How Going Internet-Only Can Enable a Low-Cost Minimal Business Model?

I was inspired to consider this question in 2008 when Boston’s two largest newspapers carried a headline stating that the larger of the two, the boston globe (which was owned by the same company that published The New York Times), had threatened to shut down the paper’s print version and operate only online unless employees agreed to cut their wages and benefits by more than $20 million a year.

That threat brought to mind a conversation with a senior executive at Tea Boston World. The executive’s view was that much of the classified advertising, especially for jobs, would eventually be published online and that some material (such as stock price lists) would no longer need to be printed. He never once considered that online publishing would become a total replacement for having a print newspaper in his hands to read the news.

Having seen how things turned out, I can’t help but think that the newspaper executive would have benefited from this article. I like to help you avoid his myopia.

I encourage you to think through two hypothetical cases for your business before reading on. The first case involves replacing everything your business does now with Internet-only activities, very similar to the option the newspaper executive should have considered at some point. In the second case, identify a business you can’t initially imagine could be run solely on the Internet…and then design a business model for that business that is superior to what at least some customers receive today. Once you’ve found your best thinking on both counts, start reading the next paragraph. If you want to sleep in these two cases before continuing, that’s fine.

Here’s an example that I initially found daunting to provide over the Internet: being a golf caddy.

If you don’t play or follow golf, let me describe a little bit about what golf caddies do. The golf bags and clubs that many players use are quite heavy, and you have to walk about four miles to play eighteen holes. Most older golfers don’t feel like bringing their own clubs. Also, a good caddy will often be helpful in reading putts on the green to save strokes. Great golf caddies can also give advice on club selection and help keep the golfer in such a relaxed frame of mind that it is easier to play well. Some caddies are also good storytellers and provide a lot of fun by being delightful companions.

Naturally, providing all of these benefits depends on being there with the player and carrying the bag and clubs. Well, you can’t carry a bag and clubs on the Internet. What could an internet shopping cart do instead?

Let’s start by looking at what many golfers are interested in: having a better experience with fewer shots. Otherwise, if the course allowed, golfers could put their clubs in a bag on top of a pack animal and guide it around the course.

In practice, there is an easier solution: buy a cheap cart for the cost of renting a caddy for a round or two. If pulling a cart is too much work, you can purchase a battery-powered version to transport the clubs for the cost of about six or seven rounds of caddy services. Most courses will also rent you two-person gas or electric carts that also carry bags. Renting a cart usually costs the same or less than a human caddy.

So being there to carry the clubs and bags can be easily eliminated. In fact, the Internet caddy could sell battery-powered carts to golfers (or hire rentals when golfers are away).

For golf purists, I’m happy to agree that many of my upcoming fixes will require changes to the rules of golf. In the meantime, many casual golfers might be happy to use such alternatives during non-competitive rounds.

Most caddies are pretty useless at lining up putts. If an Internet caddy were to develop detailed information about each green and provide instructions on what to do based on where the ball lands and where the cup is, the golfer could get better advice electronically over the Internet through cell phones or wireless connections to Internet.

Some golf courses already offer a variation of this advice by placing GPS devices in their carts that tell golfers how far away the pin is, the front of the green, and the hazards (water and sand traps) ahead. It would not be difficult to supplement such electronic information with copyrighted instructions for aspects of playing a hole not covered by GPS-based information and to distribute the information along with the distance information now provided.

If a golfer enters information about which clubs have been used in each round and the results, an Internet caddy could also make increasingly accurate club recommendations throughout the round. Receiving this information would be like having the same expert caddy helping you every time you play golf.

Most golfers enjoy having fun while they play. The Internet caddy could archive many stories, legends and jokes that golfers could select according to their circumstances and moods. For those who wanted to pay more, a knowledgeable caddy could be available for conversation using Voice over Internet Protocol technology. So even if your favorite caddy was 3,000 miles away, you could still arrange a chat with him or her while you play.

Playing on a large course often costs between $600 and $700 per round. Good caddies on such courses earned between $120 and $200 per round for their services. The Internet caddy could help 72 golfers simultaneously on such a course. At a price of just $10 per round, the internet caddy could earn over $2,000 a day… much more than any other golf caddy except those who worked for the top pros in tournaments (usually receiving 10 per cent). cent of the prize money). pro won). Provide this type of caddy seven days a week for a busy and expensive course, and you could receive over $700,000 a year in revenue. Naturally, there would be some installation and operating costs. But there is no reason to stop at serving just one dish. You could provide such services for the top 100 courses in the world and potentially generate $70 million a year in revenue. Is anyone interested?

Let’s take the thought process I used in the golf cart example and describe how to develop a minimal internet-based business model:

1. Identify how the product or service is provided now.

2. Locate the aspects of greatest added value from the perspective of customers.

3. Build alternative ways to offer even greater added value at a much lower cost through the Internet.

4. Make sure all needs are met in a flexible way that will please the customers you want to attract.

5. Build on what you already do well and find ways to do even more by working with vendors to write the software and provide Internet interfaces.

What are you waiting for?

What is the key cost reduction point of operating only on the Internet? You can reduce your costs and those of your stakeholders by 96 percent in ways that will increase your profits after implementation by revising your business model to minimum best practices when operating online only.