What Business Model Will You be Comfortable Running?
The Third Step in Launching Your Own Business

The type of business model you will be most comfortable running is another key consideration in deciding which entrepreneurial venture is most appropriate for you and the skills you possess.

There are three business models from which you can choose:

  1. Customer-Centric Model.
    The entire business revolves around the customer (client) and your ability to build and sustain long-term, profitable client relationships.

    Typical businesses that fall into this category include:

    • Professional Services businesses
      Examples include accounting, financial consulting, legal, residential/commercial design, career coaching, psychiatric counseling.

    • Technology consulting firms
      Examples include networking, website design and management, enterprise solutions, telecommunications, graphic design.

    • Personal service businesses
      Examples include tailoring, child care, home cleaning, interior design.

    • General service businesses
      Examples include automotive repair, HVAC, janitorial, electrical service.

  2. Economic-Centric Model.
    The prime driving force behind these businesses is volume - of products, services, money. You want to build a venture that can deliver a significant number of products or services, while generating strong revenues and bottom-line profits.

    Typical businesses that fall into this category include:

    • Manufacturing businesses
      Examples include technology, consumer products, pharmaceuticals, biomedical equipment, industrial products, refrigeration systems.

    • Retail stores
      Examples include clothing, shoes, home goods, hardware, automotive, books, gifts, electronics.

    • Online stores
      Examples include books, videos, CDs, clothing, linens, tools, industrial components.

    • Rental companies
      Examples include industrial equipment, home products, landscaping equipment, automotive, computers.

    For the start-up entrepreneur, the greatest challenge in building and sustaining this type of venture will be your ability to let go and relinquish control of certain operations and activities to others within your business organization. If volume is your motivating force, them most likely your business will grow, expand, and require additional staff. At some point, as the volume builds, you simply will not be able to manage it all yourself.

    For many entrepreneurs, myself included, it is very difficult to let go of any responsibilities and trust that someone else will do it as well and as precisely you would. Whether that's the reality or not isn't the question. The question is whether you'll be able to hand off certain tasks to others. In fact, the reality is that others will, most likely, be able to do certain job functions better than you can.

    Consider the 35-year-old entrepreneur who owns four local car washes. Most likely, his background does not include a previous accounting career. Although he may have managed his bookkeeping, budgeting, and tax filings for the first year of his business, a professional bookkeeper or accountant would be a valuable addition to his team as the business grows and expands.

  3. Service-Centric Model.
    These types of businesses are really a combination of the customer-centric and economic-centric models with a twist. Most likely, they are businesses whose ability to capture and service customers is at their foundation, yet they've been able to integrate additional products or service offerings to increase the revenues generated by each customer.

    Typical businesses that fall into this category include:

    • Professional-Services Businesses (for example, a resume-writing firm that offers career coaching, interview training, and other job-search services in partnership with other career providers and companies)

    • Technology-Consulting Firms (for example, a hardware sales company that introduces a new line of software products and on-site installation/support services)

    • Retail Companies (examples include a car dealership that adds a rental-car division, and a bookstore that adds an entire CD and video section)

    • Manufacturing Companies (for example, a telecommunications products manufacturer that adds a service/installation division)

If the service-centric model is your preferred business model, then you need to pay special attention to the key issues and challenges of both customer-centric and economic-centric models.

More specifically, you need to create a business that focuses on servicing, satisfying, and retaining your customer base, while letting go of some of the management and operating control that will be required as your business grows and expands.

Note that many service-centric businesses were originally launched as either a customer-centric or economic-centric entrepreneurial venture. Then, as these businesses grew, their owners realized that there were related business opportunities that they could capture.

As such, over time, their businesses transitioned from one model to another to allow them the opportunity to continue to grow, diversify, and generate strong revenues and profits. Remember that the only constant in business is change!


SOURCE: Adapted from Wendy S. Enelow, The $100,000+ Entrepreneur (Manassas Park: Impact Publications) pages 37-41. Copyright 2008. All rights reserved. Copying strictly forbidden.