The term business model refers to a company’s plan of making profits and or sustaining itself. It is therefore very important to have a clear revenue generating model as a company even during the start-up phase for this reduces the chances of failure due to cash flow problems. Below are some of the business models to consider in Zimbabwe with some examples of companies that uses stated models.
To the franchisor, this is one of the best way to make a company expand very fast. This model allows the franchisor to license its resources, brand name, intellectual property and rights for a franchise to sell its products and services in exchange for a royalty. However, to the franchisee this limits creativity.
In Zimbabwe, Innscor Africa is one of the companies that pursued the franchise model both as a franchisor and franchisee. As a franchisor, in around 2005, it had Quick Service Restaurant (Pizza Inn, Chicken Inn, Creamy Inn and Barkers Inn) footprint into 12 African countries, 7 company operated and 5 franchised. As a franchisee, it first secured its Nando’s Franchise in 1998.
Freemium Business Model
With this becoming one of the most popular model with tech companies, it is mix of free and paid services. So as to grow business and acquire customers, companies offer free versions to customers but for a limited time or with limited features. To unlock the upgraded features, the customer has to opt for paid services.
One of the pros of this model is that it becomes easy for a company to create a large user base through the free features, however this comes with a risk of exhausting the companies’ cash reserves fast whilst supporting a large number of non-paying customers.
Subscription business model
This being one of the most common business model, it allows the customer to get services by paying a fixed amount every month or year. In this case, the company has to provide enough value to its customer, so they use their services frequently. This model greatly contributes to better service provision by the service providers since it is based on pre-payments.
This model is used by DStv, Netflix, Wi-Fi service providers etc.
Hidden revenue business model
On this model, revenue generation system will not be from the users, but the company still earns revenue streams from other sources. This is also a popular model with tech companies like Google, Facebook, Twitter etc., they earn from advertising and promoting other brands. One of the advantage of this model is that it secures a consistent revenue stream of the company since users don’t pay anything for any service.
Consulting Business Model
With much influence in the Finance, Agriculture, Manufacturing, Construction and Mining Sector, this is based on companies or individuals providing consulting services by hiring experienced and qualified people and having them assigned on client’s projects. These companies tend to charge on a hourly basis and/or they take a percentage share based on the successful completion of the project. In this model lies a high potential clients for consultants with in-demands skills ranging from start-ups to large corporates. However, for clients to trust you, you should be having high proven expertise in the sector you will be operating in.
Multi-brand business model
This model is based on marketing more than two products, almost similar yet competing with each other and come under a single organization but having different brand names. It is done to create economies of scale and to build an empire. This model is common with Unilever’s Vaseline and Nivea and also Innscor Africa’s Chicken Inn and Nandos
E-Commerce Business Model
This being one of the most popular modern model due to convenience to the customer, e-commerce allows buyers and sellers to connect and transact using an online platform (online shop). This comes with a number of opportunities that include Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), and Customer to Business (C2B).
This model is being used by global companies such as Amazon and Alibaba Express, locally we have 10nga.com and other small players
Auction-Based Business Model
The model is based on the biding option to buy a product or service. This model has been slowly becoming popular due to accessibility of cheap goods. It is also used on the Arts sector with artists auctioning their fine art to different people. The modern version of the auction model has witnessed the growth ABC Auctions.
Brokerage Business Model
Brokerage business model provides a single platform to buyers and sellers for communicating the deals. It charges a fee for any transaction between the parties either from the buyer or the seller depending on the featured.
Leasing Business Model
This being popular in the tourism, tech, construction and mining sector this model involves renting large or high-profile items like machines and electronic equipment instead of selling them. This model has given birth to Impala Car Rentals, Machinery Exchange and other private players.