What is a business model?
By definition, it is your plan for making profits and the strategy that outlines how your company is going to function and what you will do.
When starting a business, you need to consider what business model works best for you. There are plenty out there, so let’s explore the top options around right now:
In many ways this is the original business model. The concept behind it is simple; you make products from raw materials. After making the product, you sell it to companies that want to buy it. In most cases, manufacturers are B2B businesses because they will largely sell products to businesses who then sell them to the consumer. But, in a few cases – usually small manufacturing businesses – you might sell directly to the consumer.
This is probably the most common business model around. Essentially, you have products – either your own or from manufacturers – and you sell them to consumers. This can be done in a physical store or as an e-commerce company. Funnily enough, that brings us onto the next business model.
That’s right, this is a model all on its own as you run your business in a very specific way. The goal is to run everything online and rely on your business website to generate sales. You have no face-to-face contact with the customer, which means you can target a much wider audience. This model has become extremely popular in the modern age!
The franchise business model is different in that it revolves more around how the business is run. A franchise can fit into any of the other categories, but the difference is that you buy the franchise from a franchisor. This can be done through sites like Franchise Direct, through personal connections, etc. You will run a business, but there will be someone above you that ultimately calls the shots. The bonus of this model is that you can take charge of a franchise for an already established business. An example of this is a fast-food chain. You can own one of them, meaning you own a business that’s already got some adoring fans and is supported by an overall marketing strategy.
Though this model will have some cons, like not imprinting your signature on your business, it gives you a ready foundation in which you can build and grow your business. Many franchising opportunities will kickstart your business if you have the will and hunger to succeed in business. Whether you are a veteran, student, or retiree, the endless opportunities in different niches in franchising will open a new dynamic for success. You only need to commit and make the leap.
Another highly popular business model that takes a different approach to making money. Instead of selling products, you sell services. This spans across so many different industries as there are loads of services you can offer customers. B2B service-based businesses can offer things like financial help, marketing services, HR assistance, and so on. B2C service-based businesses can offer things like handyman services, financial advice, etc. People pay for the service, rather than paying for a specific product.
Why are business models important? Well, they dictate what your business will do. You must choose a model that you think is best for you and your ideas. There isn’t a winner out of these options – and there are still more to out there as well. Different business models suit different ideas, it’s all about pairing yours up with the ideal one.