Let’s focus on the word “Model” then we will discuss different business models:
The word “model” certainly gives us all the images of a small-scale, fragile model that depicts what the actual object would look like on a real scale. A business model is arguably the same.
We can say business models to be the foundation of any company in the marketplace. Multiple aspects of a business model help create a company — creating a product/service, identifying customer base, developing a marketing strategy, listing the multiple possible sources of revenue, etc.
Since a model is such an important part of creating a company from scratch, it is necessary to choose the right kind of business model for the same. Although changing the business plan is a workable option, it takes immense manpower and hit on revenue to execute a pivot in a company’s business strategy. Hence, scrutinizing attention to certain aspects can help figure out the most apt business plan for your company in the first go.
Example Companies Expanded their business model:
1. Swiggy food delivery now grocery delivery and personal pickup as well
2. Philips started its operation with lighting products then expanded it to the semiconductor and consumer electronics
3. Paytm started with Mobile recharge now they have Paytm Bank, Mall and other
4. Amazon started with bookselling now are into E-Commerce, Cloud, Tech sector
5. Onlineseoblog started with SEO Training, now have content writing and Startup Business Model analysis section #Brag
It’s Important to know your company
Obviously, to design a model, one must know the kind of company it is being designed for. It is necessary to know if it is a product based company or a service-based company; It leads to the planning of revenue modeling and marketing.
Know the market for your working model
The marketplace for IT services and products is constantly changing, and so should you. Knowing everything about a marketplace can help the founding team design the revenue model and know the competition. It also leads to deciding any need for change in the service that will be offered.
Understand the targeted user base
Understanding the user base for your company is a must to keep altering the marketing for the service and updates on the same. We can design feedback based on the kind of customers the service attracts.
Look at the numbers
On implementation of a model, at least till the company stabilizes, the numbers are what everyone should focus on. It is still in the test run phase and the company should be ready to make a pivot in plan the moment anything goes south.
Ever since the advent of the fast-paced era of technology, we have not stopped evolving as a marketplace. Every product or service has a place and use. But not all appeal to the consumer base, and that is the harsh reality of life. However, a major role is played by the business model of the service or product.
7 Business Model to analyze:
Product/Service Business Model
This is a fairly straight-forward business model where the company designs a product or a service and sells it on a platform. It gives you a sense of authority as everything — from the making of the service to marketing is in the founder’s hands. Even though the responsibility seems a lot, the pivoting process in this model is fairly easy to execute.
The only disadvantage this model proves to have is that the service/product making process is taxing.
Products offered in the same model: Any item which is up for purchase in the regular market. For example — Pens, Brushes, Blades, etc. SaaS : iTunes, EaseMyTrip
As the name suggests, this working model aims to bring supply and demand together. It provides a platform where the exchange of amenities takes place. The revenue is collected by charging a fee for the platform provided for the exchange.
Marketplace model is relatively easier to maintain, as servers are easier to run and maintain. This is the only requirement for this model.
Businesses running on this model: Ola, AirBnB, Amazon.
Since this is the generation that thrives on social media, marketing is a key aspect of any company. Media-based model, however, functions only on advertising offering services free to use, however; they contain ads that they get paid for.
For example, Facebook. Free to use, only gains revenue by ads.
This type of work model works best for this generation. It functions by offering the most basic version of their service for free to everyone. And the upgraded version f the service, with every additional feature that is added to the service, is charged for. It can either be subscription-based or pay-once. This is the reason it is called a “build-up” model.
This functions well because not everyone wants the advanced version of a service. The people who use the bare minimum of a service/product would not like to pay as much.
Google docs, WPS both work on the same strategy.
Ever bought something but felt like it isn’t for regular use? This model solves exactly that problem. Since no one likes to see a huge chunk of their money taken away in one go, paying at regular intervals for a service is a more viable option. The user can buy the subscription for whenever they intend to use it and otherwise can not avail the service.
Spotify, YouTube music, AudioBooks all follow the said model.
This article will focus primarily on B2B & B2C Business Model.
B2B Business Model
A B2B or business-to-business model in layman’s terms is a business dealing with other businesses to exchange their services and/or products. The company provides a platform, much like the marketplace model, for multiple businesses to interact and supply products.
It mostly works for the goods’ transfer from a larger manufacturer to a smaller business company.
There are three types of B2B models that function for all types of businesses and their transactions.
Supplier centric model
This B2B model, revolving around the supplier, works on a marketplace set up by the supplier to sell their goods to various available clients, which are other interesting businesses.
Buyer centric model
Buyer centric Business 2 Business models are exactly the opposite of the supplier centric. It functions for companies that want to buy products in large quantities. They put out a sort of advertisement and review possible buyers among which they can choose from.
Intermediary centric model
This model works to provide a platform that meets midway to the supplier and the buyer. It is a common ground that encourages interactions of every sector, every scale and every type of buyer/supplier.
B2C Business Model
B2C or business to consumer model works to bring known products supplying companies closer to the customers directly. They tend to offer higher revenue to the brand as the direct customer link often acquires more money than an intermediate platform.
There are three types of B2C models that function.
E-Retail is every online shopping site that you can come across. It hosts products of a single brand on a large scale and the host can have multiple consumers trying to buy the products at a given time.
Brick and Click Retail
Much like a basic shop where you pick out a product and get it to the cashier where you pay and have the product for yourself, this model works the same way. A bigger brand can work as a supplier and set up the franchises of its own brand at specific locations.
Virtual malls work exactly like a mall. They host multiple companies to showcase their products for the tsunami of people to look through and purchase.
The revenue collection for them works mostly via ads and a small fee taken by the suppliers who request a show space on the site.
Although we all know why we need a good business model and how important it is to build a model, we must know the number of advantages a good business model brings to the table.
Benefits of planned business model
- It brings better revenue. Obviously, a better thought plan brings more revenue to the table.
- It helps in an easier establishment of the company. In the early stages itself, if the business model is well laid out, the working from bottom-up of the company is easier.
- Smooth functioning of the company is based on the man-power and the plan of action, both — short-goal plan and future-oriented plans. Knowing the path to reach a set goal makes it easier to work for, especially if it is a company with many employees that need to work together.
- With smooth functioning, they can retain the customer base.
- Not all companies die when their CEOs retire. Some are handed over to another position-holder. The handing over of the company would be much easier if the company has been functioning on a well-planned model.