Build a Business Model That Works in a Recession
What’s wrong with the US car companies? Simply put, their business model was outdated and obsolete. What was wrong with all the banks? Their business model could only survive in an economically opulent time. The same can be said with most businesses that are struggling right now. So, what are the options open to established businesses that are struggling? Well, they can either change or fail.
However, change is extremely difficult. Core beliefs and practices that have been ingrained in the organization must change. To anyone familiar with organization behavior. This is a nightmare. You, on the other hand, don’t have to worry about change. You can start with a business model that not only will work in a recession but will position you excellently for any economic upswing. I know that some of your friends are neigh-sayers. They like to criticize your plans. I guess that some people will always take the negative stance no matter what. However, the next time you hear “Hey, you are crazy for starting that business in this recession” put it down to their lack of business knowledge.
See, this recession is caused by business models and a good business model can do well despite the recession. “The Recession” is the biggest excuse out there right now. The key for you is not to use it as an excuse. There’s plenty of opportunity out there for you. Keep your business as lean as possible. Really squeeze the costs down to a minimum. Bootstrap like your life depended on it (it does).
An important part of formulating a optimal business model is to test and measure as you go. This comes into play when you are doing market research. Here are some practical tips that can help you. When doing market research you can do it either the scientific or practical way.
Since you are building a business in the real word that you hope will make real money I would suggest doing your market research the same way. Are you doing a Phd.? Do you even own a lab coat? Then why would you do scientific market research? I know what you’re thinking. What does this guy mean by “practical market research”. Well, here goes (I will try to make my explanation as practical as possible). Find similar listed companies in your sector and read their annual reports. Find out what is and isn’t working for them. Also, find out what their future strategy is and why they will be following it. Go onto LinkedIn and seek advice. Post questions. Use forums and Google Groups to do the same. Build a beta or prototype and start showing it to early adopters/geeks.
Listen to them tell you how awful your beta/prototype is and make the appropriate changes. Get more feedback from the early adopters. Repeat this process until they start telling their friends about you. Sounds simple, doesn’t it? Well it is. It’s much less time consuming than writing out questionnaires and running focus groups. You are achieving the same results but in a real world practical setting. And here is the important part, by doing practical market research you are also getting traction. That’s my third favorite word after profit and sale.
For more information on how to structure your new business check out LostJobStartBusiness.com.
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