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Why Do Business Models Matter?

In order to understand both your company’s structure and competitiveness, you first have to figure out your organization’s business model.
Each business company has a business model, and if you want to succeed in your business, you should have an excellent one for yours. The main goal of the business model is to answer questions concerning the business and how it operates.

As a rule, a carefully written business model consists of two sections: designing or purchasing a product, and finding customers to sell that product to. A professional business model can either optimize your business or completely replace your existing business structure.

The main benefit of a good business model is to show the relatedness of actions and tell a story of the main goal that the company is seeking to reach. Basically, a business model shows how an objective is to be achieved.

Unfortunately, most of the organizations do not pay due attention to their business model and use a recurring one throughout their business.

However, there are situations when a company has to come up with a professional business model, albeit having the difficulty to do so. In most cases, it’s connected with drastic changes within your organization or lack of enough attention to vital aspects like customer behavior.

The Most Successful Business Models

If you decide to build a profitable business, you need carefully thought-out guidelines which will help you reach your goal. And here enters the term “business model.” There are tons of these around; however, we are going to bring to your attention the four best business models in history, even though best is a relative term.

  • The On-demand Model: This type of business model is one of the most popular ones since most beginners choose exactly this one. An excellent example of this type of business model is Uber, which does not have its own cars, but thanks to independent drivers, the service successfully operates in the United States.
  • The Freemium Model: This type of business model is commonly used for tech products. The main goal of this model is to promote the main features for free and acquire customers through word of mouth. Off the top of our minds, Dropbox is one of the best examples using this model.
  • Shopping Annuity: The main goal of this model is to earn from spending. In other words, customers make a profit by buying everyday items. This model is widely used in the e-commerce field. For example, Market America used this method by selling products through its website.
  • The Virtual Goods Model: The last type of successful business model is the Virtual Goods Model, which makes profit by providing users with the sense that they are getting real value from buying virtual products. If you decide to create an app or a game, then this model is what you need. An excellent example of using this model is commonly known as the Candy Crush app.

As practice shows, companies which succeed in their field have excellent business models set for their business. Keep in mind that having a good business model is not enough for succeeding in your business, since you cannot ignore important aspects such as carefully-measured business strategies. Nowadays, the terms business model and strategy are considered to be the most crucial aspects of every successful business, and we at Prestige Auditors are here to help you with this. From small business entity costs, to tax exemption, ITINs, and everything in between, we are here to help you take off toward the success you deserve!