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Different types of business model

The first foundation business model is the One on One Service Model. In this model you deliver your service or services to clients on an individual basis. This is a very broad model and this is where almost everyone starts out and there’s a good reason for that. Some examples of professionals where you see this business model are insurance and financial professionals, real estate agents, plumbers, electricians, landscapers, wellness professionals, designers, entertainers, physicians, attorneys, etc. Each of these provide a service to their customer. This is a great model to start with because it requires little or no inventory. It is generally a fast start up with little capital required and you don’t generally need much staff, if any, to provide the service. On the flip side, this can be a very time intensive model and one where you are trading hours for dollars.

The next model is the Coaching or Consulting Service Model. You might think that this is the same as the one-on-one model and yes, there are some similarities. In this model, however, you are providing service as a consultant or coach to clients on an individual and/or a group basis. For this model, your expertise in your field IS your service. You might be a medical professional where you see patients and that would be a one-on-one business model. Now, you could also be a medical professional that consults other medical professionals how to provide their service, structure their practice, build their business, etc. And, as I mentioned a moment ago, you can provide this service in either a one-on-one situation or a group setting. Common examples of this model are life coaches and business coaches, business development consultants, strategy consultants, and trainers.

The Information Products service model. With this model, you leverage your knowledge and expertise into product form. Many people tend to think of information products as the CDs or digital downloads but in reality, information products include e-books, audios as CD’s or mp3’s, teleseminars and webinars, transcripts, multimedia courses, workshops, and events. In other words, information products cover a lot of ground. When you integrate info products into your business you can add multiple income streams, create recurring revenue opportunities as well as passive income opportunities and your leverage abilities go through the roof.

The fourth business model is the Licensing & Franchising service model. This is where you train others to do what you do and generate revenue by allowing others to duplicate your business. Sometimes you’ll hear this referred to as the “Train the Trainer” model. This can include a certification program which can be live in person or online. It might include monthly usage fees-for example, certification maintenance fees. There might be back-end commissions on products and programs. This is also almost always a feeder model for your highest level one-on-one coaching.

The final model is the Membership Program or Continuity Program service model. In this model, you create a program where members access exclusive content. This can be delivered in a monthly training program, a subscription plan, a retainer program, a maintenance program or perhaps you develop a premium content feed. This is a fun business model to have and it’s relatively easy to sell and easy to set up with the right team and tools in place. You can create passive income for yourself and this has the potential for a huge 1 to many payoff. However, be aware that large numbers are generally required to achieve significant payoff. You’ll also need to constantly have fresh content and on a regular schedule. Lastly, retention can be a little tricky-you’ll need to be prepared to invest time and energy to continually build and maintain your program.

There are multiple factors to consider when choosing the right business model but the first step is to understand how each one operates. From there, you’ll want to consider the time, resources, and support required to fully and properly execute each one.

Selecting The Best Business Model For You

Firstly, this article is not intended to be an exhaustive resource on the subject, nor is it aimed at corporate businesses whose business models can be very complex and take years to put in place. The idea here is that I will introduce the basic idea of business modelling to those unacquainted with the process, so that they can look at their business and consider their business model (if it even exists) and possibly review things a little to get back into shape.

So what do you understand by the word ‘model’ apart from fashion and plastic aeroplanes, a model comprises of a structure of components, that when put together, make the total picture, (so actually the plane metaphor might not be so far out). When we apply the word ‘model’ to your business, we are in this case looking at the various components of the business that will add value to your customers, hence creating the demand for your products and services in the marketplace.

So the basics of your business model will look at what is your business doing? A definitive question and deceptively simple, but many companies don’t actually have this locked down. What is your business doing? Is one question and there will be an answer to that most people will readily be able to answer, but the next question, far more powerful, is what do you WANT your business to be doing?

Now you are in Business Model territory, as you are defining what you WANT to do and how our business will work in the most effective way to get there.

So now you have the starting point for your business model, next you need to figure out the process of how your business will make as much money for the least expenditure of resources in terms of your time, effort, travel, purchases, financial input, as possible. A bad business model is typified in small business, (and even large businesses to some degree) by the business owner effectively running around like a headless chicken, and the staff doing the same, trying to keep customers happy, then looking at their bank balance and realising forlornly, this isn’t working!! And this can be ultimately placed at the door of a faulty business model.

So now you have a laser beam vision of what you WANT to do, you need to look at the basic dynamics of your business: How you will turn your available time and resources into a good return on your investment.

A really good place to start is with your pricing, pricing is probably one of the biggest areas that people get wrong. When you set your prices too low, and your effort and resources to get those products and services to market are too high, you have got it wrong. Setting the wrong price means your business is not going to be scalable, i.e. you cannot grow and make any real money as you have no cash left over in the business. So pricing is a good area to start putting together your business model.

Pricing can be a complex area, but the two things that affect it most are, firstly, what your customers are willing to pay? And secondly, how much you need to charge to make your business profitable.

So now we have an idea of what we want to charge, we now need to look at how we will add value through our products and services, in the most efficient manner so we take as much of that money we charge for ourselves, obviously allowing putting some money back into the business to create a cash reserve.

Time is the next consideration, very importantly, how much does your time and that of your staff cost? Actually work out how much that time is worth in terms of a cash value. Work out how much travel you are doing, (or if just starting out, how much you think you will be doing), to service your business?

A good business model will be one where your business has scalability built in, this simply means that the business CAN grow, beyond simply yours and your staff’s available time, so you are not at a ceiling point and you can grow, (if that is what you want).

Even if you run a business and decide you are happy with it being small and keeping it that way, you will almost certainly want to have comfort in the use of your time, so that you are not running around with no time left and not enough reward.

The next area is buying. What are you spending money on and how much are you paying relative to how much you are making? A good business model will be one where you have aggressively (in the nicest way) sought the best prices so you can make a good profit, allowing for delivery charges etc. Look at this area and make sure it works, that is modelling, simulating the scenarios so you can see it all working.

The last area I will ask you to consider, is what you are personally taking out of the business? Many business owners are taking a little too much from their businesses and that can extend to the salaries and benefits extended to their staff. I am all in favour of having a highly dedicated workforce, and this should rightly be rewarded, but control is so important here as getting it wrong can be difficult to reverse once it is allowed to get out of control.