Online Business Vs Labour Exchange Business

Most New Zealanders who are either employed or working in their own businesses are working in what could loosely be called a labour exchange model. The business involves purchasing supplies or inventory, then using their valuable time and intellectual skills to add as much value as possible, then marketing the goods or services to customers, then delivering the goods or services and then collecting payment for these goods or services. In general, their profits are proportional to the amount of time and intellectual horsepower put into their business or their employment.

Online service businesses, provided they are well thought out, have the potential to offer a completely different model.  A large intellectual effort front can help to create a service that can be delivered automatically to customers, and billing and payments can be automated as well. More importantly, the service can be setup to be ongoing, so that once it is set up it continues as a revenue generating machine. This allows the business owners to spend their time and intellectual capital optimising the revenue generation for their customers and expanding their service into new niches and markets.

With the smart application of low-cost web tools and a  dedicated approach to rapid prototyping and optimising, such businesses can scale extremely rapidly. If the business owners have the skills to do their own web development and still deliver a high-quality experience to end users, then the cost of their inputs is purely the cost of their time plus the small costs associated with the web tools and their basic utility services (rent, power, Internet etc).

This means that revenue will continue without change if they stop working,  but will increase if they dedicate their time to growing the revenue per user and expanding their markets and niches within markets.  This is effectively exponential growth.