Building the Right Business Model

Kevin Trokey on March 03, 2011

Let’s imagine for a moment that you were going to start a new business tomorrow. Fresh start, clean slate, anything goes. What would you make the core of that business model? Let me suggest the following.


What you sell

You focus on selling the product of another company. You will position yourself as a middleman by going out and getting appointed by another company to sell their product on their behalf with all marketing & operational expenses belonging to you. They will determine the design of the product. When they decide it should be changed, you will have no input.

How much you get paid

Well the great thing about this business model is you don’t really have to think about how you get paid, the company whose product you are selling will tell you how much you are worth. Oh, and if they decide overnight that you are making too much, they have the ability to reduce, or even eliminate, your compensation by however much they want.

How you will charge for what you sell

Again, you won’t have to worry about how to set the price; that will be done for you. However, if they decide the price should go up by say 30% or 40%, it will be up to you to deliver that news to “your” client.

Servicing of existing clients

Wow, this model keeps getting better. Most of the service you will provide to “your” client will be fixing the problems of your partner. When they screw up in a way that effects “your” client, it will reflect as poorly on you as it does your partner, but it will give you a chance to prove what great service you provide.

Competition

You don’t really have to worry about what the competition is doing because you already know. Your partner has been given the same product, compensation, pricing, and service to your competitors as they have given to you. You don’t have to worry, the competition won’t have any advantages over you; it’s a completely even playing field!

Okay, I hope that by now you are saying,

“What kind of advice is that?! That’s one of the worst business models I can imagine! Why would I take the risk of starting a business built on that model?!”

To which I would respond,

“Exactly! If it doesn’t make sense to start a business built on this model, why would you continue using that model for your current business?!”

 

Photo by Faramarz Hashemi.

Topics: Leadership + Management, Agency Development