What is all this Business Model malarkey?

  • by

This has stumped so many businesses in the past, how do you figure out what business model applies to your business and what on earth is actually a business model.

So lets simplify things down.

What is a Business Model:

According to wikipedia “A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.” 

Thats a little confusing!!  Lets break it down; Essentially a business model is the company’s plan on how you will make money, who you are selling to and what your expected costs will be.

To take it an extra level, some companies may have a second business model.   So when thinking of your business model, think which one describes your business the best and is there another business model that also describes your business but not primarily.

Why do I need a Business model?

You maybe asking why the heck do I even need to know what my business model.  Its a good question.  The reason is simple it helps to create a vision for your business and should answer important questions about your business. 

Which Business Model is best for my business?

There are as many business models as there are businesses but to help you decide which business model is right for your business we have listed some of the most popular business models we see in Amron D, yours may not be here but this will help to get your thoughts going. If you would like to explore more business models we have added a link to another Amron D posts that lists all of Amron D’s business models.

Top 10 Business models:

  1. Direct Sales:

This model is the sale of product or services without a middle man but typically has no fixed retail location example at home, online, or other venues that are not a store.  This business model may also have a network of salespeople or be an individual.

Examples: Avon Products, Inc, Photographer

2. Franchising 

Best for the company’s expansion, franchising allows the franchisor to license its resources, brand name. Intellectual property and rights for a franchise to sell its products and services in exchange for a royalty.

Examples: Mac donalds

3. Direct-to-consumers

This model allows companies or brands to sell their products to final customers directly.   

These companies manufacture and ship their products directly to buyers without relying on traditional stores or other middlemen.

Examples: Unilever

4. Family-owned

Any business that is run by a family, and its decision-making processes are controlled by two or more family members is a family-owned business.

5. Brick-and-mortar 

As the name suggests this business has a physical presence in a building or other structure.  The business is either leasing or owns the building.

Examples: your local supermarket, hairdressers 

6. Subscription

This model can apply to both brick and mortar as well as online.   The customer pays a recurring amount (weekly, monthly etc.) for access to the product or service

Examples : Gym membership, Netlfix 

7. Consulting

These business are based on two principle ideas: (1) hiring people (top talent if possible) and (2) charging clients a fee per hour or day for gaining access to this talent, its expertise and/or manpower.

Examples: Doctors, Experts, Software Developers

8. Direct-to-consumers

This model allows companies or brands to sell their products to final customers directly.   

These companies manufacture and ship their products directly to buyers without relying on traditional stores or other middlemen.

Examples: Unilever

9. Freemium

A business that has a pricing strategy by which a basic product or service is provided free of charge, but money is charged for additional features, services, or virtual or physical goods that expand the functionality of the free version of the software.

Examples: Zoom, DropBox, Canva

10. Manufacturing

A business that utilizes raw materials to create a product to sell.

Example: Ford, GM

In Amron D platform when setting up your forecast in Step 1 of setting up your forecast you will be asked what is your primary business model, by answering here this helps you to better understand your business and you are also helping us to build more intelligence into our system.

If you would like to explore the full list of Amron D’s business models, please click here.

Leave a Reply

Your email address will not be published.