Differing business models and deciding..

_Brian

We run a small web based business.. its part time, along with another part time enterprise and a full time "real job".. but the business has room for expansion in the future.

Currently we're running with a decent margin, sales are slow but steady and we're gaining knowledge, experience, supplier contacts and an expanding customer base..

However, there is an operator I'm aware of who is running similar business, not in this jurisdiction, but with very small margins and high volumes..

Have people out there done the pro's and con's of this type of model.. I'd be interested in your thoughts.. If I were to dedicate myself full-time to this venture, the last thing I want to be is a busy fool..

jimmii

Have a guestimate as to what your hourly take home would be if you went with the lower margins higher volume option and compare it to your existing model and see if the increase is justified for the increased workload in your eyes.

Are they targeting the same customers as you or just a similar customer base in another market? If you are a direct competitor then you will probably have to get closer to them to make it work as a full time career unless you are able to offer something different to justify the higher price tag.

If you are in a position where it is very possible for there to be a jump in your running costs then lower margin can be risky as you don't want to have agreements in place then find your costs increase leaving you working for nothing. If its a case where your running costs are as set as possible then you are in a better position to run at a lower margin as it will be easier to work out how much you are going to need to be bringing in to cover costs etc.

Going with the lower margins makes it feel a bit harder work but as long as you are bring in a decent take home you'll soon forget the lower margin!

_Brian

jimmii wrote: »

Have a guestimate as to what your hourly take home would be if you went with the lower margins higher volume option and compare it to your existing model and see if the increase is justified for the increased workload in your eyes.

Are they targeting the same customers as you or just a similar customer base in another market? If you are a direct competitor then you will probably have to get closer to them to make it work as a full time career unless you are able to offer something different to justify the higher price tag.

If you are in a position where it is very possible for there to be a jump in your running costs then lower margin can be risky as you don't want to have agreements in place then find your costs increase leaving you working for nothing. If its a case where your running costs are as set as possible then you are in a better position to run at a lower margin as it will be easier to work out how much you are going to need to be bringing in to cover costs etc.

Going with the lower margins makes it feel a bit harder work but as long as you are bring in a decent take home you'll soon forget the lower margin!

I'm not competing with them, but its essentially the same business.
In my business model I've used an hourly rate on my time based on my intended income, a modest one but at present its not intended to be a principal income..
I suppose I'll need to sit down and rehash a sample plan based on full time hours, and see where I could go on margins and still give a full time wage..

My "real job" will be in a phase of transition between Dec-14 & Feb-15 and I'm not guaranteed to make it through based on LIFO. I want to assess all options well in advance so I'm not making decisions when I'm against the wall in other ways !!

jimmii

Its hard to compare to companies abroad as often the cost of trading and the cost of living can be quite a bit lower. Your decision to go full time or not should be dependant on whether or not you think there is enough long term demand for you to be able to make a liveable wage from.