What type of business are you building?

For many persons the opportunity to start and operate their own business would be a dream come through. But how many persons really think about or know the kind of business they want to own? It is very important that you decide from the start whether you want to build a value business or an income business. How many persons really think about this?

Your decision to build an income or value business will greatly depend on what your expectations are for the business and what it is that you hope to achieve from that business. Once you make your decision as to whether you want to build an income stream within your business or build equity then it becomes easier to create a viable plan, set corresponding goals,and create a product/service that supports the type of business that you want to start.

Of the two, an Income Business requires a smaller investment and is faster and easier to establish.You are able to control and minimize your infrastructure and overhead costs as you can get started in your home without the requirement of hiring personnel. In fact all you need to get started is your computer and an internet connection. With lower overhead costs you are able to generate more income in a quicker time period.   

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An example of an income business include: Selling your own ebook or becoming involved with an affiliate programme.The focus is usually on building strategic relationships to increase sales as well as to increase the capacity of the business to distribute more products. This type of business is usually done with the intention of earning as much money as possible on a regular basic, creating regular streams of income.

Over time you can automate your system which will give you the opportunity to take time away from the business (e.g. going on a vacation) without having to worry that your income generation will be adversely affected.

However, with an income business it is more risky if you are not diversified. With a single product, the risk is higher, if the product goes bad, becomes outdated or if your competitors come up with superior products, this can significantly damage the reputation of your company or become a major set back for your business.

With an income company you have to keep on being innovative, you have to keep on improving your products,you might need to introduce new products or find ways to reinvent your existing ones. You might have to launch new sites, find new niche markets, impliment new marketing techniques and build new teams.

On the other hand, a  Value Business is seen as an investment with the focus being on building equity in the business overtime.Therefore, the outlook of the company is more long term with a sustainable plan in place. The vision, mission and core value of the company is centered on creating and building the business as an asset. The infrastructure that is put in place will eventually see the business running without the owner.
The decisions that are taken and the manner in which it is operated will support increasing its equity as it is treated more like an investment and less of an income stream.

As the business grows into an asset, its value will increase and so does its goodwill. This asset can later be sold to make you a generous profit. The initial investment and start up capital are usually much higher than that of an income business as you will need to hire workers, spend more time overseeing and managing, purchase equipment etc. So before you start operating a business you need to examine your motives for wanting to start a business, determine what you hope to accomplish from its operation, identify your limitations and then decide what type of business you wish to operate.