Choosing the Right Business Model
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?**
Popular Business Models
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:
- Your target market and customer behavior.
- Available resources and startup capital.
- Legal environment in your country.
- Scalability and long-term profitability.
- 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.
Next Steps / Следующие шаги
- How to Write a Business Plan That Attracts Investors — Transform your model into a solid business plan.
- Understanding Business Licenses and Permits — Learn what permits are required for your chosen model.
Related Topics
- Starting_a_Business_from_Scratch
- How_to_Write_a_Business_Plan_That_Attracts_Investors
- Scaling_Your_Business:_When_and_How