If you are someone who is planning to launch a new business venture you are likely to explore a variety of business models for the purpose. It is imperative that you choose the right business model for your new business. It is this model that will form the foundation for the solutions or services you intend to provide to your customers. You can use your business model to show how you stand above the rest. Here are some interesting business models that you could choose from:
- To begin with, you can bring down your prices to get industry shares and make profits. This can be done by targeting a big market and then selling your products initially at low prices backed by excellent customer care service and quick deliveries. When you find that your business is taking off well, you can start to expand your product offerings, negotiate discounts with your suppliers, and put money on new technologies that can accelerate customer-response times and reduce wastage in operations. This makes it possible for you to offer your products at lower prices to your clients. Amazon’s success story resonates with this business model and explains its meteoric rise annually.
- You could consider establishing a franchise business. To do this, you must first understand how you can run a local retail store and then convert this into a system fit to be sold to businessmen all across the globe. All you need is to get onboard some hungry entrepreneurs who also share your ideas and then train them so that they are capable of finding new places and resources to establish this business. McDonald, for instance, has witnessed a dramatic increase in stock price even though its revenue growth has been only 4%.
- You could hold what is called a “reverse auction” where buyers will name a particular price for a certain service. When the seller accepts this price, the buyer will have to abide by the seller’s terms. For example, Priceline provides this business model targeting price-sensitive travelers that are willing to compromise on convenience to get the lowest rates on tickets, rental cars, and accommodations.
- Another popular business model is where you get together all the buyers and sellers for certain products in a virtual location. This is called demand aggregation where sellers can have access to the largest pool of buyers. The reverse is also true. The best example is eBay where buyers and sellers continue to give one another strict ratings. The model is effective albeit not a booming one. EBay’s profits had grown as did the company revenues, but stock prices did not witness a big leap.
- Another effective business model is to provide a product for the highest price and get customers who cannot do without this product and that no one else can offer to them. Once you have identified this niche market you can charge them exorbitantly. This model worked brilliantly for Alexion Pharmaceuticals. They produce Alexion Soliris that is necessary to save the lives of thousands of people with compromised immune systems.
- Finally, you may think of establishing a person-to-person exchange. For instance, when you have two or more cars to spare and you stay in an area where young professionals require cars every day, you can consider hiring trustworthy people for driving such cars. It is a win-win situation for both and this person-to-person business model seems to have been successful with Airbnb facilities mushrooming everywhere these days.