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STEP 3: Select Your Business Model

Now, it is time to select your business model. Let's explore some standard business models and get pointers on making an informed choice of your business model.


Popular Business Models:


Subscription Model: Companies like Netflix and Spotify thrive on this. Customers pay a recurring fee to access a service or product, often monthly or annually.


Freemium Model: Offer basic services for free and charge for premium features. Evernote and Dropbox are classic examples.


E-commerce: Platforms like Amazon and Shopify are based on this model, where products are sold online by a single brand or multiple vendors.


Affiliate Marketing: Promote someone else's product on your platform. When your audience purchases through your referral, you earn a commission. Bloggers often use this model.


Marketplace: Platforms like Airbnb or Uber act as middlemen facilitating transactions between two user groups, typically taking a cut from each transaction.


Franchise Model: Think of McDonald's. Here, one party (the franchisor) grants another party (the franchisee) the right to use its trademark or business processes to produce and market goods or services.


Direct Sales Model: Companies like Tupperware and Avon bypass traditional retail channels, selling products directly to consumers.


Pointers to Select the Right Business Model:


Understand Your Customer: Who are they? What are their pain points and preferences? A deep understanding of your target audience will point you toward the most suitable model.


Analyze Initial & Ongoing Costs: Some models require hefty initial investments (e.g., franchising), while others might have higher operational costs (e.g., e-commerce). Ensure the model aligns with your financial plan.


Scalability: Consider how easy it is to scale the business model. If rapid growth is a priority, models like subscription or marketplace might be more fitting.


Flexibility: The business world is dynamic. Opt for models that allow pivoting or diversifying if required, ensuring you can adapt to changing market conditions.


Value Proposition: Does your chosen model enhance your value proposition? For instance, if convenience is a key selling point, e-commerce or subscription models might be apt.


Competitive Landscape: Examine models adopted by competitors. This can offer insights, helping avoid saturated markets and identifying underserved niches.


Regulatory Environment: Ensure the model you choose aligns with regulatory norms and requirements, especially if operating in sectors like finance, health, or real estate.


If you are interested in looking at more business models, Harvard Business School online has an excellent article here:


When it comes down to choosing a business model, there's no one-size-fits-all answer. The suitable business model blends your product's strengths, market demands, and long-term vision. It's about following trends and carving a niche that allows your business to grow and thrive.




For a look at 55 different business models and the companies that are using them, check this page out here and grab the book here


For a good checklist on how to select the best business model, Forbes has one that can be found here


For good video explanations of how to select the right business model, two can be found here and here  


For an MBA educated consultant to help you make data driven decisions and review each model implications with you before you select your model click here to set up a consultation session.

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