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As a business owner and an entrepreneur; I often come across many businesses that share a similar business plan, marketing and sales strategies and are working with similar customers.

 

The businesses that are tied to a small geography often face a lot of competition from the peers as well as industry giants. The costs of operating the business, the sales and marketing overheads as well as resource utilization can sometimes hinder the overall profitability of a business and in worst case can lead to adverse results as well.

The competition among smaller players have always given upper hands to industry giants and have helped them flourish their businesses.

 

For e.g. a local grocery store is often run an a family business and is often a 2 to 10 person operations. Each neighborhood will have anywhere between 2 to 20 such stores depending upon the size of the city. They all need similar resources to run the business [Retail Store, Working Capital, Staff, Overheads, Customer Management etc]. Their margins are not often very high as their procurement capacity isn’t very big.

 

Whereas an organized modern retail store will have all such privileges of getting the best deals on their procurement, payment terms, contract negotiations and will always have upper-hand in terms of pricing and customer acquisitions.

 

How Crowdfounding Business Would Work ?

 

Just as CrowdFunding business model utilizes the funds from the crowd to develop and sell its products, CrowdFounding model utilizes the resources and skill-sets of the entrepreneurs to collaborate and develop a sustainable business

 

I am discussing a business model wherein the stakeholders would be individuals or businesses with a similar business interest. They would pull in all the resources and generate a business model that has low operational cost, better margin and better utilization of the manpower resources. It gives them better position against bigger competition and overall scale for growth.

 

As these individuals are the core members of the team, each one takes individual responsibility for the growth and success of the business.

 

Another example I would like to discuss is a cafeteria. It takes an average of 24 to 36 months for a single location business to get established and operate smoothly. In this model, the owner usually is a full time operator and is responsible for over business function. This hinders the growth due to various factors such as availability of funds, Human Resources, Sales and Marketing Budgets, Mobility of Team etc.

 

Whereas; in the Crowdfounding model multiple business owners collaborate under a single brand name and can operate multiple locations by sharing all the resources. As per our study, it can bring down the operational cost to almost 35% which itself is a huge benefit. It helps with Quality of Food, Lower Pricing of Prepared Items, Better Marketing and Sales Conversions and overall major growth in a given period of time.

 

Bringing together people with a similar interest could be a challenging proposition. However, this business model has often worked in a co-operative model, travel and tourism industry etc.

 

 

Opportunities

 

Our team at "The Startup Hub India" is currently exploring opportunities to collaborate with individuals in "Health Food Segment" and will be seeking to connect with business owners in this segment to further discuss the opportunities.

 

I would like to know your thought and if you have a suggestions or comments please write to us at anand@TheStartupHub.in

30.09.2017
 
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