Thank you for reading the previous parts of the entrepreneurship journey. If you have missed the initial parts of this journey, do read them to keep track of this journey. In this episode, we are going to look at formulating the business model. The business model should be designed for a steady sustained and consistent growth.
Product or Service?
What is your concept? Is it for a product or a service? Any product requires service; however, the converse is not always true. This is the fundamental principle that must be very strongly considered in formulating a sustainable and scalable business model.
For any and every concept that you envisage, ensure that you study the market for your competitor offerings. You need to ensure that you are adding value and being different from your competitors. One strong point is the service aspect to back your product. The customer service that you provide to your customers and prospects in every interaction to create “wow” factors, will determine your competitiveness and sustainability in the market. The goal will be to get more business with references and word-of-mouth.
Business Model for Products
It is always a good idea to back up your product with a service-based maintenance plan. The product is a one-time revenue generator; the service plan will be a continuous revenue fetcher. Wonderful example is that of a vehicle. To purchase a vehicle, you pay an initial amount. However, with use, the vehicle experiences wear and tear that needs to be addressed. This is where the service center comes into the picture by the same manufacturer. Every time the vehicle is taken for service, there is a small cost that is paid to the service center.
Each product that is rolled out, must be constantly innovated and upgraded. To maintain sustainability in the market, the older versions need to be “faded out”. In other words, each version of the product should have a life-cycle defined. Ideally, it should be from six months to two years. The life span would vary from case to case.
Business Model for Services
Service-based businesses consist more of project contracts that generally span for a minimum of 6 months to 2 years. However, the duration varies. Services are generally based on creating something from a person’s skills, talents, and capabilities. These are generally maintenance based or creative in nature. These can be only for a project or for a set of projects under the banner of a service agreement.
It is always a good idea to upsell long term service agreements to your clients in the form of maintenance contracts. The key factor will lie in the way you build and maintain a relationship with the client. This will be a deciding factor whether the client will come back to you or not.
Synopsis
It is essential to formulate and devise a business model that is realistic, sustainable, scalable and consistent with provisions for exigencies. Any business model that is designed to spike up, will spiral downwards as well. Exponential growth is good; however, it is not sustainable in the long term. Irrespective of the business model or the product or the service, it is the relationship that you build with your clients that will determine your sustainability and life in the market. Thank you for reading this far. Do feel free to leave your feedback and thoughts about this in the comments below. Stay tuned for the next episode.
Quick Links:-
Part 1 – Who is an Entrepreneur?
Part 2 – Importance of Decision Making Process
Part 3 – Fair and Ethical Business Practices in Entrepreneurship
Part 4 – Mindset and Attitude in an Entrepreneurship
Part 5:- Building Meaningful Relationships in Entrepreneurship
Part 6:- How to Select your Right Partner
Part 7:– Financial System in your Entrepreneurship Journey
