Starting a business can be extremely lucrative but there are numerous pitfalls to avoid. First and foremost, you need to find the right business model to facilitate commercial success. There are numerous different types of enterprises, all of which can be successful. However, one particular model might work best for your business idea or your personal circumstances. With this in mind, take a look at these popular business models and find out which one is right for you:
1. Retailer
Becoming a retailer seems fairly straightforward: you purchase stock and re-sell it at a higher price. Typically, retailers achieve this by buying in large volumes to secure lower prices and re-selling in lower volumes at a higher price. However, this approach does mean that you’ll need to fund the initial purchase of stock, as well as paying for somewhere to store it.
Additionally, you’ll need to consider whether you can take on established retailers and compete successfully. When multinational firms are able to purchase stock in much larger volumes (and, therefore, lower prices), it can be tricky for new businesses to find their USP.
2. Franchiser
Buying a franchise involves purchasing the rights to use a specific brand name, along with the equipment and supplies you’ll need to start your business. Franchisees also receive clear guidance on how to run their enterprise and what in-house processes to use. This can be particularly useful for new entrepreneurs who have limited experience when it comes to launching a brand-new startup.
A franchise can be one of the most convenient and profitable ways to launch your own business. With home care franchising, for example, you’ll benefit from specialist advice, access to physical resources, and be able to trade under a well-known name. In an industry where your brand’s reputation really matters, this can be a fast-track to generating revenue. While you will need to fund the initial cost of a franchise, many people make this back – and more – within a relatively short space of time.
3. Manufacturer
Manufacturing companies take raw materials and turn them into a product, before selling it directly to customers, partnering with a distributor, or selling wholesale to retailers. Although manufacturing can be very profitable, it can be a costly business to get into. You’ll need specialist equipment, premises, raw materials, and skilled employees to get your production line underway, for example.
Furthermore, manufacturers must ensure their products meet recognized safety and quality standards, so there are lots of factors to consider. From locating suppliers and implementing quality control, a manufacturing firm must implement various processes in order to trade profitably. Despite this, it could prove to be a lucrative venture, providing you’ve got sufficient funds to invest.
Launching Your Business
Although businesses do evolve over time and may switch from one model to another, choosing the right type of business model from the get-go can increase your chances of success. Due to this, it’s important to spend time thinking about the pros and cons of each option before deciding what type of business you want to run.
