It is often simplistic to think that the business model has only one variation. Often, the entrepreneur does not visualize all the possibilities. Some entrepreneurs left the chosen business model initially because they saw its limits and then returned to create sustainable businesses.
Before you take the plunge, make your project a reality and create your business, the question of the business model arises. Most entrepreneurs focus on establishing one in advance. However, this is not the case for all managers. What is it really?
A business model, what exactly is it?
Literally, this notion translates into a “business model”. This represents all the means and techniques that your company has to organize its business strategy. It is none other than the method used to create value in order to maintain its activity or even develop it and thus be sustainable. So it’s about how revenue is generated.
The main types of business model
Anchored in the business strategy, many business models are used.
Auctions. This is the business model on which customers set the prices of the product or service. You need to create a buy-it-now system to satisfy customers with limited time.
Freemiummeanwhile, is offering a free quote, and then encouraging its users to purchase the paid version with more features.
Membership refers to the provision of spaces so that other companies can place their ads there, we are talking about advertising banners.
Cashback comes in the form of points or refunds. These are therefore benefits given to the best customers.
Subscription models refers to the marketing of a product or service, in return for a specific registration.
door-to-door sales results in marketing being pursued on a limited purpose. This type of model focuses its development on its network.
Flash sales-re-brokerage-inventory reduction is nothing but the creation of partnerships with brands. This allows for resale of unsold products at low prices, products from old collections.
The adaptive is a model that focuses on optimizing companies’ sales by offering a product or service for sale that is not sold and is lost. Its name comes from an adaptation due to the variation of prices according to demand and the consumption habits of the customers.
The famous model discount (low cost) have lower prices than the market. This is generally made possible by reducing the cost of eliminating ancillary services. The usage model refers to a consumer paying a single price for each use of the service. The price offered is relatively low to encourage the customer to repeat his purchase action several times. The past model is profitable by getting its customers to pay for the duration of the use of its offer. Everything for free is based on media funding from advertisers. Users enjoy a free service. The sales transaction allows a business to generate revenue through the commissions it receives on the sales it organizes.
Finally the printer model consists of two stages: the sale of a basic product at a loss with a very low margin, and then the marketing of refills of the product at prices with high margins.
Not necessarily crucial when you start
It is quite possible to create a business and then make it profitable without having defined the business model in the launch phase. This is the case with world famous companies like Google or Facebook. To succeed, these companies first sought to acquire as many users as possible, but they did not yet know which profitability strategy they initially chose. In other words, they only had a rough idea of how they would make money.
In addition to the launch phase
Consider the examples mentioned above. These companies did not establish a business model in the beginning, but retrospectively, yes. Also note that the period when you have none is difficult and risky. The business model is part of the management logic of your activity. It is therefore in the more or less long term essential to have one. It is also a strategy and communication document. It puts down the measures you are considering on paper, what you want to do, how, the deadlines, that is, it brings together the defined goals and the means planned to achieve them. This makes it possible to check whether the project is economically viable by determining a forecast result. Your business model depends on your company’s identity, its offerings and its strategy. Success finds its balance between your business model and the demand from your customers.
A way to convince
Writing such a document can seem tedious and time consuming, but it can convince a banker or an investor. You will have a hard time opening a professional account if you do not have a concrete strategy in hand to generate revenue. Creating a business model allows you to build a customer goal and determine a forecast result. Thanks to this, those third parties will be all the more secure and will be more likely to provide you with the financing you need. A way to make money on the solution and get the project started. It can also save you time in the long run. This gain refers to your future steps in relation to the development of your business. Developing a business emphasizes a degree of seriousness and professionalism. It shows that you are consciously assessing the risks you are taking and leaving.