Build Your Commercial Acumen by Analyzing Simpler Business Models
By Simon Stapleton
Commercial skills are a prized personal asset in business. Those who possess these skills tend to be more pragmatic and successful in building their careers. But developing commercial skills and commercial acumen is not simple if you’re not exposed to it. If you’re not operating in commercial environments, then how can you develop these skills?
Change your job? Or learn yourself?
Try this approach instead: find a ’simple’ industry and then reckon deeply about how a member turns profit from its business model.
Take a cafe, as an example.
A cafe is an example of a business with a simplistic business model. It makes profit from earning more money than it costs to provide food, beverages and associated products. But what is involved in running a cafe and how much does it cost?
There is more to it than might be obvious. Remember each business has had to invest in its startup, suffers from running costs and overheads, and must pay for product development and other innovations. As well as any ‘real profit’ its owners want to take out.
Cafes turn raw goods (ingredients, utilities and effort from people) into products their customers delight in and pay for. It is a competitive environment – many cafes offer the same products at a similar fee. Customers are fee-sensitive, so they can be fickle. Competition isn’t just about fee though – many pride themselves on the quality of the end product, but also the quality of the raw ingredients and, especially now, the ethics of sourcing these ingredients from farmers in third-world countries. How do these factors impact the fee and the attitudes of consumers?
Cafes require trained staff who can provide excellent service and yield quality products. Efficiency is a huge factor (nobody wants to wait long for their cappuccino or sandwich), so staff training is vital. How much does this cost, and how does it effect the fee of the yield?
Reckon about premises: location is key. Passing trade is very vital to cafes – if people don’t see the cafe, they won’t find it. But premier locations cost money. Lots of it. How is the cost of premises factored in the finances of the cafe? How many extra lattes need to be sold to get back these costs?
It’s honest to say even a simple business model like a cafe can be a complex business environment. Once you start to peel away the layers of complexity, you can truly be with you the commercial aspects of business. And understanding how businesses with simpler business models earn profit is a fantastic way to learn how much larger, much more complex businesses eventually pay their shareholders.
The author of this article, Simon Stapleton, is a life coach who uses his 15 years of IT experience to help Information Technology professionals survive and be victorious in the economic recession.
He is the author of ‘The 10 Habits Of Highly Effective IT Professionals’ which you can download for free from his site SimonStapleton.com ( http://www.simonstapleton.com)
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