Choose Your Business Model

Just like everything else in the world, business matters change and evolve too. There are many different types of business models out there that we can consider for our business, however, there are not a constant number of them. As a result of the changes in the world of business, there are always new business models created. Entrepreneurs can learn about them and consider the best model that suits their business!

Business Plan

Besides a business model we need to have a detailed plan about the whole map of our business, something that can help and guide us on the way to reach our business goals as well as acting as a guide map for the team in order to keep the business on the right track! This is where the business plan steps in!
Which model would you choose?
As you have read, a business model is an outline of what value we are gonna provide to our target market and how we are going to make profits out of it. Now to have a better understanding of what actually is a business model, I will introduce different types of business models to you. There are lots of business models out there, and many new ones are made as a result of developments in the businesses.
But here I will talk about 5️⃣  common types of business models out there:
  • Manufacturer business model: This is the business model in which the company provides value to its customers by changing raw materials to actual products for their use. These companies make money by selling their products to customers. For example 👉 Volkswagen Group, which is a car manufacturer. 
  • Distributor business model: The companies that have this business model, buy the manufacturing companies’ products and then sell them to retailers or consumers. They act as one of the important components of the supply chain and they bring value by distributing the manufacturers’ products to the market. They make money by buying the products in bulk from manufacturing companies and selling them in fewer amounts and with higher values to retailers or consumers! For example 👉 the United Distribution Group Inc. is a distributor of industrial supplies in North America.
  • Franchise business model: This is one of the most popular business models in the world that is being used for many years. In this business model, there are two main parties: the franchisor (the owner of the branded company) and the franchisee (individual(s) who wants to buy a franchise). In fact, the franchisee starts a new branch of an already operating branded company under the main structure of that branded company. In exchange for the brand’s fame and already available customers, the franchisee should pay a portion of his/her profit to the franchisor. The company will provide value for its customers by bringing the products of their beloved brands close to them. It makes money by selling the products under the original structure of the brand to the customers. 👉 An example of this model is McDonald’s.🍔
  • Subscription business model: This is another famous business model that many of us are familiar with. In this business model the company, either an online one or a physical one, would bring value to its customers by providing certain products or services for them. In exchange, they will receive a certain amount of money on a monthly basis from their customers. 👉 An example of this business model is Netflix 🎬, which provides entertainment content for its customers and makes revenues by receiving money on a monthly basis from them. 
  • Freemium business model: This business model is used in SaaS (software as a service) businesses. The company delivers value to its customers by providing online services that are partly free to use. In fact, the services and tools that these companies provide to their customers will be free to use based on limitations. However, if the users want to gain full access to all of the tools and services they should make either a one-time payment or consecutive payments based on subscription plans. This is how these companies would make money. 👉 An example of this business model is Spotify 🎧, which limits the users with ads on the free account and once they start their subscription they’ll gain full access to any music they want without any ads!
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