Having a business model is important because it gives you clarity on how your business operates. Key components of a business model are what problem you solve for customers, how you deliver value and how you earn money. Three common types of business models to work with are partnerships, franchises and person-to-person.
A partnership is a legal agreement between two or more people to conduct business in a certain way. You can start a business as a partnership or create partnerships to improve your business model. Benefits of a partnership include decreased risk, more resources, shared workload, higher borrowing capacity, and more brainstorming power.
If you want to start a business with someone else, choose your partner carefully. Oftentimes, family and friends don’t make good business partners. Consider what qualities and skills you need in a partner as well as how disciplined and committed they are. Never go into business with someone who doesn’t keep their word or fails to complete tasks on time.
A franchise is a business that legally extends the rights to using its name and business model to others. McDonald’s is an example of a franchise. You’ll find locations all across the US. Each location is run by a different owner, although the brand name belongs to the franchise owner.
Opening a franchise location gives you a greater chance of business success because it’s based on a proven model. As long as you find a good location for the business, you should be successful. If you are thinking of joining a franchise, be sure to do your homework and find out what the best types of franchises to own are because not all franchises are equal in quality.
Person-to-person business models can be massively successful. Airbnb is an example of a company that uses a person-to-person model. The business takes a percentage of all listings on its website. They make the process of finding accommodations while traveling convenient for both people looking to make money and those who need a place to temporarily rent.
Take your time in crafting a good business model that is likely to be successful. Your business model outlines how you create and deliver value. The possibilities are endless. Choose a business model that works for your personality. Don’t like the thought of sharing ownership of your business? Then, you should make sure you maintain ownership.
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