Which Business Model?
The way you run your business will be influenced by the lifestyle you’re aiming for. The sales success of the product or service your new business proposes will be influenced by the value you can demonstrate to potential customers. Bring these two together and you have a happy entrepreneur and satisfied customers.
A business model is the way a company sells products and services to its customers. Different types of business models suit different types of businesses.
The growth of digital products and e-commerce have moved business a long way away from the brick-and-mortar stores of the past. Of course, these still exist and they need manufacturers and distributors behind them to make them work. But there are many other models available to the start-up entrepreneur.
Let’s look at three basic ones:
1. Product/Service — The business makes and sells its own products and services. These can be packaged and distributed either online through e-commerce or in a traditional brick-and-mortar store. This is probably the most common approach. Here are some examples:
Ø A marketing consultant who sells a consulting engagement for a monthly retainer fee.
Ø A private health coach and trainer who works one-on-one with local clients, but also sells an online course with group health coaching.
Ø An aromatherapy expert who has a local store selling oils and diffusers, and also has an e-commerce store online.
2. Reseller — Resellers buy other people’s products and sell them to make a profit based on the price difference. You can make a business out of this as do many eBay and Amazon sellers.
3. Person-to-Person Exchanges — The business essentially brings buyer and seller together and takes a transaction fee. Dating sites are an example of this. This can be very lucrative. Airbnb is an example of this which has a huge revenue.
How to Choose Your Business Model
When you’re choosing the best type of business for you, you need to consider your big “why.” Running your own business can have some drawbacks, depending on your business model.
For example, if you want the freedom to travel and work from anywhere, then having a store that has to be opened every day isn’t going to be for you. In that case, you could consider an e-commerce site that can make sales without you needing to be there in person.
On the other hand, if you prefer working face-to-face with clients, then you’d be better off avoiding online courses and programs and instead offer in-person coaching services.
To select your main business model, take your business idea and think about your lifestyle vision and your values. Then, look at the most common options described here and decide on the model you’ll use as your starting point.
Ø Your choice of business model will be influenced by your big “why,” your values, and your personal vision.