Business Model: Stop Startup Struggles, Start Smart!

Nowadays, young people tend to develop their own startups inspired by other young talented entrepreneurs.

I’m in the same boat!

Let me share my story. I guess that if I can understand the roles of business model earlier, I will save a lot of money and my earlier businesses.

I started my professional marketing career in 2009, at the same time, in 2012, I started some affiliate businesses. In 2014, I still worked for a big company and started my skincare business on the side.

I want to develop functional skills in sales, business development, and channel development. At that time, I was new in the skincare industry. So my business model, actually I may say my strategy then because at that time, I didn’t know what a business model is and how important it is. So my strategy then was:

1. Be a middle man between OEM suppliers and my online customers, and my customers then are young KOLs who influenced the purchase of cosmetics and skincare products to end-users. The reason I chose to serve this kind of customer was to learn their techniques in approaching end-users and which kinds of products, which regions, the consumer profile, etc. Then I can learn in the real business environment while earning money while I could prevent the business loss;
2. I developed my own brands based on the products I sold to my KOL networks on my own e-commerce website, fan page, and other e-commerce platforms; at the same time, I went out and sold directly to the spas and clinics at night and in the weekends.

Until 2017, I was so confident in the skincare market, product, and skin biology that I decided to make a revolution, and I thought my business concept was the first one in the world. My business concept was Solution-oriented Skincare. The core of the concept was that people had to answer my questionnaire, and my team would consult them on the root causes of their specific problems and then recommend suitable products. And you know, it was a failure.

In terms of marketing, I still thought that it was successful because many people answered the questionnaire month by month, got the consultancy, interacted with the business, and shared my brand, but in terms of business, I admitted that it was a failure. Because they appreciated the consultancy but then decided to buy from the other stores with more competitive price while they didn’t buy my own brand as it was new. For more information, I offered two options: famous brands and my own brand.

From my own experience and my observation, I felt that Entrepreneurs are always too optimistic about how easy it will be to acquire customers. They assume that because they create an irresistible product concept, a great solution for a specific problem, build an appealing website, product, or service, that customers will come to their business automatically. There are different factors that need to consider when you plan to launch your product to market, such as the industry you’re in, whether you’re selling a web-based product or physical product, the channels you use to attract your customers, etc.

When we feel excited about any new business idea, we tend to think that consumers will come. Yes, it may happen with the first few customers, but after that, it rapidly becomes an expensive task to attract and win customers, and in many cases the cost of acquiring the customer (CAC) is actually higher than the lifetime value of that customer (LTV).

Yes, excitement is good, it can motivate you to fly further. But wait! Please take one step back and consider the business model first and evaluate its feasibility to generate streams of money to cover all of the expenses.

Now we will discuss the business model.