30 Foolproof Business Models That Are Tested To Work; In A Language You Understand

30+ Foolproof Business Models That Are Tested To Work; In A Language You Understand


Let's face it...

A business venture is just as successful as its model - regardless of how cool it may look on paper.

Before injecting money into that business, you should be sure of how you will get your money back. Ask yourself which business model will work for your idea.  

A business model is a plan you put in action to make profits.

"The terms business model is used for a broad range of informal and formal descriptions to represent core aspects of a business" Wikipedia
It is fine to come up with a creative and brand new business model, but it might limit investors from trusting you. Remember it is difficult to convince an investor to give you money to try out something nobody has successfully tried before.  


The best way to go is to select some of the already existing models to ensure you are on the right course from the beginning. This way you can have a clear explanation of how you will get their money back.


There are plenty of alternatives.


This article is not filled with business jargon and so I bet it will really help your startup regardless of your knowledge. But before we go any further, here are questions you need to ask yourself.

Questions To Ask Before Drafting A Business Model


  • Is this business solving peoples problems?
  • Has someone tried it before?
  • Do I have competitors offering the same products?
  • How are they doing it, can I do it differently?
  • How will I reach my target audience?
  • How will I distribute my product?
  • Is there room for me to grow?
  • Where I’m I getting funds?
  • Do I have time to commit to this business?
  • What is the probability of success?
types of business models for entrepreneurs
If you answer the questions above and you are still convinced that you want a startup with your name on it, then you are good to go. The questions above will help you have a business with a model with strong elements. Here are some of the elements you need to ensure are in your models.


Elements Of a Successful Business Model


  • Audience identification
  • Establish business activities
  • Meet the resource needs
  • Develop a value proposition that is strong
  • Determine important business contributors and partners
  • Find ways to generate interest in your business
  • Allow room for innovation

Donation per Purchase - Donate an item every time a customer does a purchase. The customer can choose the gift recipient or you can identify individuals in need and do it yourself.


Disintermediation - eliminate or reduce the middlemen (intermediaries) between you and your consumers. You will then have to directly sell your products to consumers.


Fractionalization - Give your customers an opportunity to share the costs of your products or services for a given time frame. A good example is time-share marketing for condos.


Crowdsourcing - Getting a large group of people to follow you to contribute their content through your platform, and sell your marketing space to other companies.


Bundling - Package services or goods together as a single product and offer them at a discounted rate. Buy one get one free is a perfect example.


Leasing - Instead of selling a product, you can rent it for use within a given period. You can decide the period of leasing which can be a minute or even years. This works well with the property ownership industry including construction items.


Offer Free Services and Collect Data to Sell - A great example of this is in the case of providing medical services, collect data and sell it to pharmaceutical companies for their use.


Collect Data - You can also collect data without offering any services and sell it to targeted companies.


Low Touch - Here you offer products to your clients with minimal one-to-one interaction as possible. You can use microphones to communicate and swipe cards as a means of payment.


High Touch - In this instance, you interact with your customers more than average - the opposite to low touch.
what is your business model?
Pay As You Use - Here, you offer services so that your customers pay for metered use like in instances of electric companies.

Razor Blades - give a product for free or sell it at a low charge so as a complementary good can have increased sales. An example of this is selling an ink printer at a low price and sell the ink cartridges at high prices.

Reverse Razor Blades - In this case, you can give items for free or sell the low-margin product at a lower cost to motivate buyers to purchase the complimentary product.


Auction - Set a price and allow buyers to bid and then sell it to the highest bidder.


Reverse Auction - Have a ceiling price and allow participants to drop the price as they bid.


Subscription - You can charge a fee of subscription for customers to access certain services.
Standardization - Provide a standard quality of your items or services at low costs.


Customization - Offer services and products as the customer wants them. This model works great for developers.


Become a Middleman (Broker) - Identify a seller and a buyer then help bring them together. Through this, you earn a commission on every purchase.


Merchant - It is closely related to the broker model but here you can buy the product and own it first, and then sell it to a buyer.
business models in retail
Freemium - In this case, you can offer your basic service or product for free and charge extra for premium services. This technique is employed by most online items, but can also work great for offline (physical) items.


Demand aggregation - Your business can research a need in the market for a particular product, partner with the providers, and sell them under your brand's name.


Sell at lower prices to gain market share - In this model, you deliberately cut on the prices of your goods or services to gain a market share. After getting the desired market share, you can raise the prices to benefit.


Luxury - Create a higher brand value and price it at the highest costs targeting the high-class market. In this model only a few sales make the business to break even.


User community - As the name suggests, the business uses the community as the business marketers and avail support services. You can charge membership fees as well. This encourages the collaboration of the business with the community and therefore prices are relatively lower.

On-demand model - Satisfy customer demand for goods and services on the basis of immediacy and convenience.


Renting is also a concept under this model because your business will be offering the consumers goods and services when they need them. This model meets the needs of the online consumer well.


Direct sales - In this model, you the business owner and employees of the business directly sell your products to the consumer without using any distributors in between.


Franchising - Build new units of your business by allowing others to invest in your model and brand, thus transferring the risk to them. You earn by taking a percentage of their profits.


Affinity club - In this case you need to make partnerships with membership associations or large organizations and provide products that are exclusive to their members and also exchange royalties to get more customers.


Raise or lower the prices according to market demand - This requires you to constantly be sensitive to market needs and raise the prices when the demand increases and reduce them when the demand decreases.


There you go! Thirty business models, you can apply to your venture for success. If you know of different ones, share them in the comment section below. Remember different business models fit different businesses and therefore, you need to compare and contrast the models to pick the appropriate one. The good news is that you can fuse several business models in your entity to maximize profits.

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