Business model: types + how to choose for your company

Defining the business model is the first step that every entrepreneur needs to take when he decides to create his own company.

It is nothing more than a simple document that puts on paper the whole idea of ​​creating your organization, explaining how it will generate value for customers.

Although it seems simple, it is not always easy to get the idea out of your head and put it clearly on paper, with all the necessary details.

And to help you in this endeavor, we have separated in this article a deeper insight into what a business model is, the main types and how to choose for your company.

What is business model?

The business model, as we anticipated, is a document in which you will put on paper all the idea you have in mind about the creation of your enterprise.

It is worth mentioning that the main objective of this document is to show how your company generates value for customers based on the proposal that is being presented.

One of the most used methods to elaborate a business model is the Canvas.

This tool helps to fully understand what your company is like. In it you describe all the elements and steps that make your venture unique.

What is a business plan template?

A point that is important to clarify and that generates a lot of confusion is the difference between a business model and a business plan.

The business plan is different, and in this case you will not detail your business itself, but the whole context in which it is inserted.

Usually the business plan is divided into three parts: market, operation and finance.

The first step is to analyze the products and services offered, the company’s competitors, competitors’ strengths and weaknesses, market opportunities and threats, etc.

In summary, in the first stage you will see if it is commercially viable to set up your company. Then it will be necessary to gather operational information.

This consists of knowing the machines and installations you will need to have, the workforce you will have to hire, the training you will have to offer, etc.

Last but not least, the third part of the business plan is devoted to evaluating your company’s revenue and expense projections and the costs of each of your products.

What is the difference between business model and business plan?

It might seem a little confusing at first to differentiate a business model from a business plan.

One is that the business model is a simple, replicable, visual document about how your business delivers value to your customers.

The business plan, on the other hand , is more in-depth, rich in details, as it will show the viability of your company entering a segment.

The business model can be easily adjusted, whereas the business plan takes more time and needs the approval of all partners.

A company has a single business plan, but it can have many business models. Below, we will talk about the main existing types.

What are the types of business model?

Now that you know what a business model is and its main difference from a business plan, let’s show you what the main types are.

1 – Franchise

A business model that is very popular is the franchise, and with each passing year it gains more fans in Pak.

In short, a franchise is a store run by a third party that uses their trademark or patent. However, for this it is necessary that the franchisee follow some guidelines.

These guidelines are given in the franchise business model. It is even there that the remuneration for the use of your brand will be determined.

2 – Social business

Another type of business model that has grown a lot is social business. This is a way of joining social and environmental responsibility to your business.

Most of the companies that work from this model are those that are concerned with their image, but want to generate a positive impact on the world.

A good example of a company that adopts the social business model in Brazil is Solidarium, which sells products from less favored social classes.

3 – B2B

B2B is a business model in which your company sells products to another company and not directly to the final consumer.

This can include various types of products or services such as software, machinery, labor, raw materials, etc.

The average ticket of a B2B sale is usually higher than a company that sells directly to the final consumer. Because sales are usually made in large volumes.

4 – Signature

With each passing year, the number of companies creating subscription plans for their customers grows. That is, by paying a fee, the customer enjoys a service.

This fee can be weekly, monthly, semi-annual or even annual. It all depends on your customer’s preference.

Nowadays there are many digital entrepreneurs working in this field, with emphasis on Spotify, Netflix, Sky and even Leiturinha.

5 – Freemium

Finally, Freemium is a subscription model in which there are free and paid features. Who chooses for free or paid resources is the user himself.

In this business model, companies offer a free service as a bait to encourage the customer to become premium.

Some schools that offer distance education courses have already adopted this model, which has been growing by leaps and bounds in Brazil.

Now that you’ve seen some business plan examples , as well as the main types of business model, you already have more understanding on the subject. So now just make yours.