Business Models: What Are They And How To Choose The Right One?


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We must know that a business model is a previous strategy that must be carried out before launching a project. The business model allows you to define what you are going to offer to the market, how you are going to do it, to whom you are going to sell it, and how you are going to generate income.

However, creating a business model is not only about how to generate profits. We must follow strategies to ensure business success. The purpose of which is to achieve the benefits that its consumption entails for buyers.


  • When we talk about business models, we are referring to how our company will generate money.
  • The business models that really work are those that create value for the customer, i.e. those that can establish bonds with the customer, i.e. loyalty.
  • Today, there is a multitude of business models that have never been used before. Through these models, the customer is reached so that they choose your company as the ideal option.

6 essential tips to choose the right business model

You have been thinking about a business idea for a long time. What are you waiting for? Make the most of it and turn it into a way of monetization by setting up your own business. What is a business model, how can you design it, and how many business models are there? In this article, we have gathered the most frequently asked questions that people usually ask themselves when creating a business model. We have selected the most important ones, as there is a long list of business models.


1. What is a business model?

A business model is a general formula that helps to establish how to sell a product or service. Its purpose is to provide the target audience with the steps to be taken by the company when offering its goods. These models are used to describe and classify businesses, as well as to think about future business (1).

A business model describes the basis on which a company creates, delivers and captures value

Business models must be clear and clarify a good strategy to be used when looking for the objectives of a business. Business models are essential to know how to start certain operations of a company and above all, it is a great help for business planning.

2. Why are business models important?

When creating a company, it is important to define a business model. Plan the foundations on which your business will be based. A good business model allows you to visualize the problems that arise and solve them. It helps you generate more value for your customers, as well as see who is the target audience for your business.

Choose a model that complements your mission and how you want to achieve it

Thanks to a business model, you can have a vision of how to keep your business competitive with others and anticipate expenses and revenues. In short, planning a business model is important because it helps to establish the growth of your company.

3. Characteristics of a business model

We know that creating a business model is not something simple, but it is necessary to know that a business model must fulfil certain objectives to be successful. These are some of the characteristics that we have considered most relevant when creating a good business model (2).

1. Values of the company: First, it must be clearly defined what the company is trying to do. The business model you choose must match the company’s objectives and values.
2. Define your customers: Making it clear who the target audience of our business is going to be is very important. The main objective is to reach as many people as possible. But always understand which public could be interested in the product you are going to offer.
3. It must be innovative: That is, we must be original in the objective of our business and redesign the process. In addition, you must think that over time it can be re-evaluated and improved.
4. The 4 fundamental elements that a business model must have are: In addition to the general characteristics, there are certain objectives that every business model must have. These are:


4. Types of business model

There are many types of business models, but we have selected the most important and common ones in this table (3):

Types of business modelsFeatures
Market leaderThe market-leading business model is based on creating innovative products and new customer needs, accompanied by high prices, but with a greater value for consumers.
Bait and hookThe bait and hook model is based on selling a product at a low price up to the limit of losses (bait) to encourage the purchase of another product or service that is purchased repeatedly (hook).
Multi-componentThe multi-component model is based on selling the same product in different places, with different prices and presentations, all over the world.
FreemiumThe freemium model consists of offering your entire product or service for free for a limited time. This model is combined with a persuasion strategy so that you will eventually hire the “premium” or paid version.
EyesballsThe Eyesballs model is based on attracting user traffic and visits through relevant content for users on platforms such as websites or social networks. This is the business model of Google, Facebook and Instagram.

5. How to design your own business model

You may be wondering how to start creating your business model. Before writing your business model, you will have to decide on one. First of all, visualize the objective of your project and what you want to achieve. Once you have defined your objectives, here are the steps to follow (4):

  • Know your customers’ needs: orientation and continuous improvement based on what the market demands.
  • Research the market and your competition: and how you can take advantage of it. What works in logistics, marketing, programmatic advertising, sales… and how to apply it!
  • Introspection: be aware of your resources and how you are going to allocate them to launch your project.
  • Enhance your value proposition: what will make you stand out?
  • Develop your idea: and keep in mind that it will evolve. Do not get stuck in a fixed idea, analyze the market and adjust it. There is always room for improvement.
  • Trial and error and continuous improvement: follow the lean startup methodology. Do not launch everything or wait until everything is 100% developed. Test, and check what works and how to enhance it.
  • Eliminate what does not work and, above all, save resources.

6. Choose the right one

A good business model, apart from offering quality products, must generate value for the customer. This will help build customer loyalty and establish strong connections with the customer. Experts offer some tips when creating your own business model. Here they are (5):

  • Choose a specific market niche: many entrepreneurs are afraid of targeting an audience that is too limited or specific, however, many successful companies have started by addressing a small target and then grown and expanded their market niche.
  • Simplicity: you must be able to say how you are going to make money, if the process is complicated, it won’t work.
  • Copy: today many different business models have been invented that work. Study the ones that usually work best and make sure they adapt to your product.
  • Expand: innovate your own product and improve it.

“Increase the size of your pie instead of getting more pieces of it,” explains Kawasaki.


A business model is a strategy that a company adopts and studies how it earns revenue. This tool serves as the company’s original foundation document and is used primarily to clarify ideas and anticipate potential concerns or problems.

In short, if you are thinking of launching and creating your business, you must understand that to dominate the market today, you must worry not only about creating an ideal product that is accessible to everyone. You must think of the perfect business model, to create a profitable company and be a leader in customer demand.


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