Since I started writing about part time business that one can venture into, I have received a lot of comments from readers wanting to start businesses but do not know where to start. Some lack the knowledge of what sort of business will fit in their area, some do not have the capital and majority if not many are simply procrastinating. One of the ways to decide which business to venture in, is whether you are going to be a principal or an agent.
To explain this, let me take to of my two businesses that I recently ventured into; the driving school and the airtime , electricity and TV subscription business.
Empower Driving school:
In this I am a principal. I invested in the capital to buy the car, spent all the necessary start up costs such as obtaining the necessary fitness certificate from the municipality, the branding of the car, the initial marketing as well as the running costs to obtain all of that.
As a principal, I have the decision making power to decide on the trading hour, the rate per hours, how much I will paying out in other costs and what I get to keep in the business. Consequently, I bear all the risk associated with the business.
The Airtime , electricity and TV subscriptions services
Here, I am merely an agent. I am just selling the airtime on behalf of MTC, electricity on behalf of the various providers such as city of Windhoek, Erongo Red , Oshakati Premier etc as well as facilitating DSTV and GOTV on behalf of multi-choice.
As an agent, I have no say in the selling price. I charge exactly what a customer will pay at MTC for airtime, electricity at the various distributors as well as for TV services. My incentive to sell is to get a commission. The more I sell the more commission I make.
Just like being a principal, you may be required to buy the start up capital (i.e in my case I had to buy the machine) but you would find that other businesses are willing to give you free machinery required to start. However, the working capital, or the stock you start with, you often have to buy.
The benefit of being an agent is that you do not have to worry about pricing as customers are already aware of the pricing. In addition, you have the advantage of brand awareness hence you do not need to invest in marketing as a principal would, as you are often dealing with an established business brand.
Based on the two options, its often easier to be an agent than being a principal. However, being an agent, your business is driven by volume as you have no control over the profit that you make.
Our guest tomorrow is one that has been doing business a principal for as far as I can remember. Meet my brother Willard, someone who has welded our family out of poverty on the second Episode of The Wave.