A robust business model improves an organization’s resilience against economic storms and shifting market conditions. Unfortunately, too many businesses fail simply because of poor financial management. Business models encourage entrepreneurs to track profits and losses. This practice also improves business sustainability. Poor financial management has caused a staggering number of businesses to fail, and a business model makes it easier for an entrepreneur to keep track of profits and losses.
Business model innovation
Business model innovation helps companies adapt to the changing needs of customers. Examples of companies that have used this strategy include Amazon and Atari, which shifted their business models to better meet customer demands. Blockbuster faced similar challenges when selling VHS tapes; however, the new format required less shelf space, was more durable, and was thin enough to ship by mail. Reed Hastings and Marc Randolph recognized an opportunity and used their creative thinking to develop a new business model.
Open-source
Open-source business models have a number of benefits for business owners. These models allow developers to offer software to customers free of charge, but can also charge for technical support. Developers can also offer services such as compiling software or providing physical installation media. Examples of open-source companies that have benefited from this model include IBM, RedHat, and SUSE. In addition, some companies have found success in creating branded merchandise.
Subscription
A subscription business model has several advantages. First, it allows a business to create a more personal relationship with its customers. Secondly, it helps a business collect feedback from its subscribers, which it can then use to improve its products and services. Thirdly, a subscription system is scalable.
Reverse auction
A reverse auction business model has proven to be an effective tool for sourcing products and services. It enables sellers to compete for buyers by bidding up their prices and offering their products. It saves time and money without compromising the quality or quantity of products. It typically involves three steps, beginning with a buyer publishing a request for quotation. The buyer specifies the quantity of goods or services that it needs, as well as a deadline for the supplier to meet the request.
Increase in sales of low-margin products
The profit margin on a product is how much money the seller makes after deducting all expenses. The higher the profit margin, the more tempting it is to sell the product. But this logic does not apply to all goods. In fact, some low-margin products may produce higher profits than more expensive items.
Attract new customers
Attracting new customers is one of the most frustrating tasks for most business owners. Unlike doctors, who do not have to seek out new patients, most businesses do not have the luxury of attracting new customers. But without new customers, they will not survive. If you’re struggling to attract new customers, here are some business models that have been proven to work for other businesses.
