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A company would not be successful for long if it tried to identically copy the achievements of another business; however, a shrewd business person knows that emulating the best companies around is one way to get a leg up. Therefore, scrutinizing the outlines by which others have achieved may be key to achieving in one’s own right.
These days the vast majority of businesses being created are small companies started by people operating on limited budgets. In fact, a lot of business capital for start-ups comes from retirement savings, home equities and even credit cards. Needless to say, these small endeavors will not compete with billion dollar companies like eBay. Still, the owners of these personal size businesses can learn a lot from examining the eBay business model. It stands as one of the ground breaking designs in Internet business models. Even though thousands of Internet businesses collapsed in the dot.com debacle, the web remains as one of the most active and low cost areas for the birth of new ventures. An astute small business person can adapt many of eBay’s winning e commerce strategies for one’s own Internet business.
eBay is the world’s largest facilitator of online auctions with annual revenues totaling almost six billion dollars and a yearly growth rate surpassing thirty percent. With proprietary auction software and its own system of payments that is used not just for eBay but for the majority of all Internet based money exchange, the eBay business model has revolutionized the web business landscape. Despite assaults from similar companies and the inevitable growing pains associated with all businesses, eBay stands astride the web world as one of the few dot.com ideas to have survived and prospered. Indeed, its prosperity has reached near legendary proportions. What are the inherent business model strengths upon which eBay has founded its mythic success?
First, eBay discovered and catered to a large yet underserved niche. Second, eBay enlarged its marketplace with the then unique idea of a community of users. This community concept is reinforced by its website policies and its customer feedback system. Third, eBay developed and continues to develop specific user friendly strategies which keep it a step ahead of a constantly growing number of competitors. Fourth, relationships are paramount in all phases of the eBay business model. Not only does it emphasize relationships with those who buy and sell on the site, eBay works to grow through its relationships with complementary businesses. Fifth, eBay established and protected its brand. Throughout the Internet world, eBay is synonymous with online auctions.
The franchise business model is another concept which potential business owners might want to study. Franchise procedures provide valuable business model examples on two levels. First, they illuminate ways in which a successful business may expand without continued enormous outlays of capital by their owners. Many businesses replicate their initial achievements by allowing others to use their brands. When considering allowing people to set up franchises based upon one’s own well regarded business though special care must be taken to protect the original source. There are countless tales of businesses which unraveled because the franchisees were not held to the same high standards of the companies upon which they were based.
The second way in which the franchise business model may prove useful is for those who are looking for a ready made idea on which to base their business. Although purchasing a franchise can be very expensive, in the long run the investment may be less than money required to build a concern from the ground up. Franchises are attractive for a wide variety of reasons. Their brands are generally well recognized which alleviates the need for costly start up advertising. In addition, many businesses will share the cost of ongoing advertising with their franchisees; this is especially true of franchises which are part of a nationwide network. Also, the policies by which the franchise will be run have already been written and tested which eliminates some of the biggest headaches faced by new business owners. Relationships with vendors may already be in place as well. Vendor agreements where several franchises are involved may also lower the costs of buying supplies and delivering them.
Myriad business models exist in today’s marketplace. Anyone considering going into business would be well advised to research a wide array of business model examples before plunging into the actual work of starting a business. Even if a particular business model does not seem to be aligned with the sort of business in which one may be interested, there are often many lessons which can be learned from studying almost any successful company.
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