How to Choose the Right Business Model for Your Product Business

Once you choose your initial product, it’s time to decide how you want to sell to your customers. Take some time to consider the demands of your potential business before you make your final choice. For example, if you want to be able to work while the kids are at school but still be able to volunteer in the classroom, then owning a retail store where you can sell your designer chocolates probably is not a good fit for you because you would need to be present at the storefront during open hours. However, you could take your designer chocolates and sell wholesale to local restaurants, bakeries and candy shops allowing you more flexibility in your time.

Characteristics of a Product Business

A product business gives you many avenues to sell your new product. As an entrepreneur, you can sell your product directly to consumers or to retailers, who then resell your product in their stores. Some business owners choose one path while others choose both.

  • Can be run from home or brick and mortar store
  • Good options available for third party manufacturing, storage and order fulfillment
  • Possible high startup cost to develop and produce products or to purchase beginning inventory
  • Has potential for high compensation as unlimited amount of product can be sold
  • Able to hire third party sales representatives or affiliate marketers to boost sales with limited upfront costs

Wholesale Side (Business to Business)

  • Upfront costs can be high to get initial supply of products manufactured
  • Spend time developing new products each year to keep business viable
  • Has options to sell wholesale to retail stores and retail to private customers
  • Significant storage areas may be necessary to find and maintain
  • Credit card processing and inventory management necessary

Retail Side (Business to Consumer)

  • Medium to high upfront costs include store and/or website
  • Credit card processing and inventory management necessary
  • Has control of ultimate price of items
  • Has multiple selling options with store, online, and private parties
  • Significant storage not necessary as many suppliers will allow relatively small order

Retail Websites vs. Brick and Mortar Stores vs. Private Sales

In today’s technology world one of the biggest questions you will face is: “Do I open a brick and mortar store, sell online, or offer my products in small group settings?” If you are developing products and selling direct to the customer, then a website presence is a must in my opinion. Brick and mortar stores, I think, are optional in the beginning. Some business owners prefer to meet face-to-face with customers in small group parties so that that they can demonstrate and show their products personally. The choice of sales method has more to do with your personality than anything else. Do you like to be closed away in an office or out talking with people all day? Are you ready to hire and manage employees?  Here are some traits of each type of business model to help you decide.

Website (Wholesale and/or Retail)

  • Can be from home or small office
  • Basic websites are relatively inexpensive
  • No daily face-to-face with customers
  • Primarily phone and email correspondence
  • Lower rent likely than retail space
  • Costly decor not necessary
  • Can be isolating
  • Can reach national audience
  • May not require employees at first as many aspects can be outsourced

Brick & Mortar (Retail)

  • Daily face-to-face with customers
  • Set hours of operation
  • Must be at store during open hours or hire employees
  • Can have office at store
  • Must decorate store
  • Reach local audience – can target effectively
  • Monthly rent, possible contract

Private Sales Methods / Home Parties (Retail)

  • Set hours of operation
  • Organize home parties
  • Low cost to provide hostess with free samples
  • Face to face sales with customers

As I said, Mini Me Geology is both a wholesale and retail business that I run from home through the internet. As a geologist I understand the products and as a Mom, I like the flexibility of working from home. Through my website, I can serve our wholesale customers and also have retail sales which allow us to interact directly with our end users. Some days I feel like the house is overrun with rock and mineral samples but when I decide that I cannot stand them anymore, we will move the assembly, packing and shipping to a third party service provider in our area. (Confession – I actually love having rocks all around the house…) Even when we move these aspects of the business, I can still sit at home and run the daily operations.

So what type of business is right for you? Home-based? Brick and mortar? Retail? Wholesale?






About Tracy Diane Jones

Born and raised in Princeton, West Virginia, I love rocks and minerals, writing fiction & non-fiction, running, and swimming!
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