What is Business Models? And Types of Business Model.

A business model, also known as business design, is the planning that a company makes concerning the income and benefits it seeks to obtain. In business models, guidelines are established to follow to attract customers, define product offers, and implement advertising strategies, among many other issues related to the configuration of the company’s resources.

When establishing the business model, it is important that the person in question analyze the company in depth and answer a series of questions, since based on the answers, one or the other type of business model can be implemented.

In this case, it is important that you establish whether or not you have competition in that service or product you have, what makes you different from the rest of business rivals, how you will get customers, how growth will occur and how you will win — the money.

There are different types of business models.

The most basic and old is known as the shopkeeper model, which consists of installing business in the place where the potential customers should be, and there displaying the offer of products and services.

The bait and hook model, developed at the beginning of the 20th century, supposes the supply of a basic product at a low price, even supporting losses (the bait ), to then charge excessive prices for the spare parts or associated supplies (the hook ). This business model is very common in the business of printers, which have a very low cost compared to that of ink cartridges.

Recently a very interesting book has come onto the market in this line that is called “Generation of business models.” In it, any entrepreneur can discover not only the various types of business models that exist but also the methods to get ahead with the company, how to establish and carry out new ideas and how to revolutionize the market.

Innovations in business models are increasingly frequent in the current economy, where all sectors are very dynamic. Finding the right business model is a competitive advantage for companies.

In some cases, companies seem to function successfully, but, in reality, their business model is not clear. Therefore, it is not defined with precision how these companies are going to obtain their income and be profitable. This is the case of many Internet sites, which get millions of visitors and become very popular, but which do not have the necessary model to guarantee their financial success.