Copyright 2009 Dennis S. Vogel All rights reserved.
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According to Reuters- "Netflix passes 10 million subscriber mark" (UPDATE 1)
www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN1245694220090212
Netflix, known for renting DVDs by mail, is the only company offering a subscription-based streaming video service as other rivals such as Amazon, Apple & Blockbuster compete with a la carte, pay-per-view rentals.
Compared to Blockbuster, Netflix has a better chance of success & profit from a subscription-based streaming video service because it's not based in stores. It's already in the movie rental subscription delivery service. For Blockbuster, subscriptions are a different business model from its original model.
A Publicly Traded Firm Issue
If Blockbuster tries to force any subscription service via mail or streaming into its bricks-&-mortar model, it'd be harder to quantify its profitability. Investors like to know what they're investing in. They want to know how to judge returns on investments, returns on assets, etc. There have been too many cases of big businesses hiding problems & corruption. Investors want issues to be kept simple & straightforward.
Complications make problems more likely & covering up corruption easier.
Why It Matters To Small Business Owners
When somebody is hectically trying to keep up with the demands of customers & tax collectors, it can be hard to examine every debit & credit. It's too easy to quickly use money earned from 1 business model to support another without thinking much about it. It can get to be a habit.
Soon you may not know if your lack of profitability is just from 1 business model. With or without an accountant, you could sort it out, but it'd cost you time, energy & money. There'd also be the opportunity cost of how you could use that time, energy & money, if you didn't have those issues to investigate.
It's easy to think this wouldn't be a problem for you, if you have more than 1 business model in the same business. But some day, you or your heirs may end up selling your business.
Would your heirs be able to quickly explain how profitable your business is or why it's not as profitable as a similar business? Would there even be a similar business for a potential buyer to use as a comparison? If not, potential buyers may opt to buy an easier to quantify business, then what would you &/or your heirs do if you'd desperately need the money?
If your heirs are required to pay estate taxes, but they don't have enough cash & can't sell your business, they'd be in a difficult situation.
If you're disabled or want/need to retire, you may not be able to sell your hard to quantify business.
Do You Want Another Reason?
Here's another reason anyway: If you have more than 1 business model in the same business, you still have 2 businesses. What are your priorities?
Example: If you have a bricks-&-mortar rental business, but you also have subscribers who get rented tapes & DVDs from you via mail, which customers are more important?
Some day you may not feel well. Your mental & physical energy would be low. Would you keep your door locked & only serve subscribers?
What if a subscriber wants to rent your last copy of movie, but before you send the movie out, a customer comes into your store & wants to rent that copy? Would you decide who gets the movie depending on whose patronage is more profitable? Would serve the customer who's easier to serve? (There are many other related questions to consider.)
If your hypothetical video rental businesses were separate - with separate inventories - & possibly separate locations, the issues may be clearer. (It's especially true for legal issues, like I wrote below.)
If you'd market both services to the same people, they may be confused. If you promote your subscription service sometimes & your bricks-&-mortar business other times, people are apt to wonder which kind of business you have. They wouldn't know if they should appear in person or do business with you via mail, they might not realize they can choose either method. They'd be apt to choose a less confusing alternative - a competitor.
If you promote them together, it might not be any clearer. Just because you figured it out, don't assume anybody else understands. Since people are distracted & don't always focus solely on a marketing message, sometimes they only perceive part of your message.
Legally & for liability, if somebody gets hurt in your bricks-&-mortar store & your insurance coverage isn't enough, you could lose each part of your business. (You may be forced to sell it or your assets to pay what you're liable for.)
If you haven't kept them separate & don't have a clear delineation, the plaintiff would sue both business models & you could lose both.
If what I've written in any of my posts doesn't seem clear, please ask me for a clarification. Please be specific about the post's title & what isn't clear.
Thank you for using my blog.
Copyright 2009 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/
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