Are you interested in doing your own business and need help to develop your own business model, You are at right place. This article will tell you about business models. Now it’s natural to raise the question in your mind what is the business model?
What is ‘Business Model’?
It is a company’s plan for how it will generate revenues and makes a profit. It explains what products or services the business plan to manufacture and market, and how it plans to do so, including what expenses it will occur.
How to have a ‘Good Business Model’?
To start a good business model, you need to know the value proposition for the business. The value proposition is a business statement that company uses to summarize why a customer should buy your product or uses a service.
Types of business model
It includes the different types of business. It is business models and clicks and mortar business (physical presence + online presence).
The traditional business model includes direct sales, franchising, and advertising – based and buck and mortar based.
Even if two businesses operate within the same industry they likely have different competitive advantages and disadvantages and, therefore need different business models. Every company has the different business model.
Defining your business model
1. The way you will set up your resources.
2. Identify your market.
3. Get and Keep customers, a utility for them.
4. Define and differentiate your products.
5. How you’re going to do all this at a profit.
6. How you define what’ to be done.
How to plan for your business model
Business model planner Offer your customers more in use value than in cash value. Think, there will be payment, but the transaction needs to be a pleasure, not a pain.
Satisfied customers will come back for more and tell their friends. Make sure you have actions live up to what is spelled out in your marketing plan.
Elements for strong business models
Where will your business idea start how should it progress and when will you know you’ve been successful?
Now, for solving your queries, follow these simple steps to securing a strong business model.
- At initials, all you need is to identify your specific audience.When treating your business model, marrow your audience down to two or three detailed buyers personal.
- The second step is to establish business processes for that you need to have an understanding of the activities required to make your business model works.
- Thirdly, you need to record key business resources. Document essential business resources to ensure your business. This includes some common resources example like warehouse, capital, website, intellectual property and customer lists.
- Now, to find your key business partner, because no business can function properly without the key partner that contribute to business ability to serve customers. When creating a business model, select key partners like supplier advertising partners on strategic alliances.
- You may leave room for innovation because your business plan is based on many assumptions. After all, until you begin to welcome paying customers you don’t truly know if your business model will meet their ongoing needs. For this reason, it’s important to leave room for future innovation. But be careful; don’t make a critical mistake by thinking your initial plan or a static document.
- Examples of well-known business models
Well, the emergence of business model innovation started with Gillette and razor blades. They worked out that if they sold the razor at low cost, consumers would happily pay for blades.
Here you can read the well-known example of business model
The advertising model
It is becoming more popular with the growth of radio and TV. TV earn revenue indirectly from people looking to promote services to the audience they attracted, rather than via consumes paying radio and TV for consumption of their TV programme. If this model is being considered for your startup, it is worth noting. Nowadays examples such as you illustrate how hard it can be to monetize free content even when you have significant visitors’ numbers this model is in decline for most business.
The Auction Model
It is synonymous with eBay, but it has existed for 100 or 1000 of years. This includes the tulip market in Amsterdam. The famous examples, there are also different types of auctions from English to Dutch, Vickrey, seated bids etc and even they have several characteristics: their price is not fixed; their features, the intent helped in building this type of business model.
It is not the best way to promote your business. In this, the consumer is not getting the deal that they initially assumed.
The Affiliate Model
Affiliate is someone who helps you to sell a product and in return for a commission. But they never actually take ownership of the product. They simply get rewarded for referring the customer to the retailer when they make a sale. It is a huge success with which the internet facilitates it.
The Direct Sale Model
This means the direct sale of your product. However, which the emergence of the internet as distribution channels meant that producer could sell their product and sell directly to customers themselves. The PC manufacturer Dell is a great example. This is well known as Copycat Business model. This business model also can make you the millionaire.
The low-cost model
This is a well-established business model where the main aim is to focus on your customer but by charging at a very low price. In return, revenue is earned. This cost very less price. These can include: selling the ticket of the train, lottery tickets sale, advertising on seats, flight insurances, reprinting a boarding pass etc.
Related Article: How copycat business structure makes you a millionaire?
If you are looking to build a new business and are about to draft a business plan, you should also spend time working out your optimum business model as well as drafting a visual representation.