Category: Business

Talks about business models, interesting stories, history and tips on running businesses.

Characterisitics of good franchisees

  • Methodically screened agents (Implies that a fair amount of trial and error has to be done to decide upon the best fit profile of a potential franchisee operator.)
  • Strict quality monitoring and follow-up training (Standardised and exhaustive training modules )
  • Uniform branding and product mix (Centrally experimented and released based on the learnings obtained by the franchisor on the effect of tweaks on different aspects of the product mix. Implies a lot of trial and error again.)
  • Effective promotions
  • Low cost of goods achieved through scale (This is crucial. In order to ensure the quality of the finished product, it is essential to ensure that the raw material that goes in is standardised and of the same quality. The only way this can be ensured is by offering the raw materials at the least price.)
  • Stiff penalties for violating the rules (including expulsion)

The approach to the “marketplace” business model

Jason is back with another great post on market place business model. By marketplace, he refers to a platform which connects buyers and sellers who find it difficult to connect.

A few insights distilled from his post: (I must say that the full post is a MUST Read. This summary here, is not the best!)

  • The biggest problem for this kind of business is which side’s problem do you solve first? At the beginning, neither the seller or the buyer would come to you! Jason suggests, tackle the seller side first. Create the right proposition for the seller. It is easier to convince the seller to sell through you because it would anyways increase their sales. This would help you in creating an inventory, so that the buyer knows you have inventory and returns.
  • Do not automate right from the beginning. Wait for some time and find out the right things to automate. Or else, a lot of money might be wasted in automating something which may turn  out to be a wrong approach.
  • In order to get people to your site, SEO and google ads is passe, use a novel strategy like writing a useful guide or something that the chance visitor would bookmark/twitter/FB because it is genuinely useful. This would start getting eyeballs for your website!

Given the fact that my colleagues are fighting with a similar business model in different sectors. I am forced to wonder:

  • How would a platform that connects rural homestays to tourists start? What could be their “novel strategy” as mentioned by Jason? What could get more eyeballs to their website?
  • What would be novel strategy for the marketplace which connects buyers and rural artisans?
  • What would be the novel strategy for the marketplace solution which connects rural distributors of energy saving stoves with manufacturers of energy saving stoves?

Starbucked

Got my hand on a book named “Starbucked” which narrates the story of Starbucks (the American coffee, tea chain). Interesting facts:
They didn’t start as a food service concept. Their idea was to sell coffee so that people could make it at home!

  • It was started by three people who ultimately sold the business off to an employee named Howard Schulz who off course turned things upside down!
  • He brought in the concept of coffee shops.
  • All the stores that Starbucks has is built up using a combination of 12 different palettes which means that every store has a look different from the other. The 12 palettes are actually mix n matched. This means that though the final store look is different from the other one, all the pieces are standardised!
  • This is very different from a normal concept chain where everything has to look the same! Remember McD, CCD, KFC, or even the retail stores!
  • The concept of letting people sit as long as they want came up from them and the funny part is, they never wanted it to be so! They did some research and realised that people paid such a high premium for the coffee that was sold just to enjoy the ambience. Howard Schulz caught on to this after a bit of difficulty but then made it a core of Starbucks strategy. “Starbucks experience” is a phrase that is oft repeated to eulogise it.
  • The book somehow does not deny that it all became successful because of something called chance!
  • :))

Also published on didyouaskgod.