted by zoning laws on residential properties (best to check with your local government or authorities); shipping activities will be limited; home has its fair share of distractions e.g. children, clutter, noise etc and lastly, if you need to bring customers to your business, your home may not make the impression you desire on potential customers.
This is the classic business model with the business located physically outside of home. It is often a dedicated facility be it a retail, service, wholesale or manufacturing.
Upside: it allows you opportunity to work with people and become more involved in your community; a physical location will attract more walk-in clients in conjunction with marketing, depending on your type of business and industry; having a dedicated space helps you focus and compartmentalize your work.
Downside: Having a space means immediate increased costings in staffing and overheads and rental of space and equipment; this also means higher financial risk; it requires full time commitment to get the facility and business ready, as well as to train staff to run it; you may need to purchase inventory to mechandize your store, which translates to higher upfront costs.
With this business model, you don’t need physical foot traffic and customers in your business, just digital traffic and customers to your website. You can choose to sell products and services through your website to consumers or to other businesses.
Upside: Lower risk; lower cost; need not have much personnel, inventory or facilities; you can choose to do this part time or full time wherever you may be; it is easily scalable by replication and niche specialization to suit your preferences and priorities; you can go global.
Downside: Similar to home based businesses, shipping, inventory, credit card processing and related challenges can be troublesome if you don’t get things done right; it is a challenge to get traffic to your website and greater challenge to convert them to a customer; your rivals are just a click away.
If you choose a franchise business model, you are basically using someone else’s proven business model and concept as your business approach. Usually you pay an upfront fee, as well as a portion of your revenue to the master franchiser.
Upside: lower risk than opening a shop on your own as you have a business template that has been tested; support in marketing, estimates, staff training; the recognized and established brand helps to attract customers quickly; success rates of franchise business are higher than non-franchise businesses.
Downside: You have to pay the upfront franchise fees, which can be very costly; franchise agreements and guidelines can be very strict and limit creativity within the franchise business; the monthly revenue sharing model will be costly in the long run
5. LICENSING YOUR PRODUCT
If you have a full time job and don’t want to start a business, you can still take advantage of your great product or service idea by licensing the product to another company or business that has the best infrastructure in place to properly create/manufacture, market and deliver the product.
Upside: Lower risk because you can work on your product part time and still have active income from your fay job; lowered cost to manufacture because you need to create the prototype and test it before you can make it attractive to potential licensee (don’t need to setup the whole business) and sell the product; you have freedom to move to the next product idea – if you’re successful in the licensing, you will receive royalties for a long time after.
Downside: Finding the right licensee can take a long time, a lot of determination; if your product sales is not significant, the royalties received can be low to non-existent; it’s tough to get your ideas to larger companies or to negotiate.
6. MULTI-LEVEL MARKETING (MLM)
Multi-Level Marketing is a direct sales and distribution structure. People at the top sell to those below them, and those below them sell it to those below them and the list goes on. The higher you are in this hierarchy, the more money you can make. The issue and challenge with such a business structure is that the people at the top are the biggest winners, and the people at the bottom end up spending a lot of time and money to get to the top but usually end up losing whatever they put it.
If you choose this business model, please check with people (at least 5) who entered at your level (do this independently), find out their perspectives and what they say, and what they’re doing to be successful.
Upside: low start-up cost (commonly membership fee or initial inventory commitment); can be a home based business; you’re provided with pre-packaged products, tools and sales techniques and training.
Downside: Most initial MLM people lose money because they couldn’t sell the product as well as they thought they could; credibility can be a problem if you start treating friends like customers and keep hard selling them.
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I’m the founder and writer here at NigelChua.com; as well as serial entrepreneur, therapy business entrepreneur, digital entrepreneur, investor and also happy husband, father and Christian. Loves good success and freedom.
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