Don’t Have A Business Plan?
You’ve heard it before, if you don’t have a plan, you have a plan to fail. One of the biggest mistakes seen with online businesses is the casual, laid back approach to business. Many start their online business with a great idea, a social media page and hope for the best.
Its no wonder over the last decade, approximately 80% of new businesses fail in the first 18 months. While the reasons vary, one without question stands out. Failing to plan. The good news is, it’s never to late to develop a business plan. The even better news is that planning doesn’t have to be difficult.
One of the most confusing factors today are buzz words. Two such buzz words are: Business Models, and Strategy. They get thrown around and used interchangeably. They are being used to describe everything related to business. As such, they end up being meaningless.
If you’re getting ready to create your business plan, let’s start by looking at business models.
What is a Business Model?
A Business Model is a company’s plan for generating revenue and making a profit.
Most common Business Models used for online businesses:
Freemium Model: Online businesses that provide a free option of a product/service. This is a restricted version of what that they are selling that is available to everyone. The free experience usually includes things like: ads, account or feature restrictions. This allows everyone to experience their product, and fall in love with it. It builds desire to have access to the pieces that are currently being withheld from them. The goal: Entice customers to buy the full version.
Subscription Model: A popular choice. It’s generally loved by consumers and businesses alike. Netflix is a prime example. Provide high value, and looks after customers and they’re willing to pay a monthly fee. A monthly recurring fee is charged to a credit card. Making renewal each month painless for both sides. This model is great for proving company’s with monthly cash flow.
On-Demand Model: This model relies heavily on technology. Products (e-books, games, courses etc) are available immediately for download upon payment.
Services (coaching, mobile vet, taxi etc.) purchased online trigger a service. That service can be immediate or allows the client to schedule for a future date.
Direct Sales Model: With this on-line model your business creates a physical product. Then the company relies on individuals who are willing to sell your product. The sales associate receives a commission/flexible schedule.
Customization of Goods Model: Your business provides a base product and service. Common products are: t-shirts, mugs, trophies, etc. that are then customized/personalized. Pricing usually is tiered. Base product price + price of customization.
The Marketplace Model: Is one of the biggest and newest business models. This model continues to gain in popularity. Businesses such as: Uber, Airbnb, Etsy use this model. This model does not carry any products or services. Their business is to connect people who provide a product or service, with those who want to buy.
Which Business Model works best for your type of business? Have you considered combining Business Models as a strategy for multiple income streams? Next we will look at the role of Strategy in your Business Planning.