Going public is not important; the business model is important

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Going public is not important; the business model is important [Copy link]

Going public is not important; the business model is important

Business model is a very important factor affecting an enterprise's development, financing and listing. Enterprises with different business models should choose different listing locations. Conversely, enterprises that want to list in different places or different markets in the same place should pre-design their own unique business model according to their financing needs.

The world's first portal website, Yahoo, does not run factories, set up workshops, make (tangible) products, or have its own original content. It has developed from a simple search engine to a top Internet communication platform, providing a variety of media products and services covering the world . The brand-new business model created by Yahoo triggered the global Internet boom in 1999 and aroused people's keen attention to the business model itself.

For all enterprises, "financial figures" (profits) are above all else. Whether or not the "figures" can be as high as possible is often determined by the business model. Therefore, in this sense, the business model is above all else.

Business Model 1

A leading domestic company engaged in genetic engineering pharmaceuticals is not engaged in the research and development and production of original patented drugs as people imagine, but it purchases drug licenses from others to produce them by itself, and what it purchases are generic, non-patented drug licenses. He knows that pharmaceutical companies around the world, especially Chinese pharmaceutical companies, have to take the R&D (research and development) path, and the dream of developing new patented drugs by themselves, thereby making huge profits and skyrocketing stock prices , is very unlikely. Therefore, he purchased a non-patented drug license with excellent technology that can greatly reduce costs, in order to reduce costs and seize market share through his advanced technology , good process, and scientific management.

Such enterprises were originally planned to be listed on the domestic Growth Enterprise Market (GEM), one of the reasons being that the relevant departments needed such enterprises in order to establish an image similar to Microsoft's image as a large-cap blue chip stock on NASDAQ . But obviously , the scale and business model of such enterprises are more suitable for listing on the main board (whether domestic or overseas).

Business Model 2

In the domestic software industry, "UFIDA" and "Kingdee" are like "Coca-Cola" and "Pepsi", "McDonald's" and "KFC" in the global fast food industry. However, the business models of "UFIDA" and "Kingdee" after their listing are very different.

After going public in 2001 , UFIDA began to enjoy the "pleasure" of frequent mergers and acquisitions: holding 68% of the financial software supplier "Tongbao Software"; establishing a joint venture with IFS, the world's fifth largest ERP software company ; and purchasing software technology from Taiwan's "Zhongrui Manufacturing" . These mergers and acquisitions have put UFIDA on a path of rapid expansion through mergers and acquisitions, transforming from a pure financial software provider to a management software provider, and leaping from a domestic financial software leader to a world-class management software provider.

After listing, Kingdee still relies on its own R&D, rolling and accumulative development. Expanding scale and high-speed development through mergers and acquisitions (such as the acquisition of Kaisi) are not the main lines of its business model and development strategy. There is no time limit for refinancing on the Hong Kong Growth Enterprise Market, but the sluggish market makes Kingdee's refinancing unrealistic. The financing arrangement, in turn, affects Kingdee's business model and development strategy.

In fact, the business models of both UFIDA and Kingdee are suitable for listing on the main board. UFIDA was listed on the A -share market at a high price of 36.68 yuan per share , raising huge amounts of funds, providing more "bullets" for mergers and acquisitions and expansion. In order to fully circulate, Kingdee was listed on the Hong Kong Growth Enterprise Market, with a lower issue price and raised funds.

Business Model 3

A small PCB (printed circuit board) manufacturer in Shenzhen produces more than 2,000 types of circuit boards every month, while similar companies in Europe only produce 500 to 600 types at most. This company has a net asset of more than 50 million yuan, but an annual net profit of more than 20 million yuan, with a return on net assets of 40% .

The good performance mainly comes from its unique product positioning and business model in the market segment. It does not mass-produce circuit boards for mature products like general PCB manufacturers, but provides supporting services for small-batch PCBs required by some large communication companies in the R&D stage . Because it started early, its various production factors such as manpower, production, engineering, internal organizational structure, external marketing and other links are very suitable for the requirements of small-batch production with short delivery time and good quality stability. Therefore, it can adopt batch production in some areas to reduce production costs. Its competitors are difficult to compete with it because they started late and various factors are not well adapted to small-batch production.

Business Model 4

ENN Gas, a Hong Kong listed company, was originally positioned as a provider of household gas equipment at the county level, but later changed to an energy network operator that provides both equipment and gas. It found that towns below the county level are different from large and medium-sized cities. There are no gas companies here, but there are business opportunities with similar needs. ENN Gas seized this opportunity and developed from a small enterprise with a market value of more than 10 million yuan to a large company with a market value of 1 billion yuan. The financing arrangement of the Hong Kong Growth Enterprise Market (now transferred to the main board of ) played a decisive role: there was no time limit for refinancing, which enabled ENN Gas to obtain sufficient financial support during its rapid growth.

The two types of enterprises in Model 3 and Model 4 are small-scale enterprises with unique business models, which are very suitable for listing on the GEM. The growth of "Xin'ao Gas" has provided a steady stream of financial support, and the small-batch PCB production enterprise has long been an excellent target for many Hong Kong GEM listing sponsors to serve.

Business Model 5

Shenzhen Zhongkezhi Guarantee Company, which pioneered the domestic private guarantee, fully realized the current situation of financing difficulties for the majority of small and medium-sized private enterprises in China, and the lack of a bridge between China's financial market and technology market, in addition to venture capital, credit guarantee. "Zhongkezhi" discovered the vast business opportunities and positioned itself as a professional guarantee institution that provides financing guarantees for the majority of small and medium-sized private enterprises that have difficulty in financing. In the past two years, none of its guarantee businesses have failed, all loans have been repaid on time, and its operating performance has grown by leaps and bounds.

The business model of Zhongkezhi is based on Fannie Mae in the United States. In other words, Zhongkezhi has greater market recognition and a higher expected P/E ratio when listed on NASDAQ than on the Hong Kong Stock Exchange.

How do enterprises build their own business models?

Market competition is becoming more and more fierce as the market matures and develops. In almost every industry, there are many companies sharing the market share. Therefore, companies begin to pursue differentiation. Differentiation is manifested in many aspects, and the core of differentiation is to build different business models.

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Enterprises of different sizes, different states, different industries, and different types have different business models, but they also abide by many common business rules. Therefore, business models always have individuality in commonality, and individuality conforms to commonality. According to the state of the enterprise, there are entrepreneurial enterprises, growing enterprises, mature enterprises, and expansion enterprises. The most important thing for entrepreneurial enterprises is to design a good business model before starting a business. This is the most easily overlooked step for Chinese entrepreneurs. Due to the entrepreneurial impulse, many entrepreneurs only consider the two major elements of investment and entrepreneurship: money and business. Either they use money to find business, or they use business to find money. As for how to successfully make more money with money and business, there is often insufficient discussion and analysis. Often leads to losing all the money. Even many successful enterprises later only seriously consider the business model after they succeeded in a muddle. Enterprise entrepreneurs must analyze the business model from the following aspects, not simply make a feasibility analysis report. First of all, see whether the enterprise to be invested or started is manufacturing, circulation, or service industry. For example, the basic business model of the manufacturing industry is "supply-production-sales", and the basic model of the service industry is "purchase-sales". Secondly, we need to study the market: that is, how big is the market for the products you produce and serve, where is it, and what level of customers your market serves. That is, product positioning. Thirdly, we need to study competitors: that is, in your region, your market, your products (services), and your customer groups, what competitors are there, what advantages and disadvantages do these competitors have. Fourthly, we need to design the business model of entrepreneurship based on external analysis. Entrepreneurship does not always start from small to large. Some start with small-scale operations, while others start with high-profile operations. Small ones can be so small that no investment is required; large ones can be tens of billions, tens of billions, or even hundreds of billions. The business model of the famous domestic liquor brand "Jinliufu" is very unique. When Xinhualian Group invested in the liquor industry, the Chinese liquor market was already very mature, with many competitors competing to share the national and local liquor markets in China. Some famous brands have been prosperous for a long time, and counterfeit and shoddy products cannot defeat them. New brands emerge one after another. If the traditional business model is used, investing in building cellars, formulating, fermenting, brewing, selling, occupying the market, and building a brand, there will be great risks, large investment, long investment cycle, and lack of expertise in the production, operation, and management of liquor. Therefore, they adopted the business model of "borrowing chickens to lay eggs", stepped on the shoulders of giants, and cooperated with Wuliangye, the first brand of Chinese liquor. They created their own brand without producing a bottle of liquor, not even a wine cap, and worked hard on marketing, established a huge sales system, and achieved great success. The fixed assets are not even the scale of a small winery, but have an annual sales volume of 2 billion. The subtlety of Jinliufu's business model is that it "takes all the success of Wuliangye" for itself; it does not make a large amount of fixed production investment, but can engage in business from small to large according to its own financial strength, and do what it can to avoid investment risks; the intangible assets of the Jinliufu brand belong to Jinliufu Company, even if there are disagreements in the cooperation with Wuliangye, Jinliufu's own brand can already stand on its own. At the same time, although Jinliufu and Wuliangye have different systems and different investment entities, and there is no equity relationship between them, only an OEM relationship, Jinliufu has not impacted Wuliangye's main brand market, but Wuliangye has increased its sales without incurring marketing costs; Wuliangye's brand is also promoted by Jinliufu with only tens of millions of advertising investments each year. Generally speaking, enterprises in the incubation or growth stage have initially formed their own business models. This period is the most critical time for an enterprise. Many enterprises have been hovering at a certain sales scale for a long time due to the inability to find a breakthrough, and even suffer losses and fail in entrepreneurship. The most important thing for enterprises during this period is to find an innovative business model as a breakthrough. First of all, look at your own enterprise. Is the product or service at this stage regional or national? If it is regional, you must study enterprises of the same size in the same region to see the similarities and differences between these enterprises' business models and your own business model. Learn from others' strengths, find their weaknesses, and creatively transform your business model. Perhaps, you can succeed.

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Vantone Group once had a classic case. In 1996, after two and a half years of construction, Beijing Vantone New World Plaza made its debut and achieved unprecedented high-price sales. However, Sichuan Building, located on the north side of Fucheng Outer Street, just across the road from the property, has not been completed after 13 years of construction due to institutional problems. Two systems and two business results, which became a good story for a while. However, the business of the shopping malls from the first to the fifth floor of Vantone Plaza was a different story. Although Vantone introduced Americans to participate in the operation and hired retail management talents from Xidan Shopping Mall and Friendship Shopping Mall with high salaries, it still showed signs of failure and suffered continuous losses for Vantone, which had never engaged in commercial retail. On the contrary, Hualian Shopping Mall in Sichuan Building came from behind and was doing well. At that time, many ways were tried but failed to change the situation. It was not until more than two years after the opening in 1999 that Vantone made a bold innovation in the business model to reverse the decline and succeed in one fell swoop. Wantong's method was to abandon the self-operated model that it was not good at, split all the business areas into small pieces, and rent them all out to small vendors, turning Wantong Plaza into a small commodity wholesale market, allowing small vendors who usually could only operate in the triangular areas of the streets and alleys and were squeezed into a small area to suddenly rush into the prosperous and high-end shopping malls to set up stalls, as if they were entering a refined hall. The small vendors almost rushed in with a lot of cash. Wantong Plaza turned losses into profits overnight, and also saved the management procedures. Wantong's changes in business model at least give us the following inspiration: Wantong is an expert in real estate, and it can be said that it is more successful than the state-owned Sichuan Building. Wantong is an outsider in business, and without long-term learning and practice, it is still not as good as the state-owned Hualian. When outsiders and insiders compete with each other in the same area, Wantong did not choose the way of vicious competition, price war, and slandering competitors, but chose to operate in a different way and coexist peacefully. Wantong's move also took the first step in adjusting from diversified investment and operation to specialization, giving up investment and operation in the retail industry. The company did not choose to adjust by cutting off its own arm at a low price, but through the innovation of business model, it not only withdrew from the retail industry, but also turned losses into profits. It is particularly important for mature enterprises to choose the right business model. Mature enterprises have gone through the difficulties of entrepreneurship, experienced the troubles of the growth period, and entered the mature period of stable development. Whether the enterprises in this period can become national and multinational enterprises, this stage is the watershed. The business model of such enterprises is relatively mature and well-formed. However, such enterprises are also prone to two types of mistakes. One type of mistake is to stick to the business model and take historical success as inevitable. No matter how much the environment changes, no matter whether the competitors are pressing step by step, they still remain unchanged, stick to the rules, and mechanically use the original business model. Finally, they decline or even go bankrupt and withdraw from the business stage; the other type is to blindly believe that they are successful, and do not explore the familiar market space, industry space, and value space on the original basis, but to carry out diversified investment and diversified operations, which leads to failure due to the inability to control the new business model. These mistakes are the most common mistakes made by Chinese enterprises. I think there are several things to do to avoid these mistakes. Take advantage of the leading advantage, find companies that may pose a threat to you, conduct mergers and acquisitions, and integrate to eliminate the threat of competitors. Innovate business models and enhance core competitiveness. Business models are never static, and innovation is unlimited. The OEM model is a model for large companies to expand their scale while reducing investment risks by innovating business models. McDonald's, KFC and many domestic companies have adopted this approach. However, OEM management cannot be a one-time solution.

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When a chain enterprise develops to dozens of stores, due to the increase in the scale of investment management, the wider scope, and the longer management radius, it is difficult for the management essence of the enterprise to be transmitted from the headquarters to the end of each store without distortion. The attenuation of this information during transmission can easily lead to a decline in corporate performance. As a result, various forms of franchise stores were born. The development of enterprises no longer relies on direct investment for expansion, but sacrifices investment income as a cost, obtains income through standardized management, and sells the intangible assets of the enterprise. Although the unit income of this income is reduced, due to the expansion of scale, greater economies of scale are obtained, thus expanding the influence of the enterprise, expanding market share, and reducing investment risks. For listed companies, it is more conducive to obtaining market appreciation of stocks. However, the rapid growth of franchising is often a double-edged sword. Most of the time, there is no capital relationship between franchisees and the main body of the enterprise. They are two different legal entities, sharing the market benefits of a product, a brand, and a business model, so the two sides are both united and constrained. Therefore, the main enterprise must deeply understand and recognize such a relationship. While expanding infinitely, gaining profits continuously, strictly restraining and regulating franchisees, we should not sit back and relax. We should keep the vitality of the main enterprise at all times, constantly introduce new products, and persevere in product varieties, quality, colors, service methods, advertising, and cracking down on counterfeit and shoddy products, so that franchisees will always feel that there is a strong backing behind them. There are already many large chain enterprises in China, but there are indeed not many high-level management and management personnel. The above problems cannot but be said to be the core issues that restrict the development of Chinese chain enterprises into international enterprises. The last type of enterprise is the construction of the business model of expansionary enterprises. There are many Chinese and foreign companies that have declined or even gone on the road of no return due to mistakes in the choice of business model. Especially in recent years, some companies have gone through more than 10 years of hard work and entered the mature stage. They have their own brands, formed production and sales models, and stable income, but their income comes largely from direct investment and direct operation income. As a result, a trend of relying on capital operation to implement the so-called "low-cost" expansion strategy was born, that is, to enter the capital market in a big way, abandon or despise the business methods that helped them succeed, and carry out capital operation in an all-round way. As a result, the blind pursuit of high-speed growth and the lack of the ability to grasp capital operation have magnified the role of capital operation in corporate expansion and underestimated the risks of capital operation. In the end, not only did the capital operation fail, but it also destroyed the industrial foundation created over the years, fell into trouble, and was harmed by the capital market. The following are the business models commonly used by expansion-oriented enterprises when expanding: First, carry out diversified investment. This has been a topic of endless debate in recent years. As companies engaged in diversified investment, represented by Delong, have fallen one after another. The entire social public opinion almost unanimously believes that it is necessary to take the path of specialization and diversification is not suitable for Chinese companies. I believe that specialization is worthy of praise, but diversification itself is not a trap. Whether diversification can succeed depends on the company's ability to drive, not on diversification itself. There are also many successful companies engaged in diversified investment in China. I propose diversified investment, professional management, and doing what you can. When the management level is not up to standard, it is not appropriate to make diversified investments. Second, strategic investment. Except for Delong, no domestic expansion-oriented enterprises have positioned themselves as strategic investors. Haier, the largest electrical appliance manufacturer, is an industry investor and operator, but not a strategic investor in the electrical appliance industry. It is recommended that large expansion enterprises use strategic investment as a business model for expansion. However, the investment and management level of strategic investors is very high, and their basic model is strategic mergers and acquisitions, industrial integration, and strategic management. At present, there are very few domestic expansion enterprises that have such ideas and capabilities. Third, merger and acquisition expansion. Using mergers and acquisitions to expand is one of the most commonly used business models for expansion enterprises. However, Chinese expansion enterprises have a weak awareness of mergers and acquisitions, and the purpose of mergers and acquisitions is not strong, and the integration ability of mergers and acquisitions is even weaker. Fourth, take the value chain as the core to extend up and down. This is the expansion model brought in by foreign consulting in recent years. There are generally three ways to invest and integrate with the value chain as the core. The first is to expand along the original products of the enterprise to horizontally related value products. For example, Wahaha has extended from mineral water to Very Cola. The second is to expand along the original products of the enterprise to vertically related value products upstream and downstream. For example, Xiang Torch has expanded from selling car spark plugs to car gearboxes, and then to integrating the heavy-duty automobile industry value chain. The third is to expand along the original products of the enterprise to horizontally related value products and upstream and downstream vertical value chains at the same time. For example, First Automobile, while extending from the early trucks along the upstream and downstream of trucks, has also expanded horizontally into light vehicles, cars, auto services, and auto financial services. In short, in choosing and designing business models, small and medium-sized enterprises pay more attention to tactical business models, such as marketing strategies, product innovation, technological innovation, management innovation, pricing strategies, alliance strategies, etc., while large enterprises focus more on strategic business model selection. However, companies like Microsoft and Walmart, which are both very successful in tactics and strategy, are almost impeccable great companies, but they are rare after all.

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Business model determines the success or failure of an enterprise. I have been involved in the business world for more than ten years. Based on the professional characteristics of capital operation, I have seen countless enterprises and entrepreneurs. Success and failure are like floating clouds in my eyes, and I feel a lot of emotions. In summary, I have found that there are too many entrepreneurs who succeed or fail because of the model. I also feel that the business model is to the enterprise like people to blood, trees to water, and the world to the sun. The business model is simple to say, but it is actually the way for enterprises to produce and sell products to earn income. In the farming era, monetary media had not yet appeared, and barter was the earliest business model. The emergence of the division of labor in human society and the progress of productivity can be said to be driven by the new business model. In philosophy, the business model is also a part of productivity. The survival of an enterprise has some inevitable elements: capital, manpower, products, market, business model, technology, trade, etc., but among the factors that determine the success or failure of an enterprise, the business model should be the first. To start a business and be invincible in competition, the business model plays a decisive role. The success of the business model has created many great enterprises. Wal-Mart and Microsoft are the most classic business models of the last century. The business models created by these two companies have made two great companies and brought human wisdom in creating business models to the extreme. At the same time, it makes the business community panic and feel helpless about what humans have created. Business Collection Travel Etiquette Guide Network Marketing Guide Only Spring Business Opportunities Different Ages Different Financial Management Returning Goods is the Hard Truth "Taxi Brother" Business English Summary Chapter Earthy: Who is Making Money Therefore, we should pay enough attention to the understanding, recognition and research of business models, especially after more than 20 years of short-term prosperity in the market economy. But to this day, we are still a country that ignores business models. Looking back at many companies, there are many that succeed by chance and fail because of the model. At present, those with annual turnover of more than 1 billion and less than 10 billion can be said to be the backbone of Chinese companies. Those with less than 1 billion are still growing; those with more than 10 billion are almost monopolistic state-owned enterprises. The author believes that the most important thing to study business models is this kind of "backbone enterprise walking halfway up the mountain". Most of these enterprises succeeded in the early days of reform and opening up. They accumulated wealth by relying on courage and opportunity. As the saying goes, "one move can make you rich". However, it is these enterprises that are most likely to take the accidental success as inevitable and make mistakes to the end. Take China's real estate as an example. For more than 20 years, due to the debts of the past few decades, the Chinese people's need to live in new and good houses has created a generation of real estate developers and real estate tycoons. However, in terms of business model, who has escaped the most basic business model of "acquiring land - digging pits - building houses - selling houses - managing houses"? Even the benchmark Vanke is just "acquiring more land - digging more pits - building more houses - selling more houses - managing more houses". What is there for our real estate heroes to be proud of? If the government introduces some policies to curb real estate speculation, if our houses have been built almost completely and the per capita living area has reached a considerable saturation level, how can Vanke and Sunco maintain it? In a word, it is time for China's real estate to brew a huge change in business model. If we analyze Chinese enterprises by business model, Delong is the first choice for success and failure. Delong's success lies in that after achieving primitive accumulation, it focused on studying business models. Every investment was made after careful research, design and simulation of the business model, so the success rate was very high. Every acquisition was an acquisition in a strategic series, and the acquisition model was carefully planned. Delong's failure was also the failure of its business model. The desire for success and expansion led to financial constraints, which led to the most basic mistake of short-term financing and long-term investment. Using high-cost short-term funds for long-term investment, this wrong business model became the killer of Delong's failure. Business models are important, but any model is controlled by people. Therefore, when we study business models, we must not ignore the following key issues: First, we cannot stick to the business model. Any successful business model is successful under certain conditions and under certain circumstances. It must be constantly revised and innovated to maintain its vitality. Second, we cannot play with business models. In order to improve competitiveness and obtain greater profits, some companies deliberately pursue complex and novel models. The chain is unnecessarily extended, the process is unnecessarily complicated, and the nodes are unnecessarily weird, which will backfire and cause harm. Third, we cannot simply imitate the business model. Successful business models have commonalities, but more of them are individual. We cannot simply copy them. The business model can make us successful or fail. Yes, it is time for us to open our eyes on this issue.

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