‘Businesses within a business’ – Applying different ‘models’ to the same business

Jul 29th, 2019

Business benchmarks

 

Many businesses are ‘mixes’ of basic revenue models – and in particular, are a mix of ‘retail’ and ‘labour-based’ models.  So to analyse it effectively, you might need to think differently about each part of the business, using a different ‘model’ in the process.

 

Here are a few examples to prove the point:

 

  • A newsagency earns revenue by retailing – buying and selling product; it also earns some revenue on a commission basis from its ‘soft gambling’ sales.  A newsagency with a sizeable ‘delivery round’ might even have features in common with a ‘courier/taxi truck’ business.

 

  • A taxi operator has limited scope to increase its prices, because fares per kilometre are generally set by Government agencies.  So instead, just concentrate on the ‘usage’, ‘efficiency’ and ‘cost control’ issues.

 

  • A car dealership has a mix of revenue from ‘retailing’ of its new or used cars (big ticket items at comparatively low margin, either sold off the floor, or ordered for a specific customer); from labour and materials in the workshop; from retailing parts (typically holding a few pieces of each item, from a wide range of parts, and backed up with a buy-in service for the rest); and possibly even a commission income stream from finance or insurance packages.

 

  • A Vet Surgery is a mix of professional time (sometimes packaged as a flat fee for each surgical procedure), with a substantial merchandising component.

 

  • A jewellery business might be just retail-only, or it might offer labour-based services such as repairs or even jewellery design.

 

  • And my favourite is a hotel – it could contain up to 6 different ‘businesses’!

 

  • A retailer selling high margin product with some potential for ‘wastage’ issues to creep in (the bars)

 

  • A retailer selling low margin, high turnover product (the bottleshop)

 

  • A restaurant or bistro (relatively high labour content, plus the need to manage a perishable stock range)

 

  • Accommodation

 

  • A commission-based business (the PubTab, Keno or similar gaming services)

 

  • An entertainment venue (high fixed costs, where profit depends on the number of patrons)

 

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