Choosing The Right Business Model For You And Your Business

February 16, 2022   |    minute read

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Your business model will influence how fast your business can grow and how sustainable it is, therefore, choosing the right business model for you and your business is vitally important..

Many small business owners choose a business model because that is what others in their industry are doing, so they think that is the only way to do business, or maybe it’s the best way.

Instead, choose a business model based on your objectives for the business.

 

The main context I am talking here is in terms of recurring revenue, one off purchases, pricing.

Most people think of recurring revenue in terms of a monthly subscription, however, it doesn’t have to be this way. 

It could be a 3, 4 or 6 part payment plan for a higher ticket item - for example wedding photography or, sticking with photography, a large purchase of portrait photography wall art, and repeat purchases.

Your decision on this can also be influenced by our cashflow. If cash is tight, you are more inclined to use short term thinking and aim for one off payments to ease the immediate cashflow rather than thinking more long term and spreading the income over 3 - 6 months to give some stability.

 

Therefore, a business model based around monthly recurring revenue is incredibly sustainable and far more stable but it is slower to build.

Whereas if immediate cashflow and fast growth are a priority it's better to have lots of one off higher ticket purchases. The downside is that each month you are starting at zero, having to generate all of those sales again.

The other consideration is lifetime client value.

How can you encourage clients to keep buying from you?

It is of course possible, and possibly desirable, to have a mixture of one off payments and recurring revenue, and the key thing is what is right for your and your objectives for your business - how big a business do you want, how big a team if any, what kind of profit margin do you want, how many hours you want to work a week, do you want to go all in for several years to create a massive business or to create a business that supports your lifestyle from the start?

 

It’s important that your business model is based on what you desire, not what other people want or do.

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