Running head: BUSINESS MODEL 1 Business Model Jessica McNairy University of Phoenix 5/28/18 BUSINESS MODEL 2 Business Model A business model is essential for every company to be it a startup or well-established firms. A business model a well-drafted company's plan which entails ideas on the generation of profits and revenue in the social, economic and cultural context as well. There are a variety of business models used all over the world and the business model chosen for this paper is the high touch business model of a salon. There are business models who date years back and some which are newly created (Markides, 2013). Regardless of when the business model was generated, most wellestablished firms borrow business models from other firms to get an insight into the drafted ideas. Selection of the High Touch Business Model A high touch business model is a model which involves a lot of client-employee interactions and the client places a lot of trust in the company they are associated with. There are both upsides and downsides of having a high touch business model (Markides, 2013). The high touch model can be very profitable but also can be quite tedious to grow and expand quickly. A high touch business model is most suitable for highly populated places which may attract customers faster. An example may be a salon located on a busy street in the neighborhood. With a good employer or employee-client relationships, the business is most likely to take off quickly and generate a lot of revenue. High touch business model is selected because it tends to boom faster and bring in a lot of profits. When properly managed and guided, a top touch model is most likely to be an attraction of many consumers. When the consumers are pleased with the interactions and services offered by the firm, the chances of them coming back with other clients is most likely. Therefore, the sales increases and the profit margins definitely go up significantly. In the case of a hair salon, when the services offered are satisfactory, the customers are easily retained, and new customers would feel tempted to come and get a feel for the services being provided. BUSINESS MODEL 3 Key Contacts A key contact person is that one whose creativity, knowledge and skills are critical to the growth of a particular business establishment and without the expertise and know-how of the key contact person, the firm may cripple and destabilize. The key contacts would include financial advisors, external auditors, investors and business partners as well. Financial advisors are key contact persons because they would give the necessary financial expertise needed to gear the company in the right financial perspective. A financial advisor is essential for any business because, with their insight, they can give their say on what areas need to be improved to ensure efficiency and financial stability. External auditors are preferred to internal auditors because; they are in a better position to assess the financial statement and the financial performance of any company. Unlike internal auditors, external auditors are preferred because they are less biased when giving judgments on the financial performance of the company. The input of potential investors is crucial as well. This is because most of the investors have been in business relationships with many businesses and therefore their contribution is relevant. They may dictate how they would like their money used and this would enable the business owner to find the most suitable ways which would generate huge returns on investments. A business partner is equally important (Zott & Amit, 2013). Before entering into a business relationship, the business partner would have done a lot of market research concerning the business they would love to venture in. This means that they have the capability of bringing more input which would be useful for the growth and viability of the established business entity. Market and Customer Research Market realities and competitive pressures play a huge role in influencing the business model a firm may choose. Research in the U.S by 2017, revealed that high touch models achiever BUSINESS MODEL 4 greater commission rates unlike any other business models (Ehret, Kashyap & Wirtz, 2013). Direct contact with clients is significant because it gives a business owner insight into what the customer wants. When the needs of the customers are tapped into, a customer service is mostly customer oriented and this is effective for a high touch model. Research entails that, hiring a proper person for the job increases the chances of improving the stability of the firm. An excellent job posting is most likely to produce a generic response. With adequate staffing, the growth of the company is expected to be much possible. High touch strategies give the clients a feel of what the salesperson is offering. The high touch industry is highly competitive, and therefore, it is essential to find the high touch strategies which would make the business stand out from the rest. The market and consumers of high touch services inspire customer loyalty. Therefore, the products and services offered should be tailor-made to match the needs and expectations of the consumers. Engaging employees and understanding the customers is a key to improving the stability of the company. Research Methods The most active research methods are observation, online surveys, and interviews. Observations give a person the do's and don'ts in a business. Through observations, a business owner can highlight the most effective ways which would bring in more revenue (Hedges, 2016). Online surveys generate input from different sources. Online surveys and monkey surveys would help a business owner to work on the areas that would enhance the growth of the firm. Conducting interviews with the relevant people in the business is essential. This is because a person would gain a deeper insight into what needs to be done to improve the financial and success of the story. Interviews with experts would give answers to the most challenging questions regarding the high touch model. BUSINESS MODEL 5 BUSINESS MODEL 6 References Denise Hedges (2016). High Touch Marketing. Retrieved from http://www.denisehedges.com/high-touch-marketing/ accessed on May 26, 2018 Ehret, M., Kashyap, V., & Wirtz, J. (2013). Business models: Impact on business markets and opportunities for marketing research. Industrial Marketing Management, 42(5), 649-655. Markides, C. C. (2013). Business model innovation: What can the ambidexterity literature teach us? The Academy of Management Perspectives, 27(4), 313-323. Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), 403-411. Running Head: INDUSTRY OVERVIEW 1 Industry Overview Jessica McNairy University of Phoenix 6/4/18 2 INDUSTRY OVERVIEW Service oriented business design In a high touch-business model, a customer places a lot of trusts and strong relationship with the company and at some point with specific individuals within the company. In other words, the business is more of a person-centric in which the relationship between the customer and company has a significant impact on the company sales and the level of customer retention (Stickdorn et al., 2011). The business model for this case is a personal service hair salon which is trust-oriented or relationship-driven business. In this kind of business, there is a direct link between price and value. Here the customers are willing to pay more based on the trusted relationship they have created with the company. The business, on the other hand, must be able to provide the required value to maintain the relationship between the business and their clients (Stickdorn et al., 2011). The business design for personal service hair salon, in this case, is a service-oriented business design which focuses on the premier customer experience. The goal of this design is to create a more personalized relationship with the customer to ensure sustainable and long-term commitment to the business. The goal of the service-oriented business design for our personal service hair salon is to optimize service levels and business processes to create a more positive customer experience in the business (Stickdorn et al., 2011). To realize sustainable profits from this design, teams in the business will be trained on the four most critical shared services including human-centered design to improve customer satisfaction, service design thinking to improve on the ultimate customer experience, process design, and prototyping. These are essential service business design tools that help the business define and develop a shared design understanding of what the customer values within the company (Stickdorn et al., 2011). 3 INDUSTRY OVERVIEW Inventory and cash flow system Proper management of inventory in the business generates a positive impact on the business cash flow system. Whether small or large, a company must ensure adequate management of inventory by maintaining a proper balance between the invested capital in the business and the cash held for day-to-day management of the market. A critical strategy for appropriate management of inventory is to develop a proper forecast of inventory requirements in the business (Michalski, 2008). To undertake this critical milestone, for our personal service hair and beauty salon business, the company will use the existing inventory mix and come up with realistic sales projection for the business (Michalski, 2008). Pro forma Forecasted Cash flow Statement for Hair and Beauty Salon Year 1 Year 2 Year 3 Stylist 1 $ 5,000 $7,000 $10,000 Stylist 2 $ 5,200 $7,800 $11,000 Barber 1 $ 4,000 $6,000 $ 9,000 Barber 2 $ 5,500 $8,000 $12,000 Stylist 3 $7,000 $9,000 $13,000 Nails and Massage $10,000 $15,000 $ 20,000 Beauty Product Sales $,20,000 $30,000 $ 45,000 Total projected cash $36,700 $82,800 $120,000 flow The pro forma projected cash flow statement projects the revenue streams from different operations of the business. Each year, there is a projected increase in sales from different operation activities of the company. From the pro forma cash flow statement, we expect income to increase steady over the next three years as the salon continue to get more customer insights and improves the customer retention. 4 INDUSTRY OVERVIEW Pricing and sales strategy The sales and marketing strategy of the business will involve a simple technique in which the stratified customers are the marketing tool for the business. When the customers leave the business premise with a new look, he or she broadcasts the name and quality of the business thus allowing the business to gain attraction of market. Most of the customers of the business will be referrals for the loyal customers of the business. Word of mouth is the best advertising strategy that the business will use. It has commonly been known that quality goes with price; our business will be no exception as the business pricing strategy will be premium based on the perceived quality personal care services (Lo & Yu, 2007). 5 INDUSTRY OVERVIEW References Stickdorn, M., Schneider, J., Andrews, K., & Lawrence, A. (2011). This is service design thinking: Basics, tools, cases(Vol. 1). Hoboken, NJ: Wiley. Michalski, G. (2008). Corporate inventory management with value maximization in view. ZEMEDELSKA EKONOMIKA-PRAHA-, 54(5), 187. Lo, A., & Yu, E. (2007, November). From business models to service-oriented design: a reference catalog approach. In International Conference on Conceptual Modeling (pp. 87-101). Springer, Berlin, Heidelberg.
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