The idea of owning a business appeals to most people for a number of reasons such as; they hate their jobs, they couldn’t find a job, they needed extra income, they want to change the world…the reasons are endless. But from the beginning with businesses you always have to know the kind of business model you are going to use
Deciding on a business model for your business is important remember businesses are all about sales and profits which is why business model you choose matters a lot. The business model will describe the way a company operates to make sales and profit
BEFORE DECIDING ON A BUSINESS MODEL FOR YOUR BUSINESS
Before you pick a business model you have to know the persons you sell to, is it b2b, b2c, c2c,
Here is what I mean
Business to Business (B2B)
In this case it’s a business selling to other business.
It could be your business selling raw material to other businesses or something as simple as a guy who does farming selling oranges to a juice making company or even a marketing company offering their services to other companies
Business to customer (B2C)
In this case you are selling to an end user, for instance selling shoes in a retail store to client who intends to wear them
Customer to customer (C2C)
In this case it is customers selling what they have to other customers…this is mostly what you see in platforms like EBAY.
SEVEN BUSINESS MODELS TO CHOOSE FROM
- AFFILIATE MODEL
The affiliate business model works best if you are dealing in digital selling space or ecommerce platform.
The idea here is to have a product on your website and it has an affiliate link and when someone sells that product on your behalf you pay them a commission.
Amazon uses that to sell most of their products.
So let’s say you are selling shoes
This model means, you tell guys that anyone who shares a web link showing those shoes and someone purchases the shoes via the said link the seller or the ‘sharer’ in this case gets a percentage of the paid price or something.
The beauty of this model is that you end up having guys working for you as sales team and yet they are not part of your payroll related legal obligations
- FREEMIUM MODEL
With this model what happens is that you are offering a certain part of your product for free but there is a premium version of the product or service that the user has to pay for to access more value
A good example here is skillshare…do you know what skillshare is?… ok it’s a learning platform in which you can access some courses for free while others at a fee. In fact click here to sign up for free
So with your product or services in this case you can use this model to get a number of potential clients then start to convert them into paying clients. Of course some will just use the product for free and leave but that’s just people hence you make sure you attract the potential clients in huge number
- AUCTION MODEL
This is the model used in platforms like EBay.
So if you are a painter or something or even selling cars you just have a platform where guys can bid and buy the product
- SUBSCRIPTION MODEL
You see this model with companies like DSTV Netflix and such, the idea is your clients pay a regular upfront fee to access your product for a certain period and when the period expires they renew the fee(subscription) to continue accessing your products or services. So this could be your beauty product, music, videos, programs etc.
- BAIT AND HOOK MODEL
If you decide on this as a business model for your business, what you will be doing is using one product to sell another product
So you have a selectively priced product, let’s say a printer, which a person buys ones but the person will need cartridges and that is where you get repeat sells
So the printer is the bait and the cartridges are the hook
Remember with repeat sales you get to make more.
It’s like you SIM CARD and the Airtime cards…you get the picture
- FRANCHISING
The idea here is to create such a strong brand or product that pays royalty. You will see this with companies like KFC or Vivo Energy and Shell.
Guys just get to use such brands for business and pay the owners…of course it is not that simple so at some point we will have to talk about how franchises work in our YouTube channel so Subscribe now!
- DIRECT SALES
Final model is to just sell directly to your customers, as in cutting out the middle person.
Social media makes this very much possible
REMEMBER
There are a number of models you can use in fact imagine you want to sell hair shampoo which business model will you use?
Add some more models in the comment section and remember every Wednesday we will be talking about starting and running your business in our YouTube channel ZERITE NETWORK