7 of the Best Proven Effective Business Models for Startups

November 29, 2019

Are you planning out on starting your very own (maybe first or second) business? Are you excited? We feel you, because we’ve been there. Truth is, when we do have that plan in mind, we get excited and feel energised because a lot of ideas keeps popping up and we get really busy planning trying to get that business in the real world and not just crammed up in our head.

 

Starting a business can really make you busy and stressed at the same time as you need to list your ideas, plan your finances to make it work, but other than that and also the first step to establishing a business is to define the business model that you are to use.

 

 

Business Models

 

Before we start enumerating the best proven effective business models for startups, let us first dig deeper to what a business model is about. According to Investopedia, “A business model is a company's plan for making a profit. It identifies the products or services the business will sell, the target market it has identified, and the expenses it anticipates.”[1]

 

A business model is said to be an upper-level plan in making profit for operating a business in your target market. An essential part of your plan of action is how your business will deliver its promise to your chosen clients when they buy your product or services. This is where and how you describe why your products and/or services should be patronized and also how you are distinguished among your competitors.

 

 

There are many types of business models out there, but we would like to discuss with you the proven effective models that you can adapt in starting up your very own business.

 

 

1. Production Model

 

A really simple business model wherein you create your product or offer your services directly to the public. This is model is really wide and can incorporate at least one of the different business models. The Production or Service model offers adaptability and with no limitations.

 

If used correctly, this business model can generate big profit for our business.

 

 

2. Supplier/Reseller Model

 

This business model on the other hand is the opposite of the production model. You need don’t need to create your products but rather buy from the manufacturers and profit by promoting or selling the manufacturer’s product or services to your target clients.

 

3. Ad-Based Model

 

Have you seen or encountered ads of products or services showing up on a particular website? This is the essence of ad-based model. You mainly depend on the profit you’ll gain from ads of companies being shown on your website.

 

 

4. Subscription Based Model

 

To understand this model properly, let us give you a few examples of companies who used this.

  • Netflix

  • Spotify

  • Udemy

  • Lynda

  • Coursera

  • Skillshare

 

With the above-mentioned examples, you’re probably gettOing the idea. To explain more, with subscription-based model, profit comes from people subscribing to your services. Clients choose to pay monthly or annually until they decided they don’t want your services anymore.

 

 

5. On-Demand Services Model

 

Businesses have evolved and has taken advantage of technology. Which is why they offer more and more ways to help their target customers providing them comforts and ease of use, plus giving you more options for your budget. By maximising technology, online services such as freelance works got popular these days. Some other examples of businesses built on the On-Demand Sevices model are Airbnb, Uber, Grab and the list goes on.

 

 

6. Transaction/Online Solution Based Model

 

The well-known businesses built on this model are PayPal, Pay Dragon, Amazon, eBay and the likes. Profit from these businesses comes from taking advantage of the distance between the seller and the buyer. Clients gather around these platforms and make their transactions. These above-mentioned businesses handle their client’s activities in a secure manner and these businesses’ incomes come in small fees that came with that single or multiple transactions.

 

 

7. Freemium Based Model

 

With Freemium Business model, companies offer free services and at the same time lock up some of their premium features and make them available only if these customers avail of these services. Some examples of these companies are Dropbox, Skype, video editor apps, game apps and so on.

 

 

 

Are you planning to start a business and need help creating your logo, packaging designs or maybe need a hand in marketing? Just say hello to us and we’ll get back to you shortly.