Description – Startups are usually based on innovative and big ideas and even the brightest idea fades if implementation is poor. So, you need a profitable business model.
Corporate startups usually come up with some new and innovative ideas. But implementation plays a huge part on whether that particular idea will work or not in the long term. This is why you need a profitable and sound business model to ensure the success of every startup.
Well, the idea is just a tip of an iceberg. You will definitely want to offer something new, unique and cool in the market to gather your audience. But you also have to build a great framework to make it a sustainable and profitable business. You need to decide which marketing channel and strategy you will need to reach your potential customers and how you will present offers to those people.
You can determine the success of your new business with the framework that can influence all your advertising and marketing efforts. With that being said, how will you choose the business model for your startup?
There are different questions to ask before turning an idea into a complete business. With these answers, you can get better insight to choose the right approach. Here are some of the important aspects to consider –
What is your Target Market?
Before going any further, you have to find out whether an idea is viable for you. You need to research the target market and get an insight to potential customers and ensure that you can meet your needs with your services or products. If only a few people are showing interest in your offerings and most people just don’t want to know about your products or services, you can consider your decision, at least.
Who are your Competitors?
When it comes to venture into a specific market, you need to figure out who you are going to face off with. Find out how many people are doing what you expect to do and where they stand at. Consider how you are going to add more value? What it is to do better? What makes your model stand out?
Competition is actually important at some point. It shows whether your idea is innovative and that your product has a demand so you can plan further. But you need to be careful if market is too competitive. It would be very difficult and expensive to attract every customer.
Who are your target audiences?
There is no point in making decisions just on the basis of data until you enter in the business for a while. It creates a mental image of your target customer. Find out exactly whom you want to serve. What are their interests, demographics and issues they are having, as well as their goals in the long term?
It is even easier to find how best to reach your market once you have a clear insight to your potential customers. Create an avatar of a customer in your mind to choose the right marketing strategies and channel, along with the voice tone to use to convey your marketing message.
What will be the sources of your revenue?
It is the main reason why you have decided to start a business. Also consider other options to add other streams of revenue. For example, you can add other products to offer as cross-sells and up-sells. You may also want to add affiliate products and generate extra income with commissions. Rather than focusing only on one service or product, explore other possibilities and add multiple streams.
Here are some of the best Startup Business Models
There are some business models that are literally lucrative and proven for your startup. But you need to review all the options available carefully. Consider their functionality and compare their benefits for your startup. Choose the one which matches your business idea. Here are some of the common business options which are profitable in the long term –
Sole proprietorship business is owned and controlled by one person. You can start this business in 15 days and it is one of the most popular types of businesses to start, especially if you are a small trader and merchant. These types of businesses are identified by their GST registrations. Their liabilities are unlimited and they don’t have constant presence.
General partnership is basically a business structure which is managed by two or more people and operated by them according to the objectives and terms which are set in Partnership Deed. Since instruction of Limited Liability Partnership (LLP), this structure is known to have lack of relevance as its partners come up with unlimited liability. It means they are liable for debts of the business. However, ease of starting up, low costs, and minimal requirements for compliance makes it a great option for some people, for example home businesses which may not take any debt. They may or may not register.
One Person Company
These days, the One Person Company (OPC) is a nice refinement over sole proprietorship. There is a single promoter who has complete authority on the company and it restricts their liability to their contributions to the company. The owner is the only director and shareholder. There is no option to contribute to equity funding or employee share options.
The LLP or Limited Liability Partnership took shape in January 2009 in India and made it a great success with professional services and startups. The Limited Liability Partnership Act, 2008 governs the registration of business as LLP. It combines the best of both Limited Liability Company and a partnership.
Private Limited Company
Private Limited Company is among the best business models in India for startups. It offers limited liability to the shareholders with some restrictions. In LLP, partners manage and own the business. On the other side, directors can be different in private limited company.