The business model of the tech and digital world is why these companies undoubtably dominate the startup space.
If you look at any awards programs around the country, most (if not all) winners for categories like “Startup of the Year” are tech companies or online-based businesses. Startup businesses face huge competition from established companies and other keen and eager entrepreneurs vying for a slice of the pie.
In the rush to enter the market first, startups forget the fundamental rule of business 101 – planning ahead. We all know the saying “failing to plan is planning to fail” but the statistics still don’t favour new businesses. Estimates are that a third of new small businesses fail in their first year of operation. Finding and following a business model can be the single biggest planning process that can set you up for success. We take a look at 3 popular business models commonly used by tech startups.
The subscription business model means a company can expect a reliable, predictable income and for consumers it provides convenience and ease. There’s also the excitement of getting a package delivered regularly – that “Christmas” feeling every month.
In just three years, Gold Coast startup ‘HiSmile’ grew from a $20,000 idea to a business that turned over $40 million by basing their business on a subscription model. HiSmile’s teeth whitening products can be purchased on a monthly subscription from $13.99. With HiSmile as an example, the company attributes a lot of its success to its digital marketing strategies that feed the success of this business model. The company relies on popular social media influencers and celebrities, including the likes of the Kardashians and Conor McGregor, to endorse their products online.
Another business model that has proven its value is the on-demand business model. If we take into consideration how fast the world is developing, the term “instant gratification” is quite a big factor in our purchase behaviour. We have a bigger demand for simplicity and getting what we want, when we want it. This is why companies like Uber and Gumtree have flourished. This business model is cost effective and more efficient than ever before. Leveraging new technologies while using low-cost freelancing labour is an obvious indicator of success.
This business model generates a fee from a transaction between a seller and a buyer that is facilitated by a “middle-man” platform. When a product is purchased on that platform, the seller pays a commission fee. Airbnb is an online platform success story and makes its revenue through commission, by connecting a buyer to a seller without having to produce its own product or service. Looking locally, Australia’s first social eCommerce platform ‘Konvo’ is taking on the big guns like Amazon through a commission-based model as well.
What’s unique about this startup is that they’re determined to implement an already successful business model and take it to the next level. Not only is Konvo going to bring supply and demand together, but it will also let users tailor their preferences to their individual needs with unique trending algorithms and analytical data working in the backend. The startup has invested heavily into artificial intelligence and unparalleled user experiences to change the way we shop.
There are many business models that are proven to work on the market, and this depends a lot on what your product or service is. Following a business model helps set milestones and gives you the opportunity to look at the big picture. In Australia, only 5% of Australian small businesses starting from scratch prepare a business plan. Get the right advice and prove the statistics wrong.
Did you know that Konvo is looking to raise up to $5 million through equity crowdfunding? Visit their offer page to invest in the company from $125 on crowdfunding.com.au.