W. Patric Gregory on business models

Your overall model is the foundation of your business; there’s nothing more important in your early entrepreneurial endeavors.

But what is a business model? According to Entrepreneur.com, “A business model explains which consumer pain your startup chooses to relieve, why your solution works better than competing ones and how big a wedge a company can drive between what customers are willing to pay and the costs.” Put simply, the right business model ensures that you are properly defining and cultivating your customer base.

There are a variety of proven business models to choose from, but because all businesses are unique and because your model will be so critical to your success, the selection process can be, and should be, thoughtful and painstaking. To help narrow your search and focus your research, here are four considerations from some of the most effective business models for startups.

Implement “demand aggregation.”
One business model that has been proven to be consistently effective is “demand aggregation,” a method that brings sellers and buyers together in a marketplace that enables organized transactions. If your business can become a marketplace, it will create an environment in which buying and selling parties will achieve optimal pricing through a dynamic process of supply matching demand.
Done properly, demand aggregation can create significant revenue volume. Success stories include eBay, Amazon and Uber.

Pursue franchising.
Once your business has grown enough to gain a reasonable following, or if it caught fire with your target audience from the start, you may want to turn it into a franchise. Reach out to entrepreneurs who share your business vision and provide them with the literature and training they’ll need to secure new business locations and customers that are similar to those you have already proven to be responsive.

Don’t shy away from high prices.
If your business provides a product or service your target audience can’t find anywhere else, don’t be afraid to charge for it. While you don’t want your prospects to experience sticker shock, the exclusive nature of your product or service may demand almost any price where there are enough customers who either want it or need it. Over time, you’ll likely have to adjust your price to reflect encroachment by competitors and the changing need of your customers. Still, you should absolutely consider the “going in high” approach in the early stages of your enterprise.

Offer subscriptions.
Offering subscriptions is a business model that is highly effective in retaining customers, and it’s growing rapidly thanks to the explosive growth of mobile technology. Much of the success of subscription-based mobile payment services can be tied to the customer’s desire for services that are easy to create and virtually devoid of ongoing intervention and maintenance. Success stories include Dollar Shave Club and the music-based services Spotify and Apple Music. If this approach is applicable to your product or service, capitalize this proven trend that has no indications of slowing down any time soon.

About the Author

W. Patric Gregory is an experienced business professional from Glastonbury, Connecticut. Patric currently serves as the owner and CEO of Highway Safety Corp, a company that has contributed to the highway construction industry for over 40 years. As leader of the company's senior management team, Patric is a seasoned strategist and innovator in his field.

To learn more about W. Patric Gregory, click here.