Asset-light Business model is the key to success for start-up

6 min readJan 5, 2021

Grow Your Business by Using Asset Light Model

We give you ideas about business and ways to grow that business. And today we will give you some unique and other types of business ideas or tricks that almost all the big companies do. Today our topic is how to grow your business with less capital or limited capital. Almost all of you think that it takes a lot of money to do business, but it is not right. Today we want to give this message to the corners of the world that the bigger the global tech giant is growing or growing, they are not growing by investing a lot of money. Our model today is Asset light Model. Today we will explain this asset light model to you through some examples. So read this post in its entirety so that you too can grow your business with less capital.

Fly Light Model

WhatsApp: WhatsApp is the largest messaging service in the world, but WhatsApp’s own server Zero makes its own server in your mobile operating system. It does not require more employees of WhatsApp, only 150–200 employees of WhatsApp work all over the world, it is called Fly Light Model. More capital expenditure is not a little opex then all profits.

Uber: Uber is the largest taxi service in the world, Uber has so much money that it is the largest taxi service in the world. But Uber doesn’t have its own taxi or driver, it’s called Fly Light Model.

Asset light model does not cost capital, it costs capital, which means capital expenditure Vs operational expenditure.

Alibaba: Alibaba is the most valuable retailer in the world, but it does not have any inventory of its own. Simply by looking at the other product from here, see the same is called Fly Light Model.

Apple: Apple is the world’s most premium mobile manufacturing company, but Apple does not make a mobile phone, Foxconn company makes mobile phones for Apple, it is called Fly Light Model.

Asset light model is a great thing. In the asset light model, the organization does not need to do all the things, the organization just focuses on its expertise and it automatically increases the return on investment of both the promoter and the investor, because not much money is blocked in the capex. The Asset light model has three major benefits -

1. High return and asset match: Every company calculates the assets of its own business, this price to earning ratio is the big work ratio. This means that his return or asset is always higher.

2. High return and asset match: Every company calculates the assets of its own business, this price to earning ratio is the big work ratio. This means that his return or asset is always higher.

3. Controlled Profit Fluctuations: This means that the volatility of the profit is repeatedly up and down. Because you all know that now the world has advanced a lot and is growing very fast and everything is not the same as before. First the pigeon would take the letter then the peon would take the letter instead of the pigeon and the peon was so slow that then the telegram went then the courier came then the courier emailed, then the social media went and social media went a little bit then WhatsApp went This is because the world is growing rapidly so there is a lot of fluctuation in profits. And if you do not have much investment on the asset, then there is no problem to recover the trouble, because the annual cost you do not have to spend more because the asset is not high, so there is no problem to recover that cost, there is no fluctuation in profit, asset light model For both small and large traders.

4. Reduces scalability driven cost: Every business needs money to scale up, but its model tie is that you have accumulated from the beginning that your business will not only increase your cost as much as you want to increase profit.

Example: Suppose you want a new factory for five crore rupees and another factory for another 10 crore rupees, this is an asset heavy model. But the light model of S is such that the cost to scale up does not increase, only the profit increases. Here are some more examples to help you understand the cost -

Franchising

Now franchising is a very fast and easy method for franchisors and franchisees, it is an asset light model for both. Tomorrow the load of the two of them will be shared and the business of the two of them will grow.

Franchisor: You do not have to make capital investment for every new set up of Franchisor.

But the work of the Master Franchisor is that of the Franchisee

Gives training to manpower
Gives corporate strategy

Supports its sales, marketing, branding activities. Instead, the franchisor first receives a licensing fee, monthly royalty and profit percentage

Franchisee:

Sales marketing
Proprietary tools
Training / learning
Development

He doesn’t have to invest money or time on a lot of things like this, he gets a franchisee so he can start his business early.

For this, both of them have their own different asset light models.

Outsourcing

Outsourcing is a model where you reduce your costs and build operational efficiency.

Example: Foxconn made by Apple phone, Foxconn made hmd mobile and Foxconn company made Xiaomi mobile.

Here Foxconn has mastered the art of making mobiles and these companies have mastered the brands of mobile phones.

Here Apple only focuses more on Designing / R&D / Marketing / Sales and it is Foxconn’s job to make that mobile, it is called asset light model.

Asset Sharing Model

This means that many times two or more companies together if the cost of the asset is much higher then they share the cost of the asset, this leads to optimization of the capital cost of the investment. They make it a partner asset sharing agreement in which their risk is diversified and their capital is divided first.

Licensing in and Licensing out

Many pharma companies give out licenses to save their R&D cost and to save their brand development cost. This means that the big R&D company will sell the goods from itself so will get the license in for it. And to say that you can make our product with you is called license out. As it is happening in two dates, it is becoming cost-sharing. Those who are licensing are focusing more on Manufacturing and Sales Marketing, and those who are licensing out are focusing more on R&D and brand development.

If you want to grow your small business with less capital then you should follow the steps given in this post.

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