Page 32 - The Bootstrapper Bible

ChangeThis ater, cellular phone, and even casual clothing business in the markets in which it operates. Letʼs look closely at how the Advantage fares on the five rules of business models. FIRST OF ALL, IT’S PROFITABLE. By relying on significant relationships with suppliers, it can buy cheap and sell sort of cheap. The profit on each sale isnʼt huge but the volume is, so thereʼs plenty of money left over at the end of the day. IT’S PRETTY PROTECTIBLE. In the beginning, of course, the Stereo Advantage had nothing that couldnʼt be easily copied. But back then, no one wanted to copy it. Now, twenty years later, the store has built a significant brand, a huge array of loyal customers, a talented staff, ongoing service contracts, and deep, mutually beneficial relationships with suppliers. Many, many companies have tried to go after it, but all have failed. IT’S SOMEWHAT SELF-PRIMING. The beginning was a very risk-filled time for the store. The owner had to buy inventory, take a lease, and hire staff without any guarantee that people like me would walk in and buy something on opening day. As it grew, though, each step has been self-priming. He brought in two televisions. When they sold, he brought in eight more. Now there are hundreds on display, without the risk that would have been incurred if he had filled the store with televisions before ever selling one. IT’S ADJUSTABLE. If the core of the Advantageʼs business is that it combines a solid reputa- tion with a good location and trustworthy suppliers, then the business can be adjusted a great deal within those parameters. When portable telephones got hot, for instance, it was easy for Stereo Advantageʼs owner to talk to Sony and other suppliers and get some in the stores quickly. Same thing with home theater. Itʼs unlikely that the store could sell cars, or even profitably move into high-end stereos. But, within the constraints of its business model, it enjoys a great deal of flexibility. | iss. 6.01 | i | U | X | + | h 32/103 f