The Right Business Model

Is there such a thing as the right business model? Or, the perfect business model, or the best business model?

I posed this question to a friend of mine last night, but I can't honestly say we figured anything out.

The conclusion that we came to is that there are many different business models, each with its own pros and cons.

Without getting too theoretical this is what we came up with.

1) There is the retail business model, where you buy a product, and sell it either directly or through a distribution channel. This is probably the most common.

2) There is the subscription business model, where an individual or group pays a flat fee with minor fluctuations in costs for a service or product for a fixed amount of time. Your utility, phone, or cable company fits into this group.

3) There is the insurance business model, where again, an individual or group pays a premium for access to service or product for a longer amount of time, but doesn't always use or need the product. Medical, auto, and homeowners insurance are the usual suspects in this group.

4) There is the Multi-Level marketing business model, where a product or service is sold through a defined network of distributors who benefit from the sale of a product across various levels of involvement in that sale. Franchising is similar to a MLM, but is generally more rigid and capital intensive to get involved with.

5) There is the consultation business model, where services are rendered on a per-diem or set term basis for a fixed fee. However, consultants have to continually seek out new clients to maintain a steady stream of income.

6) Lastly, we have the contractual business model, where a basic service is provided at a set price for a set time-frame and is expected regardless of outside market forces. This arrangement can be found in just about any field, but is prevalent when dealing with services to large organizations or the government. This model is great if your budgeting an management skills are excellent.

We figured that for any business, there might more than one business model that might apply. However, as it relates to your business, you have to define what kind of structure you are most comfortable working within. It should also be noted that even though a business might have one business model, it is possible to have more than one revenue stream.

For example a publisher might make a little money from selling subscriptions, but makes substantially more from selling advertising. In addition they might take in revenue from the sale of branded products, or from consulting for other publications.

Your job as a business owner, entrepreneur, or investor is to seek out business models that feel right to you.

It's only right if it works for you.

-whatdabusinessis.com