Online or offline, the main aim of every business is to be profitable; in fact, it’s often the only way for your business to thrive.
No matter your dreams of changing the world, revolutionizing your industry or having some major impact in your niche, you won’t go very far if you don’t have a viable business model.
It is very important to come to terms with this, especially when you run an online business; offline, it’s very difficult to start a business and it’s easier to realize it’s time to stop when things aren’t profitable but online, where the barrier to entry is literally non-existent and where most people start their businesses as a “hobby,” it isn’t uncommon to find people running businesses with a broken business model for years.
This article will be sharing some reasons why you should fix your business model as well as example business models you can use.
Why You Should Have a Business Model
1. It’s the only sure way to generate revenue and profits: Your business idea might be great; you can be in the right market, have the right team as well as the right execution strategy but you won’t go very far unless your business can generate revenue and profits. Having a business model helps you become clear about your approach so that you’re able to generate revenue and profits from your business.
2. Your business can’t thrive without profits: Without profits from your business, you’ll eventually have to quit your business. The only alternative to this will be to go into debt and that’ll be a very wrong move since you don’t have a business model.
3. Having a business model makes it easy to grow your business: When you have a solid business model, not only does it become very easy to make money that can be invested into growing your business but you’re also confident that your business will be profitable so you’re more likely to invest in growing it.
4. It informs other decisions you make in your business: Unless you have a clearly defined business model, it’s very easy to be moved by trends and fads, that have little or nothing to do with your business success, because everyone is raving about them. However, by having a clear business model you’ll know when a certain change will favor your business and, as a result, change and when not to change.
5 Business Models You Can Use Today
Since the success of your business is hinged on your business model, if you currently don’t have a solid business model for your online business, here are a few ideas:
1. The Email-based business model: A very common saying in the internet marketing world is that the money is in the list. This saying has proved very true for businesses of all sizes.
A very effective business model your online business can embrace is that of building an email list of active buyers; once you have this list, you can start building relationships with your email subscribers and you can also use your emails as an avenue to sell your products and make your offers.
Just how effective can this be? Very effective. This is the business model Groupon uses and it’s also the business model Appsumo uses. Nytimes also recently featured Jon Rimmerman, who owns a very profitable business that sells wine via email; Jon’s business makes $30 million annually due to his email marketing alone, proving that this can be a very profitable business model that applies to any industry.
2. The Tutorial-based Affiliate Marketing Model: This approach can be very effective if you already own a popular blog or if you plan to start a website that generates its revenue via affiliate marketing.
This is the business model Make a Website uses; by offering detailed and practical tutorials on how to build a website or how to start a blog, it’s able to generate revenue by recommending affiliate products that help people start their websites. This approach is also effectively used by Pat Flynn of the Smart Passive Income blog; Pat also writes practical and informative articles that helps his readers with their online business. In the process, he recommends resources that people need to follow his instructions and he makes money as a result. Pat makes over $40,000 every month via this model, and since this model is based on a blog and run solely by Pat, almost everything the business makes is profit.
3. The Continuity Business Model
This approach is very simple and can also be highly profitable; the idea behind this is to have a membership site or a kind of product that people have to pay a monthly fee to have access to.
The unique point of this business model is that, if your product is of the best quality, you won’t have to put much effort into acquiring customers since your customers will often continue to renew their subscriptions monthly. In other words, each additional customer you gain means more monthly income for your business.
The continuity business can be via a simple online membership site like the Freelance Writers Den, via a print newsletter like the one offered by Ben Settle or via a paywall like Andrew Sullivan does on his site.
4. The e-Commerce Business Model
This business model is specifically for those who already have an online version of their business and want to use the internet to aid sales; most people find it convenient to carry out transactions online, so you can make more sales by having an e-commerce website that allows people to purchase your products that can be delivered to them physically.
This business model can be used on a large and small scale; a prime example of this business model on a large scale is Amazon.com and a small scale example is this company that sells rustic furniture in Australia. In other words, this model can be used for a business of any size and in any location.
5. The Information Products Business Model
This model is based on distilling expert knowledge in information products – ebooks, courses, webinars etc. – and then selling them to your audience for a fee.
The barrier to entry for creating information products is very low and there are countless ways to market your information products to generate revenue and profits.
What’s Your Business Model?
Do you have a business model or is your business model broken? What do you think about the above business models? Let us know in the comments.
Bamidele Onibalusi is a freelance writer and the founder of WritersinCharge.com, a blog that helps writers be in charge