Manufacturer, Distributor, Service Provider, Retailer

[Saint]

A friend of mine is a (quite successful) business broker, and he shared a book on the process of buying a business. In the book it said that there are 4 types of businesses:

• Manufacturing
• Distribution
• Service
• Retail

If you go look on BizBuySell or check the proverbial phonebook, that seems to be pretty accurate.

May seem obvious, but I found it enlightening because in the past I've thought of entrepreneurship as requiring you to do basically all of these at once. If I start a cookie business, I think I have to produce the cookies, create all the marketing, and go find the outlet to sell them, or if I start a SaaS, I have to develop and market it to the final end customer.

There are lots of examples of people getting creative to circumvent doing it all, but I thought of it as just that - getting creative. Or being lazy/risky (I sell other people's software/physical good, I make a consumer good with no direct distribution). As I'm seeing, it seems like focusing on one piece of the value chain is actually the norm. The founder(s) who create a genius solution, develop it from scratch, build a massive sales & marketing engine and grow it to millions themselves is actually less typical and where you often get into needing serious funding.

There's so much talk about "niching down" with respect to industry or problem, but I don't see much about niching down by model. It seems so much less complex to focus on one aspect of the value chain too. Like to make things? Focus on making things that solve problems and find people, organizations, etc. to market and sell it. Like to sell things? Find existing products and sell them to potential buyers. Like to market things? Set up an ecommerce store or a retail shop and stock them with other products. Like to help people or businesses with some aspect of their business or life? Start a service business.

I think I've been stuck and have had reinforced (not just here) that to do entrepreneurship, I need to "vertically integrate" start to finish. I have to come up with a unique solution, create a distribution channel from scratch, service it myself, etc. Realizing how typical it is to focus on one aspect of the value chain makes it all far less daunting and opens up lots of great options for fastlane entrepreneurship.

Just sharing to clarify my thoughts and figured that breakdown might be helpful. For me, it's leading me to ignore manufacturing (whether software or physical products) and focus on distribution and service.

 

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