The Well-Being Business Model
The story so far:
Reporter Max Wahlter has been visiting the sustainable city of Porena (see earlier journeys). He visualized a "Centre of Well-Being", and finalizes the trip with some deep questions about how to make it work financially. This is especially interesting as it is a combination of local enterprises and the local municipality, where the local municipality is helping well-being business set up.
Making money on well-being is something many would like to do. Health is the foundation of wealth, and of sustainable development. Last time I was interrupted by the telephone. It has never happened before, and makes me realise how lucky I have been in that respect. This will take up where I left off. I think as well that I already know the answers, and will not be open for surprises, which makes the method less reliable.
The question: what is the business model around the set-up of a Centre of well-being? We have been asked to go back and penetrate. I hope this will help readers with their own sustainable enterprises.
I go up to the next floor to find the office spaces for rent – company hotel - and ask about renting a desk. And about how their business model works.
It seems they rent out offices, desks and support services. They themselves rent the space from the building owners, the centre developers. They also work together with the local new company support organisation, so newly-started companies can get started quickly with a desk and office facilities.
One of the purposes of having the office space is to encourage people to come and work here temporarily, to attract good outside help, or to establish here.
'If we do not rent the spaces out we do not earn anything. The local authority rent a couple of spaces for their own project staff or for their partners.' My interview object explains.
I ask about the company hotel's opinion of the building owners, the centre development firm.
'They are good, go and talk to them - they are on the third floor.'
I go up to the third floor, the Centre Development office and ask for a chat. A guy in a business suit comes out.
'Hi,' I say 'I'm interested in the overall business model of the Centre and the area development.'
He replies; 'It's simple. The initial stages are probably the most interesting.'
'We went into partnership with the local authority. We ran the project to start the centre's activities. Our job was to supply office facilities, increasing as the project grew. Adapting this building to the size it is now. It was projected from the beginning to this size. The local authority rents it as part of their project.'
'It is good business for you?' I ask.
'It is good business for the regional products sellers because they get marketed. All feet or visitors pass through this area so it generates business opportunities for them. The centre acts like a magnet. They also, because they have the brochures, explain how to visit the farms which offer tourism as well. The suppliers are helped by tourists, and they have web sales. It is an integrated concept.'
I find out more: The regional development people are happy as they are in the centre. The same with the travel centre which is also central. The taxis have to pay a fee, but they have a contract and are partly subsidized so they make money. As far as the advertising space is concerned they do not know how effective it is but it is important as part of the local profile communication. The Bank is rather small and does a lot of its work through Internet and the other places - there are not that many visitors that come through it physically.
That is, the information Bank rents the space, along with the development centre.
I ask them about marketing: 'We do not market the centre - it is marketed by the Bank. We administer the centre. We worked on the mix, and had advisors involved. We make our money by renting facilities.'
I leave to go down to the development centre.
'I need to ask about marketing' I say to the director as he appears.
I gather there is no reason why local authorities should run a tourist service, but you can increase an area's business activity as numbers of visitors increase. The centre has thought of charging a fee, or simply footing the cost out of taxpayer's money.
'We prefer an income to spend on marketing,' he says, 'it is more transparent that way.'
Providers pay a fee to be in the Bank, which makes and distributes the brochures, map and book, keeps them updated, runs the web and takes care of bookings.
The fee system finances transport to some extent.
The more successful people are, the more they pay. That is the way it works.
That is the advantage of the booking system. There is a pay per booking charge, so the more you book, the higher the total fee to the Bank.
The bank can produce statistics for the travel planning based on the booking system. Pay as you go is better.
'How do you encourage individuals to put courses on?' I ask.
'They register the courses in the system.'
'And how do you know if they turn up.' I reply.
'You do not know until they have registered, but the Bank takes telephone and internet bookings. And you charge as you go, if no-one turns up to the course it costs nothing.'
'What about wages etc? Many of these people have regular jobs perhaps,' I wonder.
'We have a - company in a company - solution. We pay the person wages as temporarily employed. If they are employed with us we pay them minus our fee, our booking fees and taxes. If they have a company they send up a bill for their services. It lowers the barriers to entry to encourage people to try new things.'
The tourism development office part of the development office offers training in how to connect tourism and training and how to run courses etc.
It also conducts market surveys. They offer more courses than they have customers for, so they offer a wide choice which they can develop as they gain more experience in what customers need.
'How do you ensure the success of the business model?' I ask still unsure of how this would make money.
'Costs for project will pay back in three years. Break even in two and then the hand-over which is not yet decided.'
They could continue running the development centre from Tourist office fees or find and other model. The bank is profitable and was almost from the beginning. In working together with local companies they share the risk.
The Director says:'The building facilities management firms were very helpful.'
I thank the Director for his time and run up the escalator to return to the departure area.
I am very pleased. I was surprised by the answers I got, meaning I was not just 'projecting my own ideas' onto the exercise.
Always trust the method and give it a chance.
Always turn the phone off and make sure you are undisturbed. This is to ensure you get full value out of the session. Although these sessions take less than the length of a cassette tape, it is not always easy to arrange a supplementary session soon after an interrupted one.
End of assignment: Centres of Well-being
NEXT WEEK: Max takes us back to a town that is hard at it to go through a transition to sustainability. If you can't wait..... read the book at http://Stephenhinton.avbp.net
And of course the adventures continue........ check out http://porena.blogspot.com
to see the latest exploits of people Inventing for the Sustainable planet.