One Cow Describes Eight Business Models

Business models have diversified and evolved in unpredictable ways over the past couple of decades. Those businesses that have thrived have been the ones who were best able to not only take advantage of the new possibilities offered by the world wide web, but to predict the ways that the internet would change the way that consumers think and behave – both online and offline.

Online business economics do not exist in a vacuum: they have grown out of and exploited previously proven ways of doing things. It is quite simple to get a basic understanding of the names for new and existing business models by analogizing them to one of the oldest trades of all: the milk market!

Let’s take a look at eight of today’s most common business models:

Direct Sales Model. If you have one cow and you sell the milk it produces directly from door to door, then congratulations – you have a direct sales model. The classic modern example of this is Avon, who until recently dispatched their salespeople with suitcases full of make-up supplies to knock on doors and try to make a deal. Today, online direct sales marketing is more likely to take the shape of a bit of online networking and organizing, followed by a ‘shopping party’ hosted by the salesperson in their home. Think Origami Owl, Mary Kay etc.

The Freemium Model. You have one cow, and you give away the milk for free – but customers have to pay for a carton to hold the milk. Emerging from the more utopian ideals of ‘shareware’ in the programming community of the 1980s, Freemium is a combination of free stuff (a service such as Dropbox) with added services for which you pay a premium (added storage, for example). LinkedIn and even The New York Times (with its soft paywall) are contemporary online examples.

The Subscription Model. You sell your cow’s milk for $3 per carton – and offer your customers 20 cartons per month for $40. The idea with the subscription model is to keep your customers in a long-term contract and thus ensure recurring revenue. Netflix and eHarmony are among the subscription websites that have made a success of this model.

The Franchise Model. You buy a license from a farm to use its equipment to package your cow’s milk. The farm’s brand name goes on the packaging. It works because you already have a ‘sure thing’ in the good reputation of the franchise’s brand. You don’t have so much freedom as you would with your own business, but you have a bit more security behind you. McDonalds do this in the meatspace; Digital Altitude do it online.

The Loss Leader Model. You sell your cow’s milk for 50 cents, making a slight loss on each carton – but the low price attracts customers to your dairy, where you also sell fancy yoghurts and cheeses. Supermarkets undercut each other all the time with the loss leader model. Just think of Google – they give away a ton of services for free, but turn the multitude of clicks into dollars by selling advertising space.

The On-demand Model. You have one cow. You build an app so that customers can order milk whenever they need it, and charge for quick delivery. It works very well if you offer some form of convenience that customers can turn to when they’re in a tricky position – whether you’re downloading a film to answer that craving, or ordering an Uber to get you to the airport on time.

The Ziferblat Model. People don’t pay for your milk. They pay for the time they spend sitting in your café, drinking your milk. Ziferblat is a Russian ‘pay as you go’ café service that is opening eyes across the business (and coffee-drinking) world.

The Crowdsourcing Model. You don’t yet have a cow. But you suggest to people that they contribute to your campaign to buy a cow – and in return, you offer them their first 10 homemade cartons of organic milk for free. Independent business people are starting this way on Kickstarter and Indiegogo every day.

So which model best fits your big business idea? For an at-a-glance reminder of what that prize cow has to say about each model, check out this new infographic from The Business Backer. It’s inspiring stuff!

G. John Cole is a digital nomad and freelance writer. Specialising in leadership, digital media and personal growth, his passions include world cinema and biscuits. A native Englishman, he is always on the move, but can most commonly be spotted in Norway, the UK and the Balkans.

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5 Steps To Securing a Consulting Internship

Few internship schemes are as competitive as those offered by top management consulting firms – for many good reasons. Instead of making coffee, you will work on challenging projects as part of a team. Your salary will be more than decent. And even if you find out that consulting is not for you, the knowledge and skills you’ve acquired will be highly appreciated by any employer around the world. To get an internship though, it is important to know what to expect from the application process and crucial to prepare before it’s too late.

Here are 5 steps that will help you secure your dream internship:

1. Get to know the firms you’re applying to

At first glance, a lot of consulting firms seem similar and they all promise to solve their clients’ business problems in the most innovative manner. Once you do your research though, you should be able to figure out what sets them apart from one another. Who are their clients? Do they serve specific industries or do they have functional expertise in certain areas? Do they work on the client site or from the home office?

More importantly, however, you should get to know people at each firm. Most consultancies hold company presentations, networking events, or workshops for students at target universities, which enable you to get to know them better. If they don’t, you can try to contact alumni from your school or university who now work in consulting and arrange a phone call with them. Nothing tells you more about a firm than meeting the people who work there – the notion of a ‘company culture’ may sound like a cliché at first, but it genuinely provides insight. If you don’t like the people at the firm, will you really be able to spend long days working with them?

2. Spend some time perfecting your CV and cover letter

Consultants and recruiters often spend no more than a few seconds looking at your application when shortlisting interview candidates. To stand out among other applicants, you should not just meet most of the screening criteria – such as a good academic track record, relevant work experience, extracurricular activities and interesting hobbies – but should also show that you know the firm you’re applying to. Research what each firm is looking for in a candidate and adjust your CV and cover letter to match that profile. Think about why the firm you’re applying to attracts you and resort to the conversations you’ve had with its employees if appropriate.

3. Practice aptitude tests before taking them

In many countries you will have to take aptitude tests after you’ve sent in your application, either online or as part of an assessment centre. If you are naturally good at these numerical, verbal, and logical reasoning tests, don’t worry too much about it. If you’re not as confident though, then it should definitely not stop you from getting your internship! There are plenty of free practice tests around, so make good use of the resources available to you and be sure to analyse the correct answers. Soon you will discover certain patterns and learn what to look out for.

4. Get comfortable with case studies and develop your own style

Case studies are business problems you have to solve with the help of your interviewer and they are arguably the most difficult part of the application process. They involve coming up with a structure, calculating relevant business figures, and developing recommendations for a hypothetical client. Given there are hundreds of websites out there explaining how case studies work and how to approach them, I will not go into any details here. I will, however, stress the importance of practising them with others: Reading a case at home and doing it under time pressure with another person staring at you while you calculate large numbers in your head are two completely different things. Try to find other aspiring consultants in your area and set up meetings with them. If you can’t find anyone, use websites such as PrepLounge to find case study partners and start practicing at least a few weeks before your first interview. While you should definitely not overdo it – ultimately, your interviewers want to see how you think and not how well you can memorise solutions that may not even fit the case given – practicing case studies will help you develop your own way of structuring the problem and working towards the solution. Using your own methods instead of blindly following common frameworks will definitely help you stand out among other applicants.

5. Think about your past achievements and prepare for tough competency questions

Case studies only make up about half of each interview. The other half will be spent talking about your CV, your skills, and your attitudes towards topics such as teamwork and leadership. Of course, this part of the interview can vary significantly depending on your interviewers as well as your individual story, but it is worth thinking about some potential questions beforehand. Make a list of skills your potential employer may be looking for and write down one or two examples from your past where you have showcased each skill. Also think about problems you’ve had to face during past ventures, why they occurred, and how such situations could be solved. It is likely that your interviewer will drill far beyond the surface, so be prepared to discuss each statement you make in great depth.

If you’ve followed all of these steps, there’s only one more thing you can do to get your dream internship – show up on time, be confident, and rock your interviews. Good luck!

Max Kulaga is a finalist reading Economics and Management at the University of Oxford. As a former intern at L.E.K. Consulting in London and President of one of Oxford’s largest business societies, the German-born is keen on sharing his experiences and knowledge about the consulting industry.

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Using Facebook Ads to make your brand part of everyday life

If you’ve been turning your nose up at the idea of advertising on Facebook, you’re missing out on a fantastic opportunity. It may not exactly be ‘old school’ – even by internet standards – but Facebook Ads have a way of integrating themselves into your customer’s daily lives in an unobtrusive way that puts them just a click away from buying or signing up to your service.

Facebook is now used by 1.59 billion people across the world: if you can’t find your audience here, they likely don’t exist. What’s more Facebook Ads are easier to create than pretty much any other form of advertising. This doesn’t mean you don’t need to put a great deal of thought into the preparation process – the usual questions about the who, the how and the why of your campaign – but it does mean that if you run a small business, it’s something you can handle by yourself.

Ready to take the plunge? Log in to your Facebook account, click on the little arrow in the top right hand corner of the screen, select Create Ads, and you’re ready to go.

Facebook will now confront you with a range of marketing objectives to choose from, such as ‘Brand awareness’ or ‘Product catalogue sales’. You’ve already decided why you’re running this campaign, so this is where you let Facebook help you choose the best template to adapt to your needs.

Let them know where you are, the currency you work in, and your time zone, and everything you need will be tailored to your situation. All of which sets you up for the interesting part: defining your target audience.

The more specific you can be, the better. Facebook lets you narrow things down by age, gender, and location, but of course the real power comes with the ‘demographics, interests, or behaviours’ – because, of course, Facebook knows all of this about everyone! Think of other brands, products and services that are like yours, and pastimes for which your product might be needed. For example, if you’re selling custom-made bicycles, you could target people who ‘Like’ Ruff Cycles and cycling as an interest, and probably narrow the area down to just your town, county or country – depending how far you are willing to send your product.

Next, you make your budget decisions. Facebook ads can start at a dollar a day, and it’s worth starting with a few dollars at a time for your first couple of campaigns while you figure out how to get the best results from your settings. You can choose a target daily spend, or an overall budget that will be spent customer by customer until it runs out.

Designing the ad itself is quite straightforward. You need an image or a video to base it around, so it is ideal if you have some professionally captured footage of your product or service. However, if you just want to get things done quickly and simply, you can instead use one of Facebook’s stock images. Add a headline to grab users’ attention and a line of text describing what you’re offering. Facebook will help you with the final touch: a ‘call to action’ button that clicks through to your website, shop, or mailing list.

That’s it – you’re ready to launch! Facebook Ad Reports are a simple way of tracking the success of your first advertisement, so you know what to tinker with the second time around. You should see results in no time. In the meantime, here’s a simple 5-step guide to getting your first ad up and running – it is a lot easier, and a lot more effective, than you think.

G. John Cole is a digital nomad and freelance writer. Specialising in leadership, digital media and personal growth, his passions include world cinema and biscuits. A native Englishman, he is always on the move, but can most commonly be spotted in Norway, the UK and the Balkans.

Image: Pexels

Investing In Cryptocurrency

Cryptocurrencies are digital assets or “tokens” – akin to the idea of money – specifically designed to take advantage of the architecture of the Internet. Unlike traditional currency they have value not because of the guarantee of a financial institution or government. Instead, they have value for three reasons: their ability to be accurately “confirmed” by the computers on a particular network, the value that is placed (or misplaced) on them by the market, and as a consistent way to measure the price of goods within a blockchain network.

Cryptocurrency versus traditional currency

In some ways, cryptocurrency works very similarly to a traditional currency or a precious metal like gold. The worth of the US dollar, for example, as a means of exchange, is valued not only in term of what a dollar can buy in real terms, but also by its relative worth against other currencies.

A key difference, however, between traditional currency and cryptocurrency, despite Bitcoin’s recognition as an “asset” by the IRS and as an accepted currency by the EU, is that the supply of cryptocurrency is not controlled by a central bank, but rather reflects the actions and perceptions of many independent individuals across a large number of jurisdictions. This has the potential to upend basic models of political economy of the last century (if not the last several hundred years of Western history).

Bitcoins, for example, are mined at a predetermined rate each time a user of the network discovers a new block (currently 12.5 bitcoins are created approximately every ten minutes) and the number of bitcoins generated per block decreases over time. Ultimately, the total number of bitcoins in existence is never supposed to exceed 21 million.

The real impact of Bitcoin beyond the hype is that it has the potential to diminish the need for central banks. It also has the potential to reduce the role of financial intermediaries like retail banks. Cryptocurrency was designed as a form of electronic cash to allow individuals to transact without going through a financial institution. This is likely to have a profound impact on the global financial system, financial markets, and the banking industry.

When it comes to buying other kinds of cryptocurrency, such as Ether, which was not created as a traditional “currency” but rather to pay for computations along the Ethereum network, the investment analysis becomes more complicated. In a very real sense, the “value” of Ether is more like the cost of a barrel of oil, a watt of electricity or any other mineral that must be “mined” or processed in some way, and then used to make a piece of machinery function – in this case a computer.

Cryptocurrencies are not immune from market forces or monetary policy, starting with the fact that you still need traditional currency to buy them. Ultimately, the buying power and inherent value of a cryptocurrency will be affected by the real economy including by things like inflation, exchange rates, global electricity prices, and the speed of the computing networks through which the cryptocurrency is created, traded and transferred. In the case of Bitcoin, for example, a market price is created against traditional currencies like the US dollar and renminbi because the main buyers of Bitcoin do so in dollars and yuan. To the extent that the value of these traditional currencies continue to fall with inflation, the price of Bitcoin will continue to rise over time.

Investment risks

The value of cryptocurrencies are not controlled the same way that fiat currencies are, for example by a decision of a central bank to increase the money supply. However, the cost of the resources that are used to create, price and transfer cryptocurrency may still be controlled on a national basis.

Potential investors should carefully consider the risks of cryptocurrency investing, some of which are listed below:

  1. Lack of Adoption: There are many cryptocurrencies in existence. The more people that use a particular cryptocurrency, the more likely it is that other people will be willing to use it also. In short, this means that cryptocurrencies benefit from “network effects”. Investors need to be aware that if a cryptocurrency fails to gain critical mass, or if it is superseded by a technically superior or more popular cryptocurrency, then its value may decline rapidly.
  2. Market Volatility: Potential investors in bitcoin would be wise to tread cautiously given the high levels of volatility in bitcoin’s market price over the last few years. This means that even if you are correct about the long term direction of bitcoin’s market price, you could still lose money in the short run. As John Maynard Keynes noted “the market can remain irrational longer than you can remain solvent.” Potential investors should keep in mind that purchasing bitcoin with the hope of achieving short term capital gains is a form of high risk speculation, similar to gambling. Professional traders manage this kind of market risk by following the “2% rule”; a trading practice which suggests that an investor should never commit more than 2% of her total capital to any one trade. Further, manipulations of the price and supply of bitcoin have occurred regularly.
  3. Security Risk: Cryptocurrency is digital, and so there are risks posed by hackers, malware, or system failures. For example, anyone who has the private key to a bitcoin account can transfer bitcoins in that account to any other account. This poses a significant risk since all bitcoin transactions are permanent and irreversible. Many experts recommend storing bitcoin in a digital wallet that is not connected to the Internet.
  4. Increased Regulation: Cryptocurrency could be a competitor to traditional currency, and may be used for black market transactions, capital flight or tax evasion. There is also no reason why a government could not move to control the supply of a cryptocurrency in the future either by passing legislating, buying up enough of it to change the rules, or by incentivising programmers to change them.
  5. Lack of Liquidity: Liquidity refers to how easy it is to quickly convert an asset into cash without a significant drop in the market price. The more difficult it is to buy and sell a cryptocurrency, the greater the risk for an investor if they need to sell in a hurry. Bitcoin can be traded on various bitcoin exchanges, which makes it easier to buy and sell, however it has still not achieved mainstream adoption.

So, where should you invest?

The question of what cryptocurrency to invest in is a loaded one. It depends what one’s goals are. If the aim in buying cryptocurrency is to use it to buy specific goods and services, or to transfer money from one place to another, then the purpose is very different from someone who is merely trying to make money by speculating in the short term volatility of a cryptocurrency’s market price.

As the above discussion indicates, there are many issues to consider. For that reason, investing in a cryptocurrency is a far more complicated decision than investing in other kinds of assets – and the risks of the same are also not yet fully and widely understood. Tread cautiously.

Marguerite Arnold is an entrepreneur, author and third semester EMBA candidate at the Frankfurt School of Finance and Management.

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Commercial Awareness – what is it and how do I get it?

“Commercial awareness” is a buzzword that employers like to toss around a lot nowadays, but what is it and how do you get it?

Thankfully, gaining “commercial awareness” is a lot less scary than you think – all it really means is to have an awareness of what’s going on in the world and in particular, the business world. So, if you know who the US president is and what he’s done recently, you may have more “commercial awareness” than you think (because let’s be honest, who hasn’t heard about Trump’s policies?)!

For those of you who are still puzzled or (slightly worryingly) don’t know who the US president is, here are six easy ways to get “commercially aware” fast!

1. Finimize

When I first discovered Finimize, it was like a godsend – finally, financial and business news in a language I could understand!

For those of you not in the know, Finimize is a free daily email service that summarizes and explains the top financial headlines in a form that is quick and easy to digest – it even states how long it will take to read it (which is never longer than about 3.5 mins).

The email usually contains the two top business headlines of the day, either from around the globe or from your country depending on your preference, and it will recommend things to read if you want to expand your knowledge further. There’s also an inspirational quote thrown in there to get you motivated for the day (the email is usually sent around midnight so it will motivate you for a full 24 hours).

To sign up, all you need is your email and then voila – you’re already halfway there to being commercially aware!

2. The News

This should be a given but watching or reading the news is the easiest way to get an awareness of what’s happening in the world. It doesn’t matter what form you get it in, video, website, print, as long as you get the information. It doesn’t need to be The Financial Times or The Economist either – the Business section on BBC News or any other equivalent news site is equally as sufficient.

If you want to know more about a particular issue or want to see if your potential employer has been involved in anything of note recently, just type the keywords or the name of the company into Google and press the “News” tab – the most recent news will come up first.

If you want to stay ahead of the game and be informed of the news as it happens, you can set up a Google Alert on your mobile devices and your PC so that you’ll always be the first to know of any developments.

3. Social Media

If you didn’t know already, social media can be used for more than sending your friends funny pictures or mildly stalking your crush nowadays.

Major news outlets have their own “stories” on Snapchat for you to flick through, Facebook have trending issues on their sidebar and trending hashtags on Twitter usually means something big has gone down.

Furthermore, you can follow news accounts on Facebook and Twitter and be notified whenever developments occur – simply adjust your settings so that news stories appear first on your Newsfeed or get notifications when there has been breaking news. It has never been easier to be commercially aware, so take advantage of it!

4. Books

If you feel the need to hit the books, there are some very informative and easy to understand books out there that are designed specifically to make the commercially unaware exactly the opposite.

Know the City” by Chris Stoakes has been recommended to me several times by professionals and peers alike, and for good reason – it gives a high level overview of key financial concepts and products in a readable form.

Another book that’s been recommended to me is “The Money Machine” by Phillip Coggan; though I haven’t read it personally, the reviews on Amazon similarly say it was easy to read and it explains the essentials.

If you find these books too tough to crack, maybe it’s time to go back to basics – there’s no shame in revising those A Level Economics textbooks if it means you can actually understand what’s going on when it gets more complicated.

5. YouTube Videos

YouTube has a fantastic selection of videos that explain the basics of the business world, mostly created by people who were in your situation not too long ago.

There are videos that use cartoons to explain how a transaction works, video courses in finance featuring “Fault in Our Stars” author John Green (his series of Crash Courses is both amusing and informative) and there are vloggers dedicated to easing you into the scary world of commerce.

Some films are also good at explaining the complicated stuff– The Big Short explains the Financial Crisis of 2008 really well and in a quirky, breaking the fourth wall kind of way that keeps it interesting (and who doesn’t want to see Margot Robbie in a bathtub explaining mortgage backed securities?)

6. University

By university, I don’t mean you have to do another degree to be commercially aware but rather that you utilise the resources your university has.

For instance, you can join a finance or business related society – not only will it look great on your CV and demonstrate your passion for commerce, but the society will probably host talks and workshops that can help develop your commercial knowledge. Most speakers don’t assume all students have an understanding of business and financial concepts, so they will go over the basics before moving on to the more difficult topics.

Subscriptions to publications like The Economist will also be cheaper for students; if you think you will actually read them, ask around for your university rep and they will be able to offer you a much better deal than if you subscribed normally.

And that’s it!

Six (6) easy steps to become commercially aware even if you know absolutely nothing, and frankly, even by doing just one you’re already in a much better position than most!

Turns out “commercial awareness” is simply another thing employers have made to sound intimidating that in reality means very little. Plus, it’s unlikely they’ll ask you more than one or two questions about it at an interview anyway. So don’t stress – knowing a little will go a long way.

Vivien Zhu is a student studying History at the University of Oxford and is considering a career in Management Consultancy. She currently resides in Hertfordshire, England and is a regular contributor to student publications such as Spoon University and the Cherwell.

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How to stay productive when facing a deadline

Most of us work pretty hard to ensure an even schedule throughout the working week: five or more days of calm, measured – if industrious – productivity. Yet most people will also recognize the simple truth that, from time to time, work tends to get bunched up together. Whether it’s a fast-approaching deadline, a backlog of tasks, or an upturn in the market, everyone has to face up to striving onwards in the face of fatigue every once in a while.

It’s a common characteristic of the way we work, so it makes sense to be prepared for these tiring periods in advance. That way, when it’s two hours past your normal leaving time and there’s still no sign of getting home for the evening, you’ll be able to power through without producing substandard work. And the best way you can maintain your energy over days like this is to make sure you’re looking out for yourself from minute one.

This is achieved by creating a prioritized schedule. List down each task and sub-task that you need to complete, and figure out an order than enables you to get the most urgent and most difficult stuff done first – before your brain starts to slow down! Beginning with smaller tasks (if they happen to be important ones) can also be useful if you are a natural procrastinator: that way, the first leap is much easier to take.

Your schedule should allow for regular breaks. It can be a tough discipline, on a busy day, to force yourself to rest. That’s why it is very helpful to use an app such as Break Timer to remind you when each hour comes around. Taking even a 30 second break can improve your productivity by 13% – so it is worth doing, even if your logical mind reckons that working straight through will get more done.

These breaks should not be seen as an opportunity to catch up with your online life. Emails are a legitimate part of work, but they can take over the rest of your day if you allow them. Instead, mark a specific part of your schedule for dealing with messages, switch your notifications off, and keep your phone hidden from view as even the sight of this temptation can be distracting.

Instead, consider using your break to do some stretches. Stretching can boost the flow of oxygen to your brain, and keep your limbs supple – ideal when you’re working a long, mind- and derriere-numbing day at the office. If you’re short of room, there are plenty of exercises you can do without leaving your desk. A good one is to lean forward and pull each of your legs up and back towards your chest for around 30 seconds at a time.

If coffee is your fuel, you might be interested to hear about Dave Asprey’s so-called ‘bulletproof coffee’. The self-styled biohacker reckons that adding two tablespoons of unsalted butter to your cup of Joe can help to achieve mental clarity when you’re up against it. At the very least, it provides a curious alternative on a long day at work when the kettle is your only friend!

If that sounds a bit hardcore, you can at least use your coffee break as an excuse for a change of scene. Instead of returning to your trusty kettle, try moving your operation to a nearby coffee shop for an hour or so. A fresh environment can improve your creativity and concentration: it could be just what you need when your willpower is diminishing.

Drink nothing but coffee all day, however, and you’ll soon find yourself dehydrated and underperforming. If coffee is a useful tool, plain old water is a vital ingredient for success. Allow yourself to dehydrate, and you’ll feel a lot more tired a lot more quickly. Keep track of how much water you’re drinking all day long, and that way you can pre-empt disaster by topping yourself up before you start to get low.

There are plenty of less intuitive tricks you can try to help keep your energy up when you’ve been at it all day. Working while standing up can put you in a better mood and boost your brain power, according to experts. Listening to new music can keep your environment feeling fresh and your brain active – just don’t play it too loud! And working near a window can help you absorb daylight and fresh air, which should keep you feeling more awake than being sequestered away in a dusky corner.

Finally, don’t neglect the power of peppermint. A splash of this essential oil on your wrists, or kept open on your desk, can be great for your levels of awareness. And it’s probably a heck of a lot healthier than coffee and butter!

So keep these tips in mind ahead of your next deadline push or all-nighter. If you work together with your mind and your body, it is amazing what you can achieve. These tips have been gathered into a handy new infographic so you can refer back to them whenever you need that extra boost – because sometimes, our schedule is boss and we have to find a way to get things done.

G. John Cole is a digital nomad and freelance writer. Specialising in leadership, digital media and personal growth, his passions include world cinema and biscuits. A native Englishman, he is always on the move, but can most commonly be spotted in Norway, the UK and the Balkans.

Image: Pexels