What do people really mean when they ask about the Business Model? It’s really very simple.
They are asking “How do you plan to make money?” and subsequent questions are “Can you generate enough money to pay for all supplies needed and leave some left over?”, and “How long until the income exceeds costs?”
In your presentation so far, you’ve already covered what your product or service is and why customers will buy from you. This is where you explain how the customers will pay for the product and how you service them.
There are a limited number of business models and numerous hybrids. Here are the basic types along with some examples of companies that are using them:
- Product/Service Sales.
- Brokerage Fee.
- Lending / renting / leasing.
- Subscription Fee.
- Usage Fee.
If you’re not sure of the best solution for your business, do a thought experiment and apply each to your business with a spreadsheet to map the income streams.
Of course, there’s a popular model of multiple investment rounds until no more investors can be found. But that doesn’t lead to a sustainable company, so I’ve not included it here.
Looking back over the nine models, which is most likely to be effective for you?