7 Best Business & Money Lessons To Learn From Tesla

Tesla EV electric vehicles on display. Tesla products include electric cars, battery energy storage and solar panels.

If you’re thinking about starting your own company, you could learn a thing or two from Tesla. Unlike many other car manufacturers, Tesla doesn’t sell its products through franchised dealerships. Instead, it sells directly to its customers.

As part of its business model, Tesla also prioritizes vertical integration. In other words, it produces many of its automobile components in house, something that gives the company more control over quality and costs.

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While many other companies have their own success following different business models, there’s a lot to be said about Tesla’s unique way of doing things. If you’re an aspiring entrepreneur, here are some money lessons you could learn from the company — according to other entrepreneurs and business owners.

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Direct Sales Can Maximize Your Revenues

“Tesla’s choice to bypass traditional dealerships is a masterclass in controlling the customer journey from start to finish,” said Justin Godur, CEO and founder of Capital Max. “This direct sales model eliminates middlemen, allowing Tesla to retain more profit and maintain closer relationships with their customers.”

Although increased margins are a big win, they’re not the only advantage to Tesla’s business model. When you get rid of the middlemen and focus on direct-to-consumer sales, your company can also benefit in other ways.

For one, it’s easier to build long-term customer loyalty, something that can keep the people coming back to you for years or decades to come. The direct-to-consumer approach can also help you understand your customers — and the competitive market — better so that you can pivot more rapidly when necessary.

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Vertical Integration Can Be More Cost-Effective

“Unlike most automakers who rely on a network of suppliers, Tesla’s decision to produce many components in-house gives them an exceptional grip on cost management,” said Godur. “This control extends to quality and pace of innovation, turning their supply chain into a competitive advantage.”

As an aspiring entrepreneur, adopting a similar strategy can lessen your dependency on other vendors or suppliers — and keep you from having to cater to their rising price points. It does require quite a bit of capital investment, however, so it might not be right for every startup.

Victor Santoro, an entrepreneur and visionary leader with Profit Leap, added that vertical integration has been part of their company’s success.

“In my ventures, adopting a similar approach by integrating our own developed technologies like the HUXLEY AI, rather than relying on external providers, has significantly reduced costs and enhanced our product offerings,” Santoro said. “This self-sufficiency in Tesla’s model underlines the importance of controlling the production process to ensure quality and encourage innovation, a principle that has been vital in the scalability of our businesses.”

Innovation Is Key to Long-term Success

When it comes to standing out in a competitive market, innovation is vital — both to the company’s reputation and its long-term financial success. And with Tesla, it’s not just about selling cars. It’s also about selling the image, the vision, that goes with purchasing one of their  vehicles.

“This ethos of continuous innovation is not just about product improvement but also redefining what a product can be,” said Godur. “Entrepreneurs can draw from this by not just entering the market with a new product but by continuously evolving the product to stay ahead of market trends and expectations.”

Tesla’s also made moves — particularly by investing heavily in research and development for electric vehicles — to help it prioritize innovation. Doing this has enabled the company to disrupt the traditional auto industry and stand out amongst the crowd. It might have been a risk, but one that’s paid off time and time again.

“For entrepreneurs looking to carve out their niche, embracing a fearless approach to innovation can result in establishing strong market dominance and pioneering new solutions,” said Santoro.

Sustainability Is More Than an Ethical Choice

If you’re an aspiring entrepreneur who’s on the fence about whether to make sustainable practices a key part of your business, you might want to make the leap. Tesla certainly has, and it’s resonated well with both the individual consumer and investors.

“For new entrepreneurs, integrating sustainability into your business model from the outset can not only attract customers but also future-proof your business,” said Godur.

Tesla’s commitment to sustainability is certainly an ethical choice, but it’s also a highly strategic one. By focusing on making sure their brand aligns with the market, specifically the social and environmental values, their business has become both resilient and appealing to many — all of which affects their bottom line.

Don’t Forget About Market Research

While companies like Tesla get a lot of their market research from their direct-to-consumer sales model, there’s also a heavy emphasis on research and development.

“Tesla relied heavily on the use of market research before it proceeded with a lot of its cars. You should do the same,” said David Bakke, financial expert at DollarSanity. “Even if you think you have a can’t-miss product or service, test it out with consumers beforehand and decide whether or not it makes sense to go forward with your current idea, or if changes are needed. In some instances, you may have to go back to the drawing board entirely.”

A Clear Mission and Vision Can Lead to Financial Success

As any business owner will tell you, having a clear vision and purpose for your company is also vital to long-term success and profitability. Once again, take Tesla’s mission to accelerate the transition to sustainable energy on a global scale as an example.

“[This mission] has resonated with many consumers and investors who share those values,” said John Lin, an automotive expert and business owner at JB Motor Works. “This has helped them build a loyal fan base and raise capital to fund their ambitious projects.”

“Of course, Tesla’s business model also carries risks, such as high upfront costs and the challenges of scaling production,” Lin continued. “However, I believe their innovative approach offers valuable lessons for entrepreneurs looking to disrupt traditional industries and build businesses for the long-term.”

You Don’t Have To Stick to One Business Model

If you choose a business model that works for you, that’s great. But if you start out with one that just isn’t getting you to where you need to be, know that it’s okay to make a change.

“Tesla has changed business models several times over the years, and guess what — that’s OK!” said Bakke. “If you start off with one model and see that it’s not working, change things up. You might have to do this a few more times until you get it right. Solve one problem at a time and adjust your model as necessary. Eventually, you’ll get it right, as Tesla eventually did.”

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This article originally appeared on GOBankingRates.com: 7 Best Business & Money Lessons To Learn From Tesla