Business Models & the Long Tail

The value of business models is under appreciated.  By that we mean people start or buy businesses without thinking though the non-financial implications. 

It is terribly easy to start a business that quickly becomes a monster eating all your time and energy.  I think it is particularly true of service businesses.  People look at the rates for consultants or advisors and think the sellers are making a fortune.  They also don't see the stress and strains involved.

For example, imagine being a doctor.  It's a high status job with lots of income.  You can do lots of good helping people.  However, everyone dies.  So sometime you will have to look a patient in the eye and tell them it's almost over and they need to make funeral plans.  If you are not prepared to do that, perhaps you need to look at a different business model.

Ecommerce Tips is a website we are developing based on our experiences selling things on the web.  We have installed shopping carts on two websites and find they are great for visitors who already know what they want.  However, we know from other websites that most people find answers via search.  The typical ecommerce website design makes it extremely hard to find products by searching for them. 

We have not been comfortable with the existing business models for board design. 

• Time and materials -
• Fixed bid

In our opinion, these models increase costs, ensure lawsuits, and, worst of all, fail to take advantage of collaboration tools.  The potential benefits of adding a web 2.0 tool like Basecamp™ to the mix is huge.  We believe it is possible to have a business model which is profitable for all and makes possible many smaller projects which are not affordable with existing methods.

We have been reading about the "Selling Less of More" ideas from long tail research and discussions books & blogs.  There are many business model implications to be found in the long tail.  For example, the price/performance trend of computer software and hardware means a one person company can profitably make and sell small runs of product which they take from concept to finished product in-house.  New products can be tested quickly & cheaply.  If they sell, production can be outsourced to reduce costs.  However, costs of even short runs are so low the prototypes may be profitable.  In any case, the prototypes can be so inexpensive in terms of capital costs, there is almost no downside risk.  This is much more attractive than a startup process that requires betting the company on success.