Finding a Successful Home-Based Business Model
Once you have made up your mind to start your own home-based business, your next step is to decide which home-based business model you want to adopt. You may ask what is a business model? On the basic level, it is a method of how you are going to operate your business to generate profit, in short, it means how you are going to make money to survive and grow. However, the business model involves more than that, it includes components such as value propositions, customer segments, channels, customer relationships, revenue streams, key resources, key activities, key partners and cost structure which is proposed by Business Model Alchemist. I recommend you to check out their website, it has a wealth of information dedicated just to business model.
It is important that you select a business model carefully because it will affect your home-based business and living in the long run. The most common business model adopted by most home-based business is services and product-based model. The business owners trade their times to sell services and products for profit, if they want to earn more, they would have to charge more. While there is nothing wrong with these business models but often home-business owners find they have to struggle constantly to find new customers and market aggressively to remain profitable. All these could drain up the home business owners’ time and leave them little time to focus on other areas. Another main disadvantage of such business models is it relies too much on the business owners’ health and time, if these two were lacking it could affect their earnings tremendously.
What make a Good Business Model?
A good business model should have the following characteristics.
- Offer unique value that other competitiors cannot match
- Winning business model is hard for competitors to imitate
- Successful business model is grounded in reality
Finding a good business model is therefore important for startups, once you get it right from the start, it will save you a lot of headaches, time and resources. A good business model should help you to generate profit passively without too much of manual intervention and costs. Today, there are many new and innovative business models that have brought amazing success to the businesses, some good examples such as in the computer industry – Dell Computer has managed to eliminate the middleman channel and allowed customers to configure their own PC and purchase directly online at a lower price. In the airline industry, there is budget airline that cater to the general masses. In the software industry, users do not need to buy expensive software now but is able to subscribe to membership at a lower fee per month. These new business models have changed the way businesses are operating and some even have even replaced the old business models.
Different Home-Based Business Models
We can see that finding an innovative and sustainable business model is crucial to one’s success and it is even more crucial for home-based business as small businesses cannot afford to make too many mistakes. There are many business models in the various industries but we will only focus on those that are suitable for home-based business. Below are some common home-based business model examples:
Online or Web Business Models
This is the probably most common and popular business model for home-based business due to the ubiquity and convenience of Internet technology. Professor Michael Rappa has categorized the online or web business model into the following main categories, you can check out his website for detailed description of each model.
Affiliate Marketing Business Models
The affiliate marketing business model is probably the fastest and safest way to make money online. It eliminates the major business operations such as creation, manufacturing of the product to distribution of the product. Business owners who opt for this model only need to promote the merchants’ products and services and get commission for referring sales.
Blog Business Models
Blogging business model is one of the hottest business models of making money online now. Many people have become full-time bloggers and some even have made a fortune out of blogging. The Blog business model can be further broken down into several models, check out the Australian famous blogger – Darren Rowse and his 10 innovative blog business model here.
eCommerce Business Models
If you intend to sell products or services online, you can consider setting up an eCommerce store and there are few eCommerce business models you can consider such as Business to Consumer (B2C), Business to Business (B2B), Consumer to Consumer (C2C), Peer to Peer (P2P) and mobile Commence (m-Commence). You can learn the definition of each model from this article. If you find it is a hassle to set up your own ecommerce store then check out eBay, a platform that allow you to sell goods and services online with a small fee.
Social Enterprise Business Model
If you intend to produce products or services for social or environmental purpose and care less of the money aspect, you are in for the social enterprise business model. This has increasingly become a popular business model and may become the future business model because customers usually like businesses who have a good cause and social responsibilities.
Networking Marketing Model
The networking Marketing Model is also known as Multi-level Marketing Model (MLM), there is much confusion about MLM as it is perceived as a pyramid scheme but in fact it is not. It is a legitimate business model but was somehow abused by many businesses especially in the health, nutritional and beauty industries. Click here to learn more about MLM and its pros and cons, who knows, it may help to clear the air and become one of your money-making business model.
Franchise Business Model
This could be the least risky but the most expensive business model for home-based business. There are now a lot of home-based franchise opportunities in the market, you can check them out at Franchise Solutions or Franchise Sales at UK. Adopting a franchise business model could be the fastest way to start a home-based business as the business concepts has already been tested and supports will be given whenever help is needed.
The above are just some business models that have tried and tested, there may be other new business models appearing but it is not made known yet. New business owners may have misconception that they can only adopt one business model at a time which usually is not the case. In fact, there are many businesses that use several business models together in order to achieve greater efficiency and profitability such as a membership subscription model combines with advertising and affiliate models.
If you can find a winning business model for your home-based business, you are already close to success. However, the adopted business model will constantly evolve with the time, changes in business practices, industry trend and environment. Therefore, finding a successful home-based business model requires constant review and checking so as to keeping up with the changes. Moreover, choosing the right business model for the first time may not be easy but don’t be discouraged, an average home-based business will take 3-5 years to trial and succeed.
I wish you all the best in finding a successful home-based business model and if you have an interesting business model, I would like to hear from you too.