Do you think the most profitable business means having more working capital to live through this pandemic? COVID-19 pandemic affected companies worldwide, with no regard to the size of the working capital stash. Both small and large enterprises are getting affected due to lockdown. Consumers tightened their purse strings, and this affected business sales and profits. Consequently, the need for a more profitable business model has come to the fore.
The most profitable business model has to address various serious issues. They include business sustenance and consumers’ affordability. Social Enterprise models satisfy these requirements to a certain degree. Innovative and creative minds are preferring these viable business models.
What is the most profitable business?
The profit model of a company has to chart out its viability in clear terms. The plan should factor in the type of products or services it offers. It should also specify the sales generation strategy as well as expenses. Both fixed and variable costs are essential factors for this business model to achieve success.
After COVID-19, business sustainability has also become very significant. So, the solutions also have to consider the customer’s paying ability or purchasing power. Costs and prices have to be adjusted to implement a profitable revenue model.
Business plans should also get conceived to create a strong impact. It is achievable through creative product offerings and financial stability. The target audience, payment terms, and value-chain preferences should also be clear. The business expansion strategy should also be in place.
The social enterprise model should never ignore the customers’ ability to pay up. Yes, many buyers face hurdles in making quick payments. But they do aspire to add value to their lives by purchasing high-quality goods and services.
In this scenario, you should also not neglect the value of partnerships. Let us look at the cost model, value generation, and business growth strategies in more detail.
How to create a social enterprise business model?
Creative offers create most profitable business
Every business has to offer useful and appealing products or services. The offers should also arouse desire and create market demand. Otherwise, even the best cost-cutting strategies would fail. Make sure you offer a practical and socially beneficial product or service.
If you still fail to increase the sales, then redesign the offering. For example, sanitary vending machines can be made more compact. Enhance their accessibility and affordability to arouse the customer’s interest. The products enhance the quality of life through cleanliness, which adds social responsibility to your brand.
Cross subsidies for most profitable business
Diverse products and services will produce different outcomes. An online skills development course can be very successful. But a humanities program from the same e-learning portal can fail to take off. In these situations, cross-subsidize the less popular product using the profits from other streams.
The lucrative products find a larger, loyal customer base. So, the profits are also going to be steady and reliable. Be patient and channel some of this revenue into the less viable, but socially impactful product. Such a strategy will not only sustain the business but also improve employee satisfaction.
Cost adjustments for creating most profitable business
Costs get determined by relative prices of resources, assets, and activities. If the price of a product is too high, then find an alternative design. Choose a different path that can reduce the costs without affecting profits. Instead of sourcing materials from others, try in-house production for a change. But make sure the choice is also affordable and within the company’s field of expertise.
Most profitable business model with social responsibility
The most profitable business can also be socially relevant and respected. You have to divide the market into high and average profit segments. Once the sales kick in, you can subsidize the low-profit segment. A percentage of revenue from lucrative segments can be helpful for this purpose.
To implement this model, you have to rely on core technology. Apply your competency judiciously to reach out to diverse market segments. Use the technology to create a value proposition for the wellness of the society or the environment. This strategy is very famous in the healthcare sector.
Why stand alone? Third-party support for most profitable business
Instead of a low-profit market, you can also focus on partnerships and create a win-win situation, like liaison with governments, NGOs, and third party businesses. With third-party companies, you have to be cautious. The best way to outwit COVID is to partner with those who have a strong sense of corporate social responsibility. This model is not restrictive to the product; you can also share data and marketing channels.
Payment options – COVID-adapted finance changes
Businesses should not lose track of a customer’s purchasing power. Both the payment timing and amount have to be reasonable during these trying times. For example, you cannot ask a farmer for loan repayment before the harvest sales. Pay-as-you-go is the new flexible financial solution wherein the customer rents a product. He has limited access upon payment of the initial installment. With each incremental deposit, he gains more and more control of the product. He gains ownership once the entire product cost gets recovered by the seller.
Unleash the power of your value chain
The value chain includes production, marketing, sales, delivery, and maintenance activities. Even the most profitable business can maximize its revenue at only some stage. Some of these profits have to lend support to other activities. As a social enterprise, make sure to support your production and delivery part of the chain. For example, textile merchants can subsidize farmers who grow cotton and spend resources on the delivery personnel’s safety during this pandemic.
If you seek to stay afloat during this pandemic, you are losing. Businesses that thrive are the ones that aspire to reach new markets. But investing the profits into the business alone is not a viable growth strategy. People look out for heroes during these crises, and even a safer delivery system or a little flexibility in payment plan can make you a hero. Remember, a commoner will never forget a hero.