Extra Income Through Chocolate Making Part II - Business Models

By Bob Sherman

Welcome to part two of this series. In this segment I will discuss various business models. Although this may be an oversimplification, basically we use this information to establish what you want to sell and begin setting some goals for your business. Since this series is aimed at those who are looking for part time or side income, the discussion here will be primarily about business models suited to that. Some of these ideas may be adapted to full time businesses as well for those who have more ambitious goals.

What Makes You Special?
Spend some time thinking about what makes your chocolates special. After all, there are many chocolate makers in this world, so why should someone purchase yours? I have listed some possible answers below, but try to come up with others on your own.

A short, but powerful list - hopefully you can add some things that are unique to your chocolates.

Business Models

Now that you have given some thought to why people may want to purchase your chocolates, it is time to look at some business models that might be suitable for you. These are just rough guidelines and of course any business model may be tweaked to suit your needs - and they may even be combined.

Custom Work
One of the most powerful tools a small chocolate business has at its disposal is the ability to handle custom orders. Although an entire business may be based around this, I feel that any chocolate maker looking to sell chocolates should at the very least include some degree of custom work in their business model. Custom work may take many forms - ranging from simply molding chocolate for a desired theme, to actually making personalized gifts or favors.

Benefits - Relatively little competition, making to order (no tied up inventory), personalized service, payment up front, special orders may command a slightly higher price.

Drawbacks - You will often need to order molds specifically for each order. Although I list this as a drawback, it has the benefit of expanding your mold collection.

Fixed Product Line
This is the business model most of us are familiar with as it is the most common in the business world. Generally this is best suited to a typical retail situation such as a storefront, craft fair, fund raiser, or internet sales. In other words POS (point of sale) - being able to hand the product to the customer at the time of sale. You make products, which are stocked and sold from inventory. The decisions on what to make and offer to customers are your own.

Benefits - Products are pre made all at one time, reducing labor and cleanup time. Prices are established, and repeat sales are simple. You already have the molds whenever you need to make more.

Drawbacks - Tying up materials on inventory. This model is most useful if you plan to actively sell your products in some live venue (POS), although a variant without extensive inventory may be adapted to brochure / catalog type sales.

Niche Marketing
Possibly the most most common term used when discussing small businesses, niche marketing is basically targeting a small portion of a larger market. Ideally this would be a portion that has some demand that is not being met by your competition. A good example of this would be a business that specializes in chocolate wedding favors.

Benefits - When you target a limited audience, it enables you to develop expertise in both products and in marketing to that group. A successful niche marketer many have just a few products, but make and market them better than anyone else.

Drawbacks - Niche marketing involves marketing - which takes time and effort. If you are simply looking for some extra income, this is probably not your best route. If on the other hand, you are looking to start up a small business - niche marketing may be your best choice.

Pulling It Together

The three basic business models discussed above are not mutually exclusive and you should feel free to use any combination of them that suits your situation as shown in the following examples:

Example 1 - Chocolate maker #1 would like to bring in a few extra dollars and makes a few chocolate lollys here and there to bring to work and sell to co workers. She will also gladly take special orders when asked. This is a combination of the fixed and custom models discussed above.

Example 2 - Chocolate maker #2 relies mostly on word of mouth to sell chocolates and pre makes nothing. He has put together a small brochure or web site to show potential customers, and does not accept custom orders. This limits the amount of time and money he needs to tie up, but also limits potential customers. This is a rigid fixed product line business model.

Example 3 - Chocolate maker #3 is more ambitious and uses a combination of all 3 business models when possible. She has developed a line of wedding and shower favors, as well as a large selection of "stock" chocolates in addition to targeting holiday sales. Custom orders are welcomed and delivered in a timely manner. Marketing through friends and co workers as well as through a brochure and web site, she never misses an opportunity to promote her chocolate business.

Summary
As you can see, there are three basic business models suited to part time chocolate makers. By combining parts of these you can make your business what you want it to be.


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Disclaimer: The information presented here is accurate to the best of my knowledge and usage practices as of the time of this writing - originally published in April 2009 and updated in November 2010. The author and the publisher accept no liability for the use or misuse of any of the information presented in this article. This article is presented for informational purposes and is used at your own risk.

Author: Bob Sherman

Publisher: Bobby's Craft Boutique Inc.

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