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In the business world, success stories are always fascinating.Looking back at the rise of Starbucks and McDonald's, we find that the success of these companies was no accident.
This article will take an in-depth look at these two compelling business cases and summarize the key points of a successful business model.
Business success stories resulting from serendipity
This is a fascinating story. Howard, the owner of Starbucks, became associated with Starbucks because Starbucks purchased large quantities of his company's coffee machine equipment.
So he decided to dig into which company was doing such a booming business, and eventually discovered Starbucks.
As a result, Howard acquired Starbucks, but still retained the Starbucks brand name.
It's a similar story at McDonald's, with Kroc selling ice cream mixers and a burger restaurant buying a lot of equipment.
He went to investigate in person and was surprised to find how popular McDonald's business was.
Eventually, he succeeded in acquiring McDonald's.
How to discover successful business models?
A successful business model may not be designed by oneself, but is more likely to be discovered.
When it comes to investing, never put resources into a startup that hasn’t been fully proven yet.
When we invested in a company in the past, we only focused on the future development potential of the entrepreneurial project and the ability of the founder.
However, this line of thinking is completely wrong.
Nowadays, no matter how excellent the project is and how outstanding the founder is, as long as it is at the 0-1 stage and has not yet been stabilized, we will never invest.
Profitability in the 0-1 stage is somewhat accidental. Even the most outstanding entrepreneurs may fail or take a wrong turn in the early stages of a new project ( within 3 years ) .
However, stages 1-10 are more certain, and actual profits are also made at this stage.
- Judgment criteria:After stage 0-1, at least 3 consecutive years are requiredprofit, and profit margins continue to rise,Only ability can be consideredEntered stages 1-10stable period.
- Note that you must look at profit margins, not performance and GMV (gross merchandise volume).
- Because if performance and GMV are through advertising and offlinedrainageWhat is produced is likely to be false performance and GMV with low profits.
We are more willing to invest in companies that are already stable from 0 to 1 and are expected to grow tenfold or even a hundredfold in the future.
Helping them achieve scale is easier, and the rewards are higher and more certain.
Key points of a successful business model
include:
Meeting customer needs: The business model should be able to effectively meet customer needs and provide valuable products or services.
Market positioning and differentiation: A clear positioning that differentiates the company from its competitors allows it to stand out in the market.
Sustainable competitive advantage: A business model should create and maintain a competitive advantage for the company in the market, ensuring long-term success.
Innovation and Flexibility: Continuous innovation and flexibility are key to a successful business model, enabling companies to adapt to ever-changing market environments.
Cost-effectiveness: The business model should be cost-effective, ensuring profitability while providing products or services.
Customer Relationship Management: Building and maintaining positive customer relationships to foster loyalty and positive word-of-mouth.
Appropriate revenue streams: Design sustainable revenue streams to ensure that businesses can continue to be profitable and support business expansion.
Resource optimization: Effectively utilizing resources, including human, material, and financial resources, to achieve optimal operational results.
Adaptability and Change Management: Business models should be able to adapt to constantly changing market and industry environments and employ effective change management strategies.
Regulatory compliance: Follow laws and regulations and compliance requirements to ensure that the company operates within the legal framework and avoids potential legal risks.
Together, these key points form a powerful business model that lays the foundation for companies to create lasting competitive advantages and sustainable business growth.
Conclusion
- By analyzing the success stories of Starbucks and McDonald's, we deeply understand the importance of business model discovery and design.
- In investment decisions, avoiding the traps in stages 0-1 and looking for opportunities with certainty and profit in stages 1-10 is the key to successful investment.
- In the balance of risk and return, choosing already stable companies and helping them achieve scale will become a reliable way for investors to obtain returns.
Frequently Asked Questions
Question 1: Is investing in startups bound to fail?
Answer: Not all startups are doomed to fail, but there is great uncertainty in the 0-1 stage and needs to be carefully evaluated.
Question 2: Why choose an already stable 0-1 stage company?
Answer: Such companies are more likely to achieve scale in stages 1-10, with higher and more certain returns.
Question 3: How to evaluate the founder’s ability?
A: The founder’s experience, leadership, and understanding of the industry are all key factors in the evaluation.
Question 4: Why focus on the discovery and design of business models?
Answer: A successful business model is the cornerstone of a company's long-term development. It is crucial to discover or design a suitable successful business model.
Question 5: How to balance risk and return in investment?
A: When choosing investment targets, you need to carefully weigh the risks and choose opportunities with a solid foundation.
Hopefully, the article "How to Discover Successful Business Models? Accidental Discoveries of Business Success Stories" shared on Chen Weiliang's blog ( https://www.chenweiliang.com/ ) will be helpful to you.
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