Business Model
During the past 18 years I have been exposed to many diverse small business experiences. The one that left the most profound impression on me was the following set of events.
I had been running an engineering business for 7 years, it had been tough. Engineering requires that you initially spend 4 years studying to qualify. Then when you eventually have the capital to go it alone you can spend two years courting a client before they eventually include you in their supplier base. Thereafter, the clients are constantly attempting to cut your fees and get you to work for less, with some corporate clients 15% profit before tax is what you get. On average these clients took 3 months to pay.
One day I picked up the phone and asked a guy about Fish, I purchased a small Freezer and opened a little shop. Ten days later I was opening the shop and there were clients that had been waiting for me to open at 6:30 in the morning. The week after that we moved 2000kg of fish. The best was our mark-up was 5 times what we were getting it for, we were buying for 1 and selling for 5 and it was immediate cash. WOW!
That little shop made more profit than the engineering business ever did. No higher education or courting of clients required. No labor fees. No expensive equipment. Whatever you do in your small business, you must get your work to achieve the best performance possible and the way that you do that is by ensuring that your business model is a frequent return real profit and preferably instant cash generating model.
During the past 18 years I have been exposed to many diverse small business experiences. The one that left the most profound impression on me was the following set of events.
I had been running an engineering business for 7 years, it had been tough. Engineering requires that you initially spend 4 years studying to qualify. Then when you eventually have the capital to go it alone you can spend two years courting a client before they eventually include you in their supplier base. Thereafter, the clients are constantly attempting to cut your fees and get you to work for less, with some corporate clients 15% profit before tax is what you get. On average these clients took 3 months to pay.
One day I picked up the phone and asked a guy about Fish, I purchased a small Freezer and opened a little shop. Ten days later I was opening the shop and there were clients that had been waiting for me to open at 6:30 in the morning. The week after that we moved 2000kg of fish. The best was our mark-up was 5 times what we were getting it for, we were buying for 1 and selling for 5 and it was immediate cash. WOW!
That little shop made more profit than the engineering business ever did. No higher education or courting of clients required. No labor fees. No expensive equipment. Whatever you do in your small business, you must get your work to achieve the best performance possible and the way that you do that is by ensuring that your business model is a frequent return real profit and preferably instant cash generating model.
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