Descriptions:
Now consider there are two businesses, business A and business B. Business A makes three standard products and sells them to the customer. Business B sells only customized products and spends their time and money on research and development before selling to the customer.
Now tell me, which is a sustainable business model? What I am going to say is a hard truth which may be subjective, but this is what the majority of SMEs are facing.
Business A should invest in marketing initially. However, when the product clicks in the market, the orders keep on repeating. But when it comes to business B, which is into customized products, each time they need to invest their time, money, and energy in R&D, prototypes, testing, and manufacturing.
Sometimes the product may fail, and then they need to repeat the whole process again. Believe me, it’s not easy. Business B may have a high profit margin; however, they are in a very high-risk business.
Business A, although their margins are less, will have consistent sales throughout the year. If you ask me which is the right business model for you, I would say it purely depends on what you choose and what works best for you.
But the fact is, businesses that have 70 to 80 percent standard products and 20 to 30 percent customized products are proven to be sustainable in the market.
If you are someone who says, “I will do only customized products,” then you are not running a business — you are doing an expensive hobby.
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