The term business model gets thrown around so much and many of you may have started or want to start businesses but have difficulty answering the question “what’s your business model?”. In short, a business model is a plan that identifies a businesses sources of revenue and can also go as deep as identifying the customer base, products and financing details. When speaking to investors, potential partners or you’re just our there networking and somebody asks what your business does you can quickly and easily help them see the picture without complex winding explanations of the features of your product.
The manufacturer makes the product. That’s it. This is for concerns that are involved in composing the product. If you outsource the manufacturing and stick-on labels, your business model is something else.
Bricks and clicks
Brick and mortar store meets online commerce. You sell products both online and offline. The modern-day mixing of these two platforms means we can pretty much put them down as one business model. Even if you sell from a physical store you are advertising online somewhat.
You have a popular platform which derives money from advertising other people’s products for a fee. Think of online advertising platforms and influencers as people who use this model.
You provide a platform for buyers of products to meet sellers of products or other services. This is like a classified platform. Not limited to buying and selling though as dating websites are also good examples of the marketplace business model.
Subscription offers goods or services at a price with an ongoing agreement remunerated by subscription. Magazines, your DSTv, Netflix, your internet provider are all examples of subscription services.
This is a business model that is based on selling things to your network. Whereas the advertiser simply markets a direct seller approaches people and handles the sale of the products directly. Think of your Avon and other cosmetics distributors.
Look at services like Hwindi and Vaya to understand this. Sometimes referred to as the sharing economy it started with the hire of equipment and the likes. Well now it’s gone huge with ideas as far outfield as power banks in China. You basically have an asset that is open to use by different people on demand.
You don’t have to be just one of these, though it is advisable to be at least one. Many businesses start with one and transition to offering others. You may start ad bricks and clicks then try to move up to subscription model for your products, Fresh in a Box and Dollar shave club are good examples. You may be a manufacturer who also becomes a direct seller. The business model tells you where the money is coming from in a business. What’s yours?