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Choosing the Right Business Model

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Choosing the Right Business Model

Starting a business begins with one of the most important decisions: selecting the right business model. A well-chosen model defines how your company creates, delivers, and captures value. It also influences growth opportunities, risks, and investor interest.

What Is a Business Model?

A business model describes the way a company operates and makes money. In simple terms, it answers three questions:

  • **What value do we provide to customers?**
  • **How do we deliver this value?**
  • **How do we earn revenue from it?**

Here are some of the most common models for small and medium businesses:

  • B2C (Business-to-Consumer) – Selling directly to individual customers.
 Example: online clothing store, café, or local service business.
  • B2B (Business-to-Business) – Providing products or services to other companies.
 Example: IT outsourcing, consulting, wholesale trade.
  • Subscription Model – Customers pay a recurring fee for ongoing access.
 Example: SaaS platforms, fitness clubs, educational courses.
  • Freemium Model – Basic service is free, advanced features are paid.
 Example: mobile apps, online platforms.
  • Franchise – Business is expanded through franchise agreements.
 Example: fast-food chains, retail shops.
  • Marketplace – Platform connects buyers and sellers, earning from commissions.
 Example: e-commerce platforms, freelance marketplaces.

How to Choose the Right Model

When choosing a model, consider:

  1. Your target market and customer behavior.
  2. Available resources and startup capital.
  3. Legal environment in your country.
  4. Scalability and long-term profitability.
  5. Risks and level of competition.

Practical Example

Imagine you want to open a fitness studio:

  • As a B2C business – you sell memberships directly to clients.
  • As a Subscription model – you charge a monthly fee for unlimited visits.
  • As a Franchise – you join a known fitness chain, paying royalties but receiving brand support.

Categories

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