When starting a business, it can be hard to find the right type that can work for you. In addition to choosing the business structure, you also have to decide on the model according to which your startup will operate. Here are just some of the most common types of business.
A manufacturing business takes raw materials and turns them into a product. For example, Apple, Toyota and Intel are all manufacturing companies. This also includes businesses that use pre-made parts to assemble products. That means that companies like Lenovo and HP are also manufacturers even though they use products made by Intel, for instance. Manufacturers can sell their products directly to customers or find a distributor and outsource the sale process. If you have the skills and knowledge about making goods, you should consider this option for your startup.
This is a model where the manufacturers decide to cut out the middleman and deal directly with the consumers. When there are no traditional distribution channels, the manufacturers can increase their profit margins and the prices can be lower, thus making it more accessible to customers. However, this means that the manufacturers have to cover the marketing and transport costs. In case you are versed in both production and advertising, you can take the direct-from-the-factory approach.
Any business that purchases goods from manufacturers and resells them either to retailers or customers is considered to be a distributor. For example, car dealerships are distributors. They obtain vehicles straight from the manufacturers and then sell them to the public. If you notice a gap in a certain market, you can try to contact the manufacturers and see whether they are looking for a distributor in your area.
On the other hand, if you prefer working with customers, you can open a retail outlet. A retail business sells the goods directly to the consumers after purchasing it from a distributor. These companies usually have a physical location, but nowadays, there are more and more online retailers. Very successful retail examples include H&M, Zara, Tesco and Amazon.
When it comes to franchising, there are many different types, including manufacturers, distributors and retailers. You can reach a licensing arrangement with a well-known business which lets you use their business model and name. You are basically working for yourself, but have the reputation of a much larger brand. For example, let’s say you plan on starting a franchise in Australia, and you want to find a license for bubble tea chains, all you have to do is inquire and they will help you with whatever you need in order to successfully become a franchisee, ridding you of most of the hiccups new business often have.
A very common business model as of late is freemium. Think about providing your users with a basic service for free while charging for some premium features. These basics usually have some restrictions. Take YouTube, for instance; you have the ability to watch videos that include ads, while you can also opt for YouTube Red which has no ads and offers other benefits as well. Dropbox is another example of this; you have 2 GB of storage for free, and you have to pay to increase the limit. If your startup is based on an app or software that can work on this principle, give it a go as it is a great marketing tool and a cost-effective way of attracting new users.
While the freemium model offers some free services, subscription allows only paying customers to use the products and services. These fees can be monthly, seasonal or yearly. This model is used by many industries, including cable television, mobile network operators, health clubs, magazines etc. See whether your startup would benefit from such an approach.
Bricks and clicks
You can also decide to develop your business both offline and online. Your customers can place the order online, via telephone or an app, and pick it up in your store. This also goes the other way around; clients can order something at the store and have it delivered where they want. Many supermarkets and apparel stores work in this way.
There you have it; these are just some of the most common business models. Consider what your startup can provide the consumers with and find the best approach to realize that.