4 types of business models

1. Product Sales Model:
This model involves selling physical products to customers.

2. Service Sales Model:
This model involves providing services, such as consulting or maintenance, to customers.

3. Subscription Model:
In this model, customers pay a recurring fee for access to a product or service.

4. Ad-Based Model:
In this model, the business generates revenue by displaying advertisements to users.

What is a good business model?

A good business model is one that effectively addresses the needs of its target market, provides a valuable solution, and generates sustainable revenue and profit. It should be adaptable to changes in the market and be scalable as the business grows.

7 steps in developing a business model:

1. Identify the customer

Determine who the target customer is and what their needs are.

2. Define the value proposition

Determine what value the product or service provides to the customer.

3. Identify the revenue streams

Determine how the business will generate revenue from the value proposition.

4. Determine the cost structure

Determine the expenses associated with delivering the value proposition and how the business will cover those expenses.

5. Define the key activities

Identify the key activities required to deliver the value proposition.

6. Identify the key resources

Determine the resources, such as people, technology, and materials, needed to deliver the value proposition.

7. Define the customer relationships

Determine how the business will build and maintain relationships with customers to ensure their satisfaction and loyalty.

Lets Understand with an example :

Harsh is an entrepreneur who has developed a new social media platform. He is trying to develop a business model that will help him grow his company. To do this, he follows the 7 steps in developing a business model:

1. Identify the customer

Harsh identifies his target customers as young adults aged 18-30 who are active on social media and interested in sharing their experiences and connecting with others.

2. Define the value proposition

He determines that his social media platform will provide users with a platform to share their experiences, connect with others, and discover new content.

3. Identify the revenue streams

He decides that he will generate revenue through advertising and premium subscription options.

4. Determine the cost structure

He identifies the costs associated with running the platform, including server costs, development costs, and marketing costs.

5. Define the key activities

He determines that the key activities required to deliver the value proposition are software development, content moderation, and marketing.

6. Identify the key resources

He identifies that the key resources needed are software developers, content moderators, and marketing experts.

7. Define the customer relationships

Harsh decides that he will build and maintain relationships with users through regular updates, engaging content, and customer support.

Through this process, Harsh is able to develop a business model that effectively addresses the needs of his target market, provides a valuable solution, and generates sustainable revenue and profit.

Hope this was helpful! There's more to explore! Learn about Cap-Table here.