The Business Model 2: Micro-scale Businesses(From Talks with a Consultant who READS Management)

In the previous talk I shared, I mentioned that business is turning ideas into value and then monetizing or commercializing it. Translating this into reality leads one to come up with a business model, which can be very basic and simple. Businesses or enterprises vary in different ways including sizes or scale and industry type, and so forth. In terms of scale, enterprises are classified as Micro, Small and Medium Scale. Of course, there are large scale enterprises including both home grown and foreign multi-national corporations, which are operating in several countries at the same time. Let us consider the business model of a few enterprises from each scale.

Simple Model of Start-Ups and Micro-scale Enterprises

Obviously, the micro scale enterprise will have the simplest business model or system of making money. Perhaps, the simplest of all business models is selling personal services to other people. In my case, I edit technical writings and I get paid for that. My clients are usually my friends or those I am recommended by friends. Another simple business model is buy and sell. My daughter at a very young age of 6 seems to have the inclination for business. She wanted to have a business of her own. To satisfy her clamor, her mother bought her chocolates worth Php20.00 as she sells each chocolate at Php1.00. They buy the whole pack at Php13.00 from a nearby supermarket. She makes Php7.00 per pack and she is able to sell to her classmates all 20 pieces per day. Other successful business-people began with this simple model. More than a decade ago, I was one of the invitees in the gathering of the Ten Outstanding Young Men. One of the awardees and a business tycoon shared how he started doing business selling t-shirts. He had made a connection to a supplier of the goods and then in Ateneo where he was schooling, he asked his classmates for orders, he picked up the goods and delivered them to those who ordered and get paid. He supported his education that way. That was his humble beginning and business can be very simple as that.

The Sari-Sari Store, Clinics and Law Offices

Further, micro-scale enterprises include the Sari-Sari store generally found at every corner of the street in the communities. When I was just a kid, my mother had a sari-sari store at home and me and my siblings take turns manning it. Eventually, my wife also operated a sari-sari store and so I have a personal knowledge of how it works. In general a small store usually employs only one to three individuals. The system is quite plain and no brainer. The store gets its supply of products from a supplier or suppliers, puts the products on shelf for customers to see, and then the neighbors or passers-by buy goods they like or need. The store makes money from the mark up with this simple system of buying and selling goods. Of course, as the store grows, more aspects get developed and components are added to meet the growing demands. This will be covered in later discussions.
Professional clinics or law offices are usually micro-scale enterprises as well. I have a dentist-friend who operates his own clinic in Muzon, Bulacan. People in the community go to his clinic, including us, for dental check ups or services. Each patient gets charged for the service accordingly. It is as simple as that. Law offices in the neighborhood are also common. They provide legal advises, assistance or notary public services to community members and at times even to total strangers. It is the same model – selling personal or professional services to make money.

The operations of these businesses usually have a very few sources of supply, one or two activities only and practically just one or two revenue streams. In short, all aspects of the business are quite basic and simple, involving just a few component or aspects. Giant businesses can come from this micro-scale enterprises. Jollibee is well known to have started very humbly. It is now a multi-national corporation with stores in several countries. The most important thing is knowing, understanding and applying the basics of a business and mastery of the business model however simple it may be.

What do you think of this? Tell us your thoughts. Know more, visit http://www.reads.com.ph.

Chot Velasquez is a Corporate Digital Marketer for READS Management Consulting. He digi-scribes and writes business and management news articles.

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