Valid Business Model?

[bitcoin2121]

Industry: Construction

Company: Said Company offers Multi-Services within the construction industry (roofing, lawn maintenance.. etc..)

Context: Most of these companies operate as Agencies, in which they subcontract and or delegate all their tasks to 3rd party companies.

The main sole function of these companies, keep in mind the company can be any industry, is to acquire and keep clientele is it not? The company acquires new clientele, delegates the service, margins up on cost, pays third party and collects profit, repeat.

Question: Is this a valid business model that works for any industry, like Construction for example?

Extra questions: Is this not how a decent amount of companies already operate? If so is it possible to have a business with a business model like this in place and not even have a need for a physical location? What PROS & CONS do you see in a Business Model like this IF valid?

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[Lorence.xD]

If you were to have a business model like this, I think that a physical office space is necessary because they need some way of consistent point of contact, with online only interaction, there will be difficulties as some clients are not inclined to do an online contact. I think it is a valid model although I am not a business expert, I think using your connection to suit your clinet needs is an effective cash cow, you do not have to spend much on equipment and the most you spend on is office lease.

[Ucy]

This is typical agency jobs. Such models will likely increase cost for customers but can be really beneficial if the company is specialized in the business to serve and make things more convenient/easy/safe for customers.

Pro: convenience/ease of having the agency companies meet customer's specific needs and such companies would normally help customers meet important requirements (esp in legal areas) to have secure deal.
Con would be paying agency fee and getting poor services

[davinchi]

Being the middleman has always been a big deal for people, there has been tons of business ideas like for example airbnb that doesn't own a single house (I assume, or at least very few) but rents other peoples houses and make money from that. Unfortunately the biggest problem these type of business ideas have is the simple fact that you need to be wanted and requested and get a lot of attention for others to join you.

For example, in the construction business you need to find places to actually want to deal with you for you to be able to send your business to others and take the difference, if you can't find business and market yourself well enough, that means you are not going to profit. All those middleman places gets big because they are very well known and wanted in their industry.

[Hydrogen]

Question: Is this a valid business model that works for any industry, like Construction for example?

Extra questions: Is this not how a decent amount of companies already operate? If so is it possible to have a business with a business model like this in place and not even have a need for a physical location? What PROS & CONS do you see in a Business Model like this IF valid?

I worked in construction & have experience to answer this. Some run a construction business with no physical location. Others lease a warehouse to store materials, displays, equipment, etcetera. Its cheaper and better to have no physical location and store materials and equipment on the job site. Businesses that have a physical location would typically have a 2nd role where they would serve as a retailer or distributor for various brand name items and need to store wares on hand. There's also a small advantage where your business would be listed in a phone book and appear more professional due to having physical premises.

AFAIK the construction industry has a high labor turnover rate. Its physically demanding work most would prefer not to do. It may not be a job someone could reasonably do until their 50 to 70 years old. But the pay is good.

I think amazon illustrates the advantages of minimizing physical "brick and mortar" locations. That could be a better example to cite.

[jaysabi]

This is typical agency jobs. Such models will likely increase cost for customers but can be really beneficial if the company is specialized in the business to serve and make things more convenient/easy/safe for customers.

Pro: convenience/ease of having the agency companies meet customer's specific needs and such companies would normally help customers meet important requirements (esp in legal areas) to have secure deal.
Con would be paying agency fee and getting poor services

Any time you have a company increasing costs for the end consumer, that just creates an opportunity for someone to come in and underbid you.  These middlemen aren't necessary in the example provided, so if all they're doing is facilitating as between two groups as a service, that presents a market opportunity for one of their vendors to move up the chain and offer those services without the cost of the middlemen.  Jeff Bezos is famous for saying: "your profit margin is my opportunity," meaning if you're making a profit off something, Amazon is willing to make less profit doing the same thing in order to steal market share.  Middlemen are the very definition of trimmable fat.

[mu_enrico]

It's an organizing business, and it exists when the output is rather complex.
Let's say a wedding organizer needs to deal with different venues, themes, etc. They maintain a relationship with multiple vendors, each doing specific tasks, and then collaborate on the D-Day.

If the output can be standardized, the big corporation would do vertical integration.

They can be virtual, but this is a business that sells prestige and trust (reputation), thus they often rent an office in the expensive business area.

In construction, the output is not that complex, so you will see small construction companies act as middlemen, and the big one acquires all the supporting business (vertical integration).

[bekti3]

Question: Is this a valid business model that works for any industry, like Construction for example?

Extra questions: Is this not how a decent amount of companies already operate? If so is it possible to have a business with a business model like this in place and not even have a need for a physical location? What PROS & CONS do you see in a Business Model like this IF valid?

quite good when viewed from the management procedure. but you need to create an existing business as an example. So that this can be evaluated including things that can cause problems. indeed besides running a business with your ideas, a physical office is very important to support consumer trust. So you can easily accept various complaints if there are problems faced by consumers.
I think your idea is good enough and can run smoothly. but then again how adept you manage and provide good service to various customers who have different desires.

[davis196]

I don't think that outsourcing is a good model for the construction business.
What if you outsource to a low quality constructors,who do a terrible job and the client blames you?
If you can find and outsource task to good constructors that's fine,but what if they can sell their services without your help?What if the client finds out that you are outsourcing at a cheaper rate and keeping the profits for yourself?
Do you have any experience at marketing and sales?

[fiulpro]

See the thing is : you cannot really expect every industry to follow the same set of rules and at the same time I don't really believe in handing over the business to a third party since this really causes long term problems , if you have one to one contact with the people you can really reach out and adjust. I do believe that a business model should be more or so flexible. I do believe that right now we need to stop engaging the middle man and start training the workers and people to do more stuff on their own. This will be better for them and they can gain more profits too. I think you will be better off thinking about a site that brings the workers and employees together.
You have to make sure to employee number of people since someone will be handling orders , someone will be handling calls and consumer reports and such therefore it's not going to be simple but it will take a lot of time and preparations.
What will set you apart is actually how you take this concept further so that people can have a place where they feel confident that they will for sure have profitable business. Most of these companies are exploiting minimum wage people you have to actually make sure it's profitable for everyone.

[Ucy]

This is typical agency jobs. Such models will likely increase cost for customers but can be really beneficial if the company is specialized in the business to serve and make things more convenient/easy/safe for customers.

Pro: convenience/ease of having the agency companies meet customer's specific needs and such companies would normally help customers meet important requirements (esp in legal areas) to have secure deal.
Con would be paying agency fee and getting poor services

Any time you have a company increasing costs for the end consumer, that just creates an opportunity for someone to come in and underbid you.  These middlemen aren't necessary in the example provided, so if all they're doing is facilitating as between two groups as a service, that presents a market opportunity for one of their vendors to move up the chain and offer those services without the cost of the middlemen.  Jeff Bezos is famous for saying: "your profit margin is my opportunity," meaning if you're making a profit off something, Amazon is willing to make less profit doing the same thing in order to steal market share.  Middlemen are the very definition of trimmable fat.

 






Well, Middlemen do increase cost for customers, (assuming you are arguing against that), atleast in small towns, esp places I'm familiar with.    In places I know, a Middleman in real estate business (for example) would charge agency fee after getting a customer to buy/rent a property. There are customers who avoid the middlemen fee by going directly to the home-owner to pay for the property/house... This reduces the overall transaction cost for owning the property for the customer.

that presents a market opportunity for one of their vendors to move up the chain and offer those services without the cost of the middlemen.

I guess by generating income through other ways (probably ways the customers may not find desirable)



By the way, I think some creative companies would compete against Jeff bezos in thesame area of business without lowering cost, by offering unique services ( services that are good and very valuable to people.) that Amazon does not offer. You can justly break monopoly in this manner if what you are offering is really worth it and cost more to provide.

[bits4books]

You just came up with uber, I congratulate you. I am sure that next you will be able to come up with a means to search for the necessary information "here and now" just by keywords on the Internet, then you will come up with a way to get people food from restaurants without having to go to them, and now it will be the crown of your invention - you will come up with showing people multi-part films on a separate platform, while buying these same films from small and novice studios.
Congratulations!