How to choose the right business model for your SME
Posted: Wed Jan 22, 2025 6:31 am
When setting up a new company, we often don't stop to think about the importance of choosing the right business model . Worried about other aspects such as the name or the economic costs, we forget to think long-term and analyze what our business model will be .
The business model is, to put it simply, the structure of the company . Not understood in terms of staff or personnel management, but in terms of how it manages to generate profits and through which strategies.
For example, one company may choose to make a few products of very high quality and very high cost . Another company, however, may choose to make a huge quantity of low-quality products in order to reach more people . In the end, in both cases, the important thing will be the profit margin.
business model
Types of business models
1. Mass sales business model
In this case, it would be a business model in which we cayman islands whatsapp lead would need to sell a huge amount of products . Also, the profit margin for each of the units we sell would be very low. This case is that of fruit or vegetable producers, and also that followed by companies that manufacture low-quality, low-cost products . The main obstacle to this business model is that it requires a large amount of sales .
2. Specific sale or consulting
If you are planning to set up a market research or image consulting company, it is very likely that you will have very few clients, but that they will pay you very well . In this business model, we have to understand that it is necessary to have a very long sales cycle . That is, months, even years, can pass from the moment we begin a commercial contact with a client until we finally close a sale.
3. Freemium
Hefreemium model(a synthesis of free and premium) business model is based on offering a basic product for free . This product, being free, is very easily acquired by many people. Once we use this product, we want to improve it through actions that do have a cost. For example, this business model is used by many mobile game manufacturers, which offer us a totally free game and if we want to get out of it we have to pay.
business model
4. Low-cost business model
When it comes to generating profits, it is clear that we have to generate income . However, low-cost business models allow us to generate profits at very low costs. These are businesses that do not require investing in large premises, many employees, etc. For example, business models on the Internet often follow this pattern.
5. Franchise business model.
When we choose this business model, what we do is open our own establishment using a license to use another brand. In this way, we benefit from the good reputation and knowledge that this brand has to attract customers to our establishment.
This business model offers the advantage of having a large number of people who already know the name of our company. The main disadvantage would be the fact of having little freedom of action over our company and also the fact of having to pay royalties to the owners of the brand.
6. Bait and hook business model
To a certain extent, this business model is very similar to the freemium model . Instead of offering a product for free, it is offered at a very low cost. However, accessory products or spare parts are offered at a high cost. This would be the case, for example, ofRyanairwhere you have to pay to check in your suitcase, choose your seat, etc.
It would also be the business model used by many telephone companies , in which they offer a mobile phone at a very low cost in exchange for signing a permanent contract.
The business model is, to put it simply, the structure of the company . Not understood in terms of staff or personnel management, but in terms of how it manages to generate profits and through which strategies.
For example, one company may choose to make a few products of very high quality and very high cost . Another company, however, may choose to make a huge quantity of low-quality products in order to reach more people . In the end, in both cases, the important thing will be the profit margin.
business model
Types of business models
1. Mass sales business model
In this case, it would be a business model in which we cayman islands whatsapp lead would need to sell a huge amount of products . Also, the profit margin for each of the units we sell would be very low. This case is that of fruit or vegetable producers, and also that followed by companies that manufacture low-quality, low-cost products . The main obstacle to this business model is that it requires a large amount of sales .
2. Specific sale or consulting
If you are planning to set up a market research or image consulting company, it is very likely that you will have very few clients, but that they will pay you very well . In this business model, we have to understand that it is necessary to have a very long sales cycle . That is, months, even years, can pass from the moment we begin a commercial contact with a client until we finally close a sale.
3. Freemium
Hefreemium model(a synthesis of free and premium) business model is based on offering a basic product for free . This product, being free, is very easily acquired by many people. Once we use this product, we want to improve it through actions that do have a cost. For example, this business model is used by many mobile game manufacturers, which offer us a totally free game and if we want to get out of it we have to pay.
business model
4. Low-cost business model
When it comes to generating profits, it is clear that we have to generate income . However, low-cost business models allow us to generate profits at very low costs. These are businesses that do not require investing in large premises, many employees, etc. For example, business models on the Internet often follow this pattern.
5. Franchise business model.
When we choose this business model, what we do is open our own establishment using a license to use another brand. In this way, we benefit from the good reputation and knowledge that this brand has to attract customers to our establishment.
This business model offers the advantage of having a large number of people who already know the name of our company. The main disadvantage would be the fact of having little freedom of action over our company and also the fact of having to pay royalties to the owners of the brand.
6. Bait and hook business model
To a certain extent, this business model is very similar to the freemium model . Instead of offering a product for free, it is offered at a very low cost. However, accessory products or spare parts are offered at a high cost. This would be the case, for example, ofRyanairwhere you have to pay to check in your suitcase, choose your seat, etc.
It would also be the business model used by many telephone companies , in which they offer a mobile phone at a very low cost in exchange for signing a permanent contract.