Insight Into a Range of Business Models from New York Magazine
New York Magazine has a fascinating set of business case studies investigating how New York businesses turn a profit
The wild risks, unexpected niches, and day-in-day-out grind behind making a dollar in New York for everyone… from a drug dealer to Goldman Sachs.
It makes me glad I work online and from home, many of these businesses have
- Staff overheads
- Property overheads
- Fixed pricing (especially the taxi driver who has zero control of pricing)
- Fixed product offering (taxi driver has to work unprofitable hours and routes with no choice, the diner can’t reduce their menu because customers demand old items, etc)
But on the other hand many show how you can create profit from seemingly unprofitable niches
- Negotiate prices from vendors, don’t just take the list price as set in stone
- Work closely with vendors to get the best quality and a fast turnaround
- Bring customers in with a great headline deal but upsell to your more profitable services
- Nurture your loyal customers as they are your bread and butter
- Trim the overhead fat (eg. do you need fancy prestige offices?)
- Find products you can sell over and over (eg. the print shop makes most money from local restaurant repeat flyer orders rather than walk-in custom, the yoga school with multi-class packages)
- Break up big high cost purchases into smaller units with a markup, as in the print shop running a photocopier lease so small companies do not need to, and the drug dealer who buys in bulk then profits by dividing up and selling on. The same model works online, for example the capital cost of web hosting is spread over dozens of shared hosting clients.
Read the full series, many of the lessons translate into other markets. Can you think how these tips can work for your business?
Tags: business, profit, model.strategy, new york, news, tips
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Posted on June 05th, 2007 by Chris Garrett in News
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I’m going to have to read that article later - I gotta learn the ins-and-outs of selling drugs
Mark - Just don’t follow the Pfizer/Merck model. It takes too much money. Better to get your supplies directly from the manufacturer. A walk around New York should provide you sufficient contacts to get started.
Chris - I think you hit the nail on the head with your list of what we can learn from these businesses. These are basic actions that so few companies do well. Too many people focus on trying to come up with something so original instead of being a solid customer service company.
This is why that is the focus of my blog. Trying to show basic principles that every business can apply that they often do not. The question that remains to be determined is if the group who needs to hear this message is online and looking for that answer.
@mark - If anyone asks, I didn’t see that
@Roger - Oh yeah, how many people have you heard say “I just need that one big idea”, uh *or* you could have a decent idea with excellent implementation
You have to appreciate the drug dealer’s profit margins although I would much rather have the drug company’s profits.
Yeah those drug companies make serious dough, at least until the generics come along