The business model is the point of acceptance for any successful startup business. No matter how strong an idea is or how unique an approach is, a startup must have a viable way to make money that can sustain sufficiently.
Let’s start with, what is a business model? And how do you know you if your startup business has got the right model?
A business model explains what consumer problems your startup chooses to resolve. The model shall define why your solution works better than competing ones. How big a wedge a business can drive. How many customers are willing to pay, and what are the expenses?
There are many different models one can choose from for a successful business. You are selecting one best suited to your company’s needs and domain that determines your company’s future.
Sweat not, we have got five business model that has proven to be successful for the majority of the startups:
1. Cut Prices Now, Gain an Industry Share Later
Focus on a large market, and sell a product with quick delivery and excellent service at the lowest possible price, expand the product line as the business grows. Then negotiate volume discounts with vendors and invest in technology to speed up customer response time and reduce organizational waste.
They are thus ensuring to deliver the lower cost to the customers with maximum value.
The number one move here is to focus on long-term growth. The power of not caring for short-term profits—made the Amazon what it is today. Not only the Jeff Bezos is the world’s wealthiest person for the third year in a row, but also the company’s revenue for the quarter ending June 30, 2020, was $88.912B. Which is a 40.23% increase year-over-year according to the report by Macrotrends
2. Become A Marketplace
Becoming a marketplace merely is bringing supply and demand together. The idea is simple, but it is also cost-effective—having zero to little overhead and no inventory. One can get a fancy office space if they like, can practically run the business online.
On the other hand, you take on many risks if you produce a product to utilize all the inventory. Instead of thinking about production costs, if you are the marketplace, you take the sellers to the buyers and promote a deal, taking a small cut from each piece.
The model works because the founder may provide sellers with a place to profit and meet buyers, while buyers can find just what they want, mostly at a reduced price. Some of the most prominent examples of the business model are Airbnb, Amazon, Uber, etc.