The best business model for our startup

March 16, 2023March 14, 2023 Livinnovate 65 Views 0 Comments

Steps to choosing the best business model for our startup

As a product manager, I’m always helping startups find their business model. For this, always follow these four step algorithms.

Step 1. Whose problem are you solving?

First, identify who the end customer of your product/service is.

B2B (Business to Business) – Entrepreneurs, not individuals. In this case, they work for the same company as you. Typical examples of the B2B model are software development companies, web design agencies and outsourcing companies.

Examples: Microsoft Teams, Slack, Plai.

B2C (Business to Customer) – Promoting products and services to individual customers. A vivid example of such a model is the online store where people buy the products, mobile apps, and games they use every day.

Examples: Netflix, Hulu, Dollar Shave Club.

C2C (Customer-to-Customer) – Such platforms serve as a connected space for customers to offer products and services to each other. In such platforms, peers are peers and interact for economic benefit. This model is also called the “sharing economy”. Examples: eBay, Uber, Horizon.

Step 2. Analyze your competitors:

We can’t make a niche statement without knowing our competitors. We need to take the time to look at the leading game setters in our niche.

Who are they targeting?

What monetization model do they use?

What is added value?

Step 3. Create a lean canvas:

The Business Model Canvas is a tool that allows you to bring all your business elements together in one schema. Templates typically contain nine blocks, each dedicated to a specific direction of the business process.

Issue: What is the issue for each corresponding user segment?
Consumer Segments: Who do you provide value to? Who are your most important customers?
Value proposition: What consumer problem are you solving? What value are you bringing to your customers?
Communication Channel: How do you communicate with your consumers? How to communicate our value proposition to the customers?
Customer Relationship: How do you interact with consumers? Directly or through a personal manager? Or is it self service?
Source of Income: What value are your customers paying? How will you monetize your project?
Primary resource: What does it take to bring a product to market, or to communicate its value to consumers? These are resources, which can be financial, material, intellectual, etc.
Important action steps: What is required to make the business work? This can be production, sales, finding solutions for a single customer, etc.
Key Partners: Stakeholders that enable your business, i.e. providers of integration services.
Expenses: Expenses necessary to keep the business running.
Unfair Advantage: Think about what value you can have that other people can’t buy.

Lean canvas is especially useful for startups with a lot of blur. This artifact gives you a clearer picture of different aspects of your business.

Step 4. Choose a business model:

We finally get to the crux of the algorithm: choosing a business model. This choice depends on the various factors mentioned above. Depending on your business model canvas and your answers to the questions above, you should choose the type of monetization model that best fits your business.

Competition with business models-

It’s easy to bring virtue into the cycle when there are no competitors, but few business models work in isolation. At least it won’t last long. To compete with competitors with similar business models, companies must build rigorous results quickly to enable them to generate and capture more value than their competitors. The situation is different when companies compete with different business models. Results are often unpredictable, and it’s hard to know which business model will work.

Take, for example, the battle between his two dominant retailers in Finland, his S Group of consumer cooperatives, and his Kesko, which utilizes entrepreneurial retailers to own and operate stores. Think about it. We’ve been following these companies for over a decade and Keyko’s business model seems to be excellent. The incentives you offer to franchisees should result in rapid growth and high profits. However, it turns out that S Group’s business model has done more to Kesko than Kesko has done to S Group. Because S Group is customer-owned, retailers often lower prices and increase customer bonuses, allowing them to capture market share from Kesko. As a result, Kesko has been forced to cut prices, dwindling profits and discouraging entrepreneurial retailers. As a result, Kesko performed worse than the S group. Over time, S Group’s opaque corporate governance system allows margins to creep into the system and force price increases. This will enable Kesko to increase prices and improve profitability, propel entrepreneurial retailers forward, and win back more customers through superior shopping experiences. This starts another cycle of rivalry.

Companies can compete through their business model. You can strengthen your own virtuous cycle, block or sabotage your competitor’s cycle, and create a complementary relationship with your competitor’s cycle in three ways, turning substitutes and complements.

How to choose the most profitable startup business model?

Each of the business models has different advantages that you can take advantage of when building your own startup. For example, the marketplace business model has very low overhead and no need to hold inventory. These companies are great because they can operate from anywhere.

You can choose to buy office space or run your business virtually. The best way to determine which of these business models is right for you is to ask business owners for certainty about each type of business model and what your company needs when implementing one of these models. to inform Once you’ve found the right business model for your startup, you should be able to create a business growth plan.

Once you have your business model in hand, you can start building your business. Starting a startup usually involves identifying sources of funding, creating a business plan, and getting your product or service to market. At first, you may find that your budget is small and your business may grow slowly. Perhaps the best way to overcome this obstacle is to join an incubator for cheap access to office space, lab space, and high-end equipment. If you’re developing a medical tech or life sciences startup and need lab access, apply today to University Lab Partners, Orange County’s premier wet lab incubator. From here, you can do the work you need to grow your business without devoting all your precious startup resources to your business.

Famous apps and their business models

Airbnb – Marketplace Business Model: Airbnb is one of the most popular marketplaces in the world today. Airbnb is a platform that connects landlords and home seekers around the world. The main idea behind Airbnb’s business model is that while it’s the world’s largest accommodation provider, it doesn’t own the accommodation itself. However, it provides tools for finding each other and makes money from user fees.

Netflix – The Subscription Business Model: Netflix is the largest entertainment platform with 193 million members (as of July 2020) from over 190 countries and annual revenue of $20.16 billion. Netflix’s primary partners are celebrity filmmakers, screenwriters, animators and production companies that create high-quality content for streaming on the platform. Users can enjoy this content without her commercials 24/7 and can pay monthly, semi-annual, or yearly subscriptions.

Amazon Web Services – Pay as You Go Business Model: Amazon Web Services (AWS) is an Amazon subsidiary that provides cloud computing services to individuals, businesses, and governments. In AWS, a user has 24/7 access to her virtual cluster of machines. When a user signs up for her AWS platform, they get free credits right from the start. So this partly resembles the freemium model. However, as soon as a user needs more cloud storage space and server capacity, the user can buy it and pay accordingly. This is how the pay-as-you-go business model really works.

Business model example:

Consider Microsoft’s vast portfolio. Over the past decades, the company has expanded its product range to include digital services, software, games and more.

Productivity and business processes: Microsoft offers Office products and LinkedIn subscriptions. These subscriptions can be based on product usage (that is, the amount of data uploaded to SharePoint).

Intelligent cloud: Microsoft offers server products and cloud services for subscription. We also offer services and advice.

Increased personal computing: Microsoft sells physically manufactured products such as the Surface, PC components, and Xbox hardware. Remaining Xbox revenue includes content, services, subscriptions, royalties and advertising revenue.