Business Models

Before you can start a new business, you’ll need a roadmap that outlines how your company intends to realize a profit from your planned operations. A business model acts as a blueprint that directs how you’ll run your enterprise and make a Return on Investment.

Depending on your industry, there are about a dozen main business models to choose from. Your business model will help you plan how to raise funds to meet the anticipated expenses of your startup. You can bootstrap from your sources or reach out to a lender for a small business loan to kickstart your business.

What Are Business Models?

A business model is an overview of how an organization intends to realize a profit. It outlines the product or service the company plans to deal in, how it plans to market the product, defines the target market, anticipated expenses, and projected profits. 

Why The Proper Business Model Will Give You The Expected Revenue

New and existing businesses will benefit from business models in numerous ways. Business models outline how a company will return a profit on its investment. This is a critical component in attracting investments from various sources. The plan is valuable when approaching lenders for small business loans to get a Return on investment (ROI).

Business models help companies to attract, motivate, and retain talented human resources to drive company profitability.

Established companies should make it a habit to refresh and update their business models to keep up with changing trends and foreseeable challenges. That way, they can draw in new investors, attract new markets, and be more profitable.

Importance Of Strategy To Make Better Decisions

A business that operates with a strategy makes better decisions on using its resources for maximum productivity. As an entrepreneur, having a business model that guides your strategic direction has various benefits.

  • Competitive advantage; relying on a plan that defines a differentiated product makes you competitive regardless of your company size. That leads to a more productive and profitable business.
  • Cost structure; strategy helps to put an expense budget that defines your fixed and variable expenses. You get to compare your costs with industry averages and also determine your funding needs.
  • Attracts and focuses talented workforce; a strategy helps focus all players towards a common goal. A focused business attracts the right talent to run its operations. 
  • Funding: A business that’s anchored on strategy is well placed to attract investors and financiers. Financiers can see how they will use their investment to generate a profit hence a deserving Return on Investment.
  • A strategy prepares an organization to survive and ride on waves of change expected in the business landscape. The coronavirus pandemic has hugely impacted how customers access products with an increasing shift to online stores.

List Of Most Popular Business Models To Generate Revenue

Here are some of the most common business models that your business can adopt to generate revenue.

  1. Subscription model
  2. Freemium model
  3. Affiliate model
  4. Manufacturing model
  5. Brick-and-mortar stores
  6. Distribution model
  7. Direct sales
  8. Web sales model
  9. Ad-based model
  10. Transactional model
  11. Franchise model

Businesses may also adopt a hybrid model that combines two or more models, for instance, a retail store that runs a web sales model.

Examples Of Business Models

To put a name to the business model, we’ll give a few typical businesses and the business model they use to generate revenues:

-Manufacturing model -Apple, Thor Industries Inc

-Franchise model – McDonald’s, KFC, Starbucks, Subway, 

-Subscription model – Hulu, Netflix

-Freemium model – LinkedIn, Skype, Mailchimp, Spotify

-Brick-and-mortar stores – Walmart, Amazon, Costco

-Ad-based model -YouTube, Google

Conclusion

You need a business model that outlines your products, target market, anticipated costs and expected profit. Starting and running a business based on a planned business model gives vision and direction to an organization. It makes clear the costs of running the business and what your profit margins should look like. 

Get in touch with lending firms to meet your capital financing needs or for a small business loan to meet your everyday business funding requirements.

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