One day you get a cool idea that you decide to implement in the form of a business. Putting together a team, thinking over the implementation, looking for … no, not money – a business model. Until you have it, no investor will give you money. The business model is how your product will earn. Without a clear understanding of this, it is unlikely that it will be possible to take off. Let's figure out what models there are and how each of them allows you to earn.
One of the reasons many businesses fail is that they choose an unviable business model. A business model is a simplified view of a business, the source of its income, and the creation of benefits for users. A business model describes how an organization creates, delivers to customers, and acquires value (economic, social, otherwise).
The term “business model” is used in a wide range of definitions to characterize the main aspects of a business, including the purpose of the business, product line, strategy, infrastructure, organizational structure, sales methods, and operational processes.
Your business model directly depends on who your consumer is. Consider the types of customers and businesses that build on this foundation.
B2B (Business to Business) is a model that assumes that both the Seller and the Buyer are legal entities or individual entrepreneurs. In simple terms, in this case, the companies do not work for the average consumer but the other companies. Classic examples of the B2B model in IT are software developers for organizations, web design studios, and outsourcing companies.
A successful example of a B2B model in practice is the German company SAP SE, a software manufacturer for organizations. It is engaged in the development of automated control systems for the internal processes of the enterprise, services are adapted to the legal framework of different countries. In addition to software supplies, the company provides services for its implementation, using its own methodology.
Among the company's products are SAP Ariba Discovery – an open platform for finding suppliers and buyers; Qualtrics Remote Work Pulse, a product that helps organizations understand how their employees work and what support they need while working remotely. Ruum by SAP is a tool for project management, collaboration, and process optimization. The company has 200,000 clients, most of them are medium and large enterprises.
B2C (Business to Customer) is a type of business that specializes in selling to individuals. Examples of such a model are online stores, where people buy goods for personal use, mobile applications and games, and custom services.
For example, the SeedSheet project (USA) has developed software so that any user can design their dream garden and plant their plants that will definitely grow and give a good harvest in the client's climatic zone. The service analyses geolocation selects and offers a list of crops, which the client can then order by mail along with the necessary equipment and even soil.
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B2G (Business to Government) is a model focused on the supply of goods, services, business solutions for the state. The model assumes a complex multi-stage decision-making system, tender purchases, complex financial conditions, and procurement material support schemes, a large influence of the administrative resource.
In practice, the operation of this model can be associated with government contracts for the supply of goods/services (public procurement), equipment leasing, public-private partnerships, and if it is an IT company, then, as a rule, this is the development of services for the government customer to automate the work of various areas.
For example, IBA Group has developed a number of solutions for the transport sector, including contactless payment for metro fares using bank cards, electronic punching machines in ground public transport, electronic displays at bus stops, self-service terminals at metro stations for replenishing an electronic travel document from using a bank card.
C2C (Consumer To Consumer) or P2P (person-to-person) is a model that assumes that participants are equal. As a rule, this is the interaction between individuals with the aim of saving money, making a profit, communicating, and uniting into communities. This model is also called “sharing economy” – when costs are divided in half.
The peculiarity of this model is the participation of a “third” party. This is the owner of the site where people communicate/post their goods and services.
An example is a BlaBlaCar service, which helps drivers find fellow travelers and thus compensate for the cost of petrol and for fellow travelers – find a driver who can give them a lift to the desired city.