Select the right business model

October 1, 2007 -  By

The single biggest challenge for owners of small businesses is creating a business model that works specifically for them.

Sounds self-evident doesn’t it?

Apparently, it’s not that easy, and it’s the reason why people like Greg Wittstock, founder and CEO of AquaScape Inc., based in St. Charles, Ill., command such a presence within the contractor market.

His success in building the $65-million water feature supply company in a little more than 10 years, serves as an example and, perhaps, an object of envy to contractors who rely upon his pond supplies and installation/maintenance systems to serve their customers.

Wittstock, who marches to the beat of his own business drum, grabbed the attention of the 1,000-plus contractors at his company’s week-long Pondemonium this past July. His keynote address to the pond builders involved Wittstock acting as equal parts showman, pitchman and business consultant.

He prefaced his presentation by riding a bicycle to the front stage at the cavernous MegaCenter at the Pheasant Run Resort in St. Charles, then doing a couple of neat turns in front of the tables jammed with pumped-up pond builders.

The bicycle, a new cruiser-type model, served as the young CEO’s metaphor for the need to have your antennae up and tuned to ever-changing market conditions. He pointed out how some bicycle manufacturers foresaw a fundamental shift in that market — fewer hard core enthusiasts and more people just wanting to enjoy neighborhood jaunts — and responded with simpler, easier-to-ride and easier-to-maintain bicycles. He said that bike suppliers are responding to the new “sweet spot” in the market by manufacturing simple “coaster-type” bikes to fit the lifestyle of today’s leisure-loving consumers.

They realize that they’re selling “the lifestyle” and not just products, a lesson that landscape contractors should take to heart, as well. His core message was that each owner — to be successful and happy in business — must create the particular type of business model that suits him or her.

He gave four examples of typical business models, none of which is inherently better than any other. What’s important is that the owner selects one that suits his or her personality.

1. The “hands-on” model is where the owner does just about everything, including much of the production. Its advantages are that there are few people to manage, little overhead and lots of control over each job. Its main disadvantage is that it’s basically limited to what the owner can accomplish with his own two hands.

2. The “working with others” model. Your company has some employees; it’s bigger than you and a couple buddies, but it’s smaller than most others in your market. The owner still wears many hats, including handling accounting and other administrative tasks, or they’re handled by his spouse.

3. The “systems-based” approach. The owner sets up the company to run by processes with managers assigned to each department. The owner focuses on marketing and sales, and makes sure that employees are trained and follow the processes.

4. The “strategic” model. The owner has a specific idea of the company’s direction, and is very results driven. The owner or management team is always looking for what’s next, always reviewing and analyzing the market.

“If you don’t design your business, your business will, by default, have a design, and it will be the wrong design,” Wittstock says.

Creating a particular business model to fit an owner’s personality, abilities and that will provide balance in the owner’s life is a much better way to become a successful contractor rather than piling up sales or work just to be adding to the numbers. In other words, concentrate on net profit.

“When I talk to contractors about their businesses, they talk about how many ponds they build or how much they sell,” says Wittstock, adding that a much better indication of how they’re doing is “how much they will net.”

Wittstock says that regardless of the business model or the business climate, contractors can count on one thing never changing — problems.

“All business is,” says The Pond Guy, “is overcoming problems.”

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