Business Model: What You Really Need to Know

Hello, I introduce myself: Pablo García. I am not a business guru, nor a theorist lost in abstract concepts. I'm just an ordinary guy who has been through the trenches of entrepreneurship, has seen firsthand what works and what doesn't work. Today I want to talk to you about business models. And no, I'm not going to bore you with textbook definitions, but I am going to break down what they are, why they are so important, and how they can be the difference between your business being the next Amazon or just a gasp in the marketplace.

What the heck is a business model

When I talk about business model, what I mean is the plan that defines how your company creates, delivers and captures value. It's like the roadmap of your business. why? Because if you don't know where you're going, any road will lead you?

Think of the business model as the backbone of your company. Define from what products or services you are going to offer, to how you are going to make money with them. And here there is no one-size-fits-all approach that works for everyone. What may be a winning model for one company may be a death trap for another. That's why it's vital that you clearly define which one best suits your idea and market.

Types of business models

Throughout my career, I've experimented with various types of business models. Some led me to success, others taught me valuable (and painful) lessons. Here I share with you some of the most common and effective:

1. Direct Selling

This model is the classic of classics. The company produces something and sells it directly to the end customer.Examples? Think of Apple, which sells its products in its own stores and through its website.

2. Subscription

You know Netflix or Spotify? Exactly, they are perfect examples of this model. The customer pays a recurring fee to access a service. It's a gold mine if you manage to maintain customer loyalty.

3. Freemium

This is a model that mixes free with premium. You offer a free basic version of your product or service, and charge for additional features or premium content. A clear example is LinkedIn, which lets you use the platform for free, but charges you for access to its most powerful tools.

4. Advertising

This is where you make money by selling advertising space. Google and Facebook are the kings of this model. The business is to offer free services to users and make money by selling targeted advertising to businesses.

5. Marketplace

In this model, the business acts as an intermediary between buyers and sellers. Amazon is the perfect example of this, where thousands of sellers offer their products to millions of buyers.

My Personal Experience: Lessons from the Trenches

It's not all theory, believe me! Throughout my entrepreneurial life, I've taken a few good hits learning what business model works for what kind of idea. I once wanted to implement a subscription model for a service that simply didn't require it. Result: the project failed. Not because the idea was bad, but because it didn't fit the right business model.

I learned that a business model must not only be profitable, but must also adapt to the reality of the market and the needs of your customers. I have seen companies die because they clung to a model that did not work, and others rise from the ashes by changing their approach.

How to design a winning business model

Here are no magic formulas, but there are some key steps that can help you:

Identify your value proposition: What is it that you offer that differentiates you from the competition? This is the heart of your business model.

Know your customer: Who is he/she? What does he/she need? If you don't know, you're lost.

Define your revenue sources: Where will the money come from: direct sales, subscriptions, advertising?

Optimize costs: Keep your expenses under control. There's no point in making a lot if you spend more.

Test and adjust: The market changes, and your business model must change with it. Don't be afraid to adjust course if things don't work out as you expected.

Conclusion

A business model is vital to any business. It's not just a pretty schematic to show investors, but the foundation on which you'll build your entire business. And make no mistake, designing it well is an art as much as it is a science.

If I've learned anything in my life, it's that a business model is not static. It must evolve with your company, the market and the needs of your customers. So don't marry one, but don't launch without one either. Find the balance, test, adjust, and, above all, never give up.