How To Choose The Right Business Model For Your Startup

How To Choose The Right Business Model For Your Startup

Ideas define our lives, now more than ever. A small idea can bring a massive change in one’s life, business, profession, and even the world. Fortunately, we have technologies to transform our ideas into effectual realities. However, not all ideas turn out as wonderful as they seem in our imagination. Without an effective plan of execution, even the most innovative and revolutionary ideas can come out as complete disasters. So, to save you from crashing your startup App Development idea here is a guide to help you choose the right and profitable business model that lays a strong foundation for your startup.

Do You Have Enough Clarity About Your Startup?

When establishing a new startup, entrepreneurs need to learn as much as they can about their startup idea. It will help determine the right approach from the very start of your business. To understand better, you should prepare a list of fundamental questions that will enable you to gain more knowledge about your startup and its market. Here are few to help you begin:

  • Who is the target audience?

  • Who are the main competitors?

  • Is there a competitive advantage?

  • What is the USP of the startup?

  • Will it add value to the customers?

Understanding your market industry, target audience, competitors, etc. will help you analyze the viability of your startup. For instance, if you do not have any market for your startup, then it is advisable to put the idea on hold instead of joining the list of startup fiascos; if you do not have any competitive advantage then you should spend more time in exploring ways on how your startup can bring more value to potential customers than your competitors.

Sustainability of your startup relies on how much effort you put in research and planning among several other factors. Rather than looking for success mantras, entrepreneurs should invest more time in outlining the vision of their startup. As you proceed, such details will act as a reference point throughout your startup journey.

Understanding The Fundamental Business Models


It is the most common business model in which companies manufacture and sell their products or services. Products and services can be sold via multiple channels and the revenue model can be based upon one time purchases, ongoing subscriptions, advertisements, etc.


This business model involves the middleman called a broker who enables smooth transactions between buyers and sellers at a transaction fee. Real estate agents fall into this category. Using this business model, you can set up an online platform where you connect worldwide buyers and sellers to sell certain services or products. PayPal uses this model in which they charge handling fees to enable the smooth exchange of money globally.


The Aggregator model is based upon community building. Most of the publications and news websites run on the aggregator model in which they create a subscriber base at the initial stage and gradually begin charging a fee to access the community.


Resellers do not require a manufacturing company to sell, instead they become brand representatives and sell the products at a profitable margin. Affiliate marketers are known as value-added resellers who sell the services or products by offering their services to enhance the fundamental product/service.

Also Read: How To Launch Your Online Fitness Consultation Business

Choosing The Right Business Model For Your Startup

Different types of business models exist to meet the varying requirements of distinct industries and business verticals. It is crucial to understand which business model is best suited for your startup to establish a sustainable and successful business.

Start With Market Research

To run a successful business in today’s world, business leaders should befriend research tools and data analytics. Analyzing the industry market will help you evaluate the potential of your startup idea. If the selected model does not project good market potential, then you can opt for the other one.

Further, you should research and analyze the value proposition of your competitors. It is always better and safer to learn about how other companies and brands are performing in the same niche before you launch your startup.

Value Proposition

The target audience for your startup might be using your competitors’ services or purchasing their products. Therefore, it is crucial to showcase how your startup is better and how it is going to add value to customers’ lives.

Define Your Ideal Customer

It is important to define the attributes of your ideal customers to sell services or products that resolve their key pain areas. Moreover, it will also give you a better view of the market size and how to penetrate it while selling what your customers actually need.

Assess Various Distribution Channels

With countless options to put your product or service out in the market, you should assess and finalize what distribution channels you will be using for your startup. Online e-commerce stores, distributors, marketplaces, retail stores, or social media channels. It can also be a combination of two or more depending upon your budget and target audience (again important to define your ideal customers).

Finalize A Revenue Model

You should explore ways of revenue generation for your startup. Besides direct sales, you can define additional methods and sources like advertisements, blog traffic, etc. By collaborating with other relevant brands and businesses, you can sell related products and earn commissions. Therefore, revenue generation methods also play a key role in determining your business model.

Strategic Partnerships & Relationships

Several business models thrive on partnerships and business relationships associated with the core products or services. For example, a marketplace startup might require to build good and trustworthy relationships with service providers and vendors to sell their services on its platform at profitable margins.

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Choosing a business model for your startup is an ongoing process as the model will keep evolving as per the changing requirements of your business. At the same time, it is necessary to design a robust base model that is scalable, flexible, predictable, repeatable, and profitable. When you finally achieve the perfect business model, you can emulate it with more effort and better focus while achieving greater results.

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