If you’re working on starting your own business, there’s a lot that you need to consider and decide. Once you have your idea solidified, you need to consider who you want to hire for the team and where you’ll be headquartered. Another important decision you’ll need to make is what business model you will use. While some businesses are naturally compatible with a specific type of business model, others can be adapted to a few different types, some that may be a better option for you than others.

The business model you choose will be the way that you deliver products or services to your customer and ultimately earn your money, so it’s important to consider it during the planning process. Will your product be better delivered through a drop shipping model or is it something that people will want to subscribe to on a regular basis? From drop shipping to subscription, here are some of the business models that are making business owners money.

Drop Shipping

The top drop shipping companies didn’t get where they are today because the drop shipping model doesn’t work. It does quite well, or it wouldn’t even be a business model to consider. Rather than stocking inventory and sending to customers yourself, when you drop ship you facilitate a purchase for the customer directly from the manufacturer so that they don’t have to go through standard channels like buying from other retailers.

There are multiple benefits to using the drop shipping model, including the fact that the startup costs are low. Since you don’t have to purchase inventory or a place to store it, your overhead can remain minimal in comparison to other business types. The model is also great for scalability and expansion since it can be easily adjusted as you want to grow your business.

Subscription

As of today, approximately 15 percent of online shoppers are subscribed to receive a product on a regular basis, and that number will likely continue to go up as more and more companies offer their product or service through a subscription model. Companies like Dollar Shave Club, HelloFresh, and even Amazon offer products through a subscription service. But even software and service companies like Microsoft and Adobe are offering their products as a subscription these days, rather than a one-time purchase.

Subscription business models offer a lot of benefit to owners since they provide a better idea of the upcoming month’s income, the ability to develop relationships with customers and therefore improve customer retention, a way to stand out from the competition, and more. While the subscription model may not be the perfect fit for all types of businesses, it’s something you may want to consider adapting to yours.

Direct Sales

The direct sales business model is somewhat unique and not something that many businesses think to use since it is often associated with multilevel marketing which is, in turn, often associated with and mistaken for a pyramid scheme. With the right marketing and effort, though, you could easily help your existing and potential customer base understand the difference between direct sales and multilevel marketing and could start reaping the rewards that the business model has to offer. Companies like Mary Kay, The Pampered Chef, Tupperware, Stampin’ Up, and many other recognized brands have all had success from the direct sales model, and if you leverage it right, you can too. Although you would still have to market and run your business as normal, having customers who make the direct sales would help you gain exposure more quickly and increase revenue just as fast.

Freemium

Like the subscription model, the freemium model is becoming more and more common these days; however, it generally only works for service-based businesses rather than businesses with a physical product. Businesses like Canva, Spotify, and others will offer a free option for their services, making it available to those who don’t have the money or don’t want to pay. They also offer a premium option, though, that will get rid of ads or offer more features for a small monthly fee or a purchase, catering to those who love the product but want a little more out of it.

Freemium business models are a great option since they attract both the customers who are looking for a free trial or a free experience as well as those who are willing to pay, but it will often convert free customers, simultaneously increasing exposure and revenue.

In Conclusion

There are several business models to choose from, but you may find that one is better than another based on your business type and goals. However, it’s important not to rule out any business models when considering which to choose since there may be one that isn’t standard for your industry, but that will fit your business and help you earn more money than you might have originally thought.

Which business model are you considering for your startup business?

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