Founders of a company often unconsciously make decisions that determine the ultimate success or failure of an enterprise. However, a few decades ago investment strategist Richard Russell already listed twelve criteria for the "ideal business model".
If you consider starting a business (or know someone who wants to do that), check the list below carefully. You’ll find out meeting all twelve criteria is extremely difficult. The suggestion therefore would be to meet as many criteria as possible of the 'ideal business model'.
Of course, whatever business model you choose, the first years require hard work and perseverance. But by electing a strong business model, your chances of success increase considerably.
For many young people in search of jobs, starting your own business should be considered as a serious alternative.
These are the 12 criteria:
1) The ideal business does not only sell to a local community, but has an unlimited global market .
(2) The product of the ideal business is characterised by an "inelastic" demand. People want your product so badly, they are prepared to pay high prices.
(3)Moreover, the product can’t be easily substituted or copied.
(4) The labour input for the ideal business is limited. So, basically you have an office with executives. Production, marketing and distribution are all done by other companies.
(5) The overhead of the ideal business is low. It does not depend on an expensive location, large amounts of energy input, expensive employees or a large inventory.
(6) The ideal business has no need for large investments in equipment. Therefore capital is not tied up in the bussiness.
(7)Cash generation is strong, so your company does not depend to much on credit arrangements.
(8) Government regulation is not interfering with your business a lot.
(9) The ideal business can be moved easily to other locations.
(10)The ideal business inspires you intellectually and makes you happy.
(11)The business leaves you with free time. Ideally, it allows you to spend time improving the company, rather than being a person working in the company.
(12)Last but not least: your income is not limited to your personal output, a problem hairdressers have for example. On the contrary, selling to one person or a million customers basically makes no difference for the ideal business.