There are many different business models but the one I want to explore today and the ultimate business model is the “broker” model. This is where you don’t involve yourself with the production element of your business, but you control the marketing and sales.
This allows you to focus your efforts on the money and not worry yourself with the drama of actually producing the goods, sending them out etc. Here’s a real life, working example:
There’s a chap in Worthing, UK who I did some work for years ago. He was a steel fabricator, we’ll call him James. He made handrails for elderly people to fix to the bathroom wall to stop them falling over and knocking themselves out.
He had a cool little business but what was amazing was that despite his product being aimed at 70 year old men and women, he was making 18-20 sales a day online! He was selling these handrails delivered for £99 and could make them for about £30. Tidy profit of £1,180 a day!
Unfortunately his factory, 3 staff, office, materials, insurances and delivery costs sucked up a good chunk of that profit. Here’s the funny thing though, he had a friend in the same business whose marketing sucked but he took care of the overflow production work for James. He charged him £50 all in, per handrail.
I said to James that he was mad and should just give all the work to his mate, shut his factory down and work wherever he wanted. He couldn’t bring himself to take the leap. Such a shame.
The real value to your clients is a simple ordering process, great customer service and the promised product. All those things slip when you need to get your hands dirty 8 hours a day. Your product or service could ultimately be made by anyone so long as it looks like it’s come from you.
For you, it doesn’t need to be as drastic as firing all your staff and shutting your factory down. Maybe that was a big ask, but it could be as simple as stepping back from production yourself and insisting on a set process.
Perhaps cutting down the product range and producing less products but more efficiently. I’ve written at great length about this in my first book ‘Automate Your Business’. You can order your copy here.
Here are a couple of short examples of regular, every day businesses operating under the ‘broker’ business model.
Tom Aitken of Enhance Services – A training company in Sussex, UK
Tom brilliantly designed his business processes with the broker model in mind. His business is running training courses like First Aid in Schools, Colleges and Universities, but his profession is marketing and outsourcing, and he does a superb job of it. His job is simply to get the bookings and book the trainer – that’s it. He’s known for providing regular work to trainers so he is inundated with people who want to deliver courses for his business. Naturally, it was easy to automate the processes Tom had created.
Tim Coe’s previous business, Hands-On Properties based in Hampshire, UK
I still remain amazed at how genius Tim was to do what he did with Hands-On Properties. Not only did he find a product that everyone wanted (reducing the Stamp Duty when you buy a house by 50%), but he managed to avoid all the legalities and responsibility. To make matters even better he didn’t even have to do anything. He’d just generate the enquiry and pass it on to his partner, iTax Consulting who are also clients of ours. They would do all the complicated paperwork, assume all the risk then pay Tim each time there was a successful sale. Absolute genius. Unfortunately, the Government have made it so difficult to sell the service now it’s not worth the effort but it was great while it lasted.
Tim now runs myUSP, a marketing agency dedicated to making your business stand out. His new business website is www.myusp.biz
Bradley Jones of Printergage based in Sussex, UK
Printergage is a joint project between our business and 3 others. It’s an online print shop with the software to process the orders. It was developed by us but Bradley’s business essentially just works on the marketing, gets the clients, and then hands them over to us to set up. We have processes internally to outsource this, meaning it’s scalable.
Are you seeing a pattern here?
Neither Tom, Tim nor Bradley have scalability issues, meaning for every client they sign up, there’s no additional hassle, just revenue and profit. How can you switch your business up to just focus on the marketing and sales, then leave the production to someone else or outsource it entirely?
Without covering every single eventuality, it’s near impossible for me to tell you how you should do it. After all, I don’t know you or your business. If you do want my input or advice you can contact me and I’ll get back to you with my thoughts.