Question: How Do I Choose A Business Model For My Start-Up?

Samuel Adoji, Okene

Answer: Your business model, simply defined, is how your business plans to create value, and make money.

Every business does one or more of three things: It makes, markets or delivers a product or service, and determines the markets to enter. In searching for your start-up model, you should consider the following:

Product or Service: Make and sell your own product or service.

You can produce and distribute your product or service through different channels. Example: Product Manufacturer or Service Provider.

Reseller: Find a product or service produced by a third party producer, represent the producer, and make profit from the difference between the price you get it from the producer and the price you sell it to the end users. Example: Distributor of fast-moving goods.
Broker: Bring buyer and seller together and charge a fee for the transaction. Example: Real Estate Agent.
Platform: Build a community and charge a fee for gaining access to it. Example: Membership Club.
In picking your business model, you should consider the following factors:

Size Up The Market: Determine the market for your idea. Does it have enough customers who are experiencing the problem your idea is trying to solve? Are they willing and able to pay for the solution to their problem? Will your business make profit if you go into a narrow niche in the market?

The Competition: Study the businesses doing what you want to do. What are they offering? Can you see a gap for you to improve on their offer? The performance of your potential competitors will give you an indication of the state of your target market and signal what you must do to succeed in it.

Your Target Customer: Define the character and qualities of the customer you plan to serve. This will give you a view of the market and the best ways to access it.

Your Value Offer: What is your unique qualification to provide the product or service you have in mind for your market? What will make your product or service different from what’s in the market? Why should buyers prefer your product or service instead of that of your competitors?

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