It is not the idea but the business model that makes a business successful. It does not matter how unique and great your business idea is, it is sure to run your company into bankruptcy without a strong business model to support it all the way to the pinnacle of success. That is why 95% of startups fail and fizzle out. There are various types of business models followed by different companies. No business idea is tailor-made for every business idea but you have a greater chance of succeeding if you follow the most-profitable and trending business models. The following are the best business models for 2018 that you should consider before finalize yours.
The Aggregator Model – This model is followed by Uber and Oyo Rooms who are leaders in the respective industry. If you are willing to start a service providing company on a very large scale, you can adapt the model for your business idea. In this model, you do not have to own the product you are selling. All you have to do is go into partnership and co-branding of the products owned by independent owners. Then with thorough marketing, you have to drive traffic and set a standard for all the products in your brands. Uber does not own any vehicle and neither do Oyo owns any hotel. Yet, they provide rides and rooms with certain standardizations under their trusted brand. This model not only cares about the quality of the product but also about the consistent the user experience.
Success Factors – Partnership, Standardization, Branding and Viral marketing.
The Marketplace Model – It is the modified middleman model. Previously, the middleman used to be the connector between buyer and seller. With marketplace model, you are creating a platform for direct interaction between buyers and sellers and you are getting a commission when the deal is done. There are various niches where the previous models of middleman still exist and you can break through them and create a platform to disrupt the niche completely. The success of this model depends on superb marketing, quality support team and eradicating frauds from the platform. This model is followed by so many successful companies like Freelancer where casual and corporate people can offer freelancer jobs and hire freelancers directly. Even eCommerce giants are steadily moving from inventory model to marketplace model.
Success Factors – Robust Platform, Branding and Marketing, Less Commission, Great Support Team, Strict Monitoring.
On-Demand Model – This is probably going to be the breakout model of 2018. Consumers have zero-patience in this fast-paced world and they want to pay for the time they use a service. If you are providing a long-term service with membership model, it is better you implement an on-demand model side by side. The on-demand model has the power to disrupt any establish sector instantly because it saves the money for a great sector of consumers. For example, instead of a monthly membership program, if you offer pay per view option for watching a movie, reading an article or playing a particular game, it is likely to be better received by casual consumers and draw users from your competitor. There is a huge scope of scaling in this model and it is also cost-effective. You can offer freelancing jobs when the work pressure goes up and cut them down when there is less demand.
Success Factors – Quality of Product, Intelligent Marketing.
The Reverse Auction Model – If you think the marketplace model is too crowded in your selected niche, you should definitely go for reverse auction model. Consumers absolutely like this model and with simple marketing strategies, you can get success in no time. This is another cost-effective model with initial investment to get started. There are various platforms available where the buyers post their requirements and the sellers compete with price tags to provide the required service. It cuts off the monopoly of businesses and high price charges. Furthermore, buyers can handpick a seller after interacting and checking out past experiences. This model is yet to become viral in various sectors and only restricted to certain digital service. There has to be a strong vigilance so that the sellers are genuine and the buyers are protected.
Success Factors – Robust Platform, Strict Monitoring and Low Commission.
The Freemium/Subscription Model – This model is not new yet 2017 has seen a great boost in this business model. Spotify, Netflix and various such companies used this model to drive robust growth. You have to begin by offering free services of your premium products so that everyone can try it out and get impressed. For example, WhatsApp offered one year of free service before charging in some countries. Once they get addicted, they will go for the subscription offers. The success of this model depends on the product more than marketing. If users like the product, naturally it will become word of mouth. But it is a risky model as there is a need for good initial investment with no hope of return. But this model is universal and can be added to any other business model.
Success Factors – Unique Product, Targeted Audience Selection, Adding Value To Premium Members.
All of these five business models started above are applicable for different online and offline products and services. Before you can choose any model, do a proper survey to understand the demand for your business idea and the business model that consumers will be willing to accept readily.