When incorporating a business, it’s not unusual for entrepreneurs to become hyper-focused on the novelty of product development and forget to innovate equally around their business model. Too often, the business model is left to the end, as an afterthought. It’s essential for entrepreneurs to remember this step when starting a business, as it serves as an opportunity to show investors precisely how your business will create a profitable niche in the marketplace. Additionally, the business model is an important management tool, providing a blueprint and step-by-step instructions for transforming your ideas into a lucrative business. Simply put, the business model expresses the logic of your incorporation. There are many examples of inspiring business models out there. Here are our top three examples, which aided in the successful launch of these well-known companies:
An artsy explosion of e-commerce, Etsy provides a platform for users to buy and sell personalized items. Its goal is to enable people around the world to make a living making things. The creative site was developed with three factors in mind when finalizing their business model: community engagement, ongoing development of tools and educational materials to empower sellers, and a mission driven balance of humanity and tactful strategy. It is precisely at the intersection of the buyers and the sellers where Etsy makes its money. The company allows its users to do business in a friendly and viable way and promotes a sense of personal reliability and trust not only between buyers and sellers, but also sellers and sellers, which has pushed Etsy to become one of the most unified communities on the web.
You can buy coffee almost anywhere, but Starbucks didn’t become the largest chain of coffee shops in the world today because it marketed coffee. The handcrafted beverages, music selections, yummy treats, merchandise and functional decor all contribute to the overall experience that consumers want in on. An approach centered on customer intimacy is at the core of Starbucks’ business model. The brand celebrates coffee amidst a feeling of connection amongst patrons and employees. Due to their respect for fair trade, special initiatives such as ethical sourcing and a partnership with Apple’s iTunes, Starbucks was able to transform the perception of drinking coffee from purchasing caffeine into a lifestyle.
Hard to believe there was a time when this office staple didn’t exist! The Xerox 914 copier, introduced in 1959 to produce images using electricity that avoids the use of wet chemicals, is a perfect example of an innovative business model. After numerous turndowns in response to initial marketing outreach, Xerox leased the copier, instead of selling it. This was a bold move given the customers were only committed to a monthly lease payment unless the invention produced more than a certain amount of copies during a set timeframe. However, the Model 914 became a huge success, all stemming from the risk of an untried strategy.
On the long list of to-dos when incorporating a new business, creating a business model should be top priority. Although time consuming, it ensures a successful launch and strong foundation for your business. Taking on this task thoughtfully will ensure you don’t underestimate – or overestimate – anything.
Entrepreneurs – We’d love to hear from you about your successful business models!