Business Models are an essential part of any business. There are all kinds of ways in which you can make money online. And, the business model you choose for your online business is the foundation of how you make money in your online business.
The first decision you will need to make at the start of your business journey is to choose your business model.
Any online business model is centred on the business owner offering a service or product that solves someone’s problems and provides value in their lives.
Now, there are several basic types of business models that you could create that are unique to the online world.
What is a Business Model?
So what exactly is a business model? And why is it so important?
Well, as I said at the start, your business model is the foundation of your business. It’s the framework you build your business on. It gives your business structure. It’s how you make money in your business.
The Different Types of Business Models for Entrepreneurs
There are many different types of business models, that entrepreneurs can choose from when starting a business. There are business models that are better for the offline world and those that are better for the online world.
Essentially as an entrepreneur, you first have to select whether you want to have a brick and mortar model or an online model.
Today we’re talking about the online business models available to you.
Business Model vs Income Streams
Before we move onto the actual business models, it’s important for you to understand the difference between business models and income streams.
You see a lot of people will tell you what is essential and income stream is a business model but it’s not.
Where your business model is the foundation of your business, your income streams are the cables and pipes that flowing into your foundation, keeping the lights on, the water flowing and the gas coming to keep the house warm.
Every business model has its own set of income streams aligned to it and the most successful online businesses know how to utilise each of the incomes streams available to them.
Online Business Models
These 5 successful online business models are the models you must choose from in order to start to build your business online.
1: Physical Products or Merchant Model
The online merchant model is nearly an exact replica of the offline merchant business model. With this model, a merchant focuses on the offering, selling and delivering products to the online market.
Examples of a physical products model include any type of eCommerce store including dropshipping, and Amazon FBA stores.
2: Digital Products or Production Model
The digital products model is when a business produces digital products that are available for use online or downloadable. This can also include providing online recommendations.
Examples of this include software as a service, online courses, ebooks, planners, digital art or affiliate marketing and advertising.
The services model is when you create and sell services to your customers. This includes coaching, consultants, freelancing and done-for-you services.
The subscription model is when you provide either digital products, physical products or services on a subscription basis. This would be any type of membership site or paid community.
5: Hybrid Model
The reality about online businesses is that they often have or use more than one business model to make their money. They set up their site in a way that several streams of income are being made from the site.
For instance, a site can offer a subscription service while also using digital products, services and physical product models at the same time. Another site may have only digital products, services and subscription models working for them.
That’s what the Hybrid Model is all about. Using a mixture of the models to create a business that works for your and the clients you serve.
The important thing is to do your research and know what each model involves. And, if you’re new to the online business world, the two best online business models to consider are digital products and services model. There’s very little prep work involved, and the investment costs are low too.
How to Choose the Right One for You
So, how do you choose the right one out of all of these business models? You have to decide which one appeals to you the most. You may want to actually start with your product instead.
If you know what kind of products you are going to be selling, you can choose the business model that fits them the best. Find something that you are passionate about and then find products or services that you can pour that passion into.
If you find the right one, then you will find it very easy to create content or market your products online.
Business Model PDF
No matter what business model you get into, there is always some financial aspect of promoting a service or product. Bear in mind that each one has its pros and cons, which means you need to be careful in choosing the right business model for your skillset and commitment. You may find that the business model you choose (if chosen incorrectly) isn’t suitable for you or does anything beneficial to your business interests.