Business Model For Startup – – with a similar question, 9 out of 10 beginners wake up in the middle of the night in a cold sweat. If you are one of them – this article is for you. If you have already decided on a business model, the information below will help confirm the correctness of your decision and you will definitely sleep peacefully. Let’s get closer to the point.
A business model is a way in which an organization creates, delivers, and receives value in an economic, social, cultural, or other context. . In simple terms, the business model can be defined as a reasonable picture of how the company works in all its aspects and, most importantly, how to ensure sales and profits. The business model is designed to explain how each enterprise interacts with each other and how the final product is made, delivered to customers and financed.
Business Model For Startup
Important: do not confuse the concept of a business venture with a business plan. Business Plan – a document that defines how to operate your business and includes a description of the specific steps of building a business, necessary expenses, etc.
What’s A Startup Business Model
Based on these points, Alexander Osterwalder and Yves Pinier created a business model canvas – a simple and easy tool, more of which you can read below.
Using the business model canvas as a template, you can modify the existing model according to your needs or create your own business model from scratch.
It’s hard to believe, but this scary, at first glance, 9-block table can help you look at your entire business model in a few minutes, find weaknesses and understand the important things for your startup. Like this:
Now let’s get down to the meat. In filling out the canvas table, many questions will inevitably arise. To understand all these issues it is necessary to have a successful example. Yes, there are many options for business startups. In fact, to analyze all of those things, we need to release a manual of at least a hundred pages. Therefore, below we analyzed the most interesting and proven models that are already used by the top companies in the world.
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In simple terms, a market is a platform to sell services or products of other companies. Generally, there are three types of marketing: for products, for services and hybrid types. One of the most famous representatives of this business model is Airbnb – an online platform for posting, searching and short-term rental of private homes. all over the world. Its founders Brian Chesky, Joe Gebbia and Nathan Blecharzik were able to create one of the most advanced companies from the Airbed & breakfast initiative:
On the one hand, the platform allows people to put their extra space on the list and get additional income in the form of the list. On the other hand, Airbnb allows travelers to book special accommodations from local hosts, saving money and allowing them to connect with local people.
In a world dominated by technology, we are used to having all the information at hand, just a click away. Software companies translate this model into their card slots, offering a variety of on-demand services. The main advantage of this startup business model is the ease of use and operation, which is very attractive to customers all over the world.
In addition, using new technologies and relying heavily on independent work, this startup business model significantly reduces the cost of doing business. In addition, the business models start the market to eliminate the risk: the one who provides the goods/services remains responsible for them, not the foundation itself.
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Sharing is probably the most common and simple option for a customer-service connection. By setting it up with just a few clicks, the customer gets the desired products or services every day/week/month. By the way, a study by McKinsey & Company (2018) showed that 46% of consumers have already paid for online advertising from services, and 15% of them became subscribers of the same e-business service within one year of the completion of the study.
Content sharing services are perhaps the most popular examples of the startup business model. Of course, in this case, we have to mention Spotify.
Spotify is a streaming music service that offers the legal ability to listen online from a large catalog of music. The service can be used on computers, mobile devices, as well as on the web, game consoles, televisions and audio devices. Algorithmic selection of music is almost perfectly suited to the tastes of listeners – this is why users are introduced to this service forever.
Where the profits come from: Spotify’s main idea is that people can opt out of piracy by making it easier for them to access legal music. Subscriptions are the only way to pay for rights and generate income for musicians. It’s like this: listen to music online for free, but at the same time there is advertising and limited functionality. To remove the extension and get the full functionality, you must subscribe to the special campaign with a small monthly payment.
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The importance of this model lies in the ability to predict income through continuous sales, which is very useful for the company’s valuation. This increases the company’s sales, its image among professional businessmen, as well as customer loyalty. Another advantage is the ability to quickly and easily gather information about what customers are interested in.
This is a startup business model where you satisfy customer needs by providing products and services quickly. A good example is Uber, a service for calling private drivers, which has become the fastest growing in history.
The best quality of cars, their quick delivery, the ability to call a car using a mobile phone, as well as the evaluation of customers and drivers – all these things made Uber a service most popular analogues in America.
Where does the profit come from: One of the ways to make profit is by paying fees for a client. Second – promotional offers and partnerships with third parties.
Infographic: 9 Basic Things You Need For Your Business Model Canvas
Uber works with car owners and drivers, and together they set a minimum price. Uber provides partners with online orders from a single application and charges a certain amount of commission. The commission paid by the company varies from 20% to 25% of the total amount given to the client, these prices vary from country to country.
New technology + existing infrastructure + focus on quickly satisfying the needs of users – this is a simple recipe for success for startups who have chosen this model. Another important benefit is the use of freelancer labor, which reduces costs.
The essence of the freemium business model (free + premium) is that customers will be able to access the basic functions for free, and to get more features they need to pay an additional monthly fee.
Freemium applications are very popular today. For example, if you are a high user of Linkedin, then you know exactly what we are talking about.
Strategic Planning For Startup Business Model For The Overall Growth Of The Company
Where to get the money: Linkedin is one of the best examples of a successful freemium model. The free version allows users to create and maintain professional profiles, while special offers are solutions and special benefits that can be divided into two main areas: Networking, profile, job search and Statistics / Analytics.
This business model makes it possible to create startups, meet users without expensive advertising campaigns. It is easy for customers to get started with a product. Even a “30 day trial” or “Money Back Guarantee” has more barriers for new users to decide to use a product than a “Free” version.
In theory, it’s easy to sell – sell something else. Customers using your software, using a special offer, changing the payment model, or simply as a result of the user preferring the “free” version are ways to stimulate payment. .
The essence of this startup business model is that the buyers name their price for the service or quality and, if the buyer accepts the price, he sets his standards for the buyer. Priceline was the first company to choose a business model in its field and, as we have seen, it was the right choice.
Digital Business Models For Startups & Venture Innovation
Priceline is a specialist in travel services. How does it work? Sometimes the number of hotel reservations is less than expected. Therefore, hotels go with special offers in an online store, where the cost of living is determined by the government.
This auction has one important feature: you are the only participant. You offer your price for accommodation in the region you need, and take into account the necessary options for your stay, and the website tells you about the presence of such unknown offers from hotels, hotels and hotels.
If there are those offers, after making a payment on the site using a bank card, you will receive an email with the name of the reserved hotel and its address. The site will bring you up quickly
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