Types of Business Models

What are the Different
Types of Business Models
in India?

January 27, 2023 • 17417 views

India’s business sector has witnessed a huge change due to the rapid growth of Micro, Small, and Medium Enterprises (MSMEs). Presently, entrepreneurs are utilising different business models to make their products and services unique. Business models are crucial for every company to be successful. Read on to learn about the different types of business models that ventures use to ensure growth and success. 

What is a Business Model?

The term ‘business model’ refers to a strategy that companies make to increase their profit. A successful business plan helps you identify your target audience and gives an estimated cost of reaching them to sell your products. A business model is a key factor that could build any established or new company. Know the importance of good business models for making a company successful and future-proof and the types of business models available in the market.

Different Types of Business Models

Over the years, companies have utilised different types of business models to meet their goals. Below you can find the most popular models that a venture uses to be sustainable:

  • Business-to-Business (B2B): When your business makes its transactions and dealings with another business, it is known as a business-to-business or B2B model. This business model allows business owners to operate at lesser costs as the production and sales are done in bulk. Some examples of B2B models are retail platforms, raw material enterprises, and tech service-providing companies. 
  • Business-to-Customer (B2C): This is one of the most common types of business models in India. Here, businesses sell their products and services directly to consumers. The consumers are the end users of particular products or services. As there is an ongoing demand for essential products, this model eliminates the risk of fluctuations, enabling you to maintain consistency. 
  • Subscription-based: Here, businesses offer their products and services as a one-time purchase, and the consumer has to pay monthly or annual prices. This type of business model allows enterprises to gain a regular income and allows customers to choose between making 12 equal payments and paying the entire amount at once. 
  • On-demand: This type of model is most popular across internet-based businesses. The model is prepared in such a way that customers can get their answers/products with just a click of a button. Some examples of this business model are online airline and hotel booking service platforms. 

How to Choose the Right Business Model for Your Business?

You might get confused while choosing a business model to achieve your goals. Thus, the points below will explain some key elements that you must keep in mind:

1.    Understand Your Target Audience
The primary goal for a business is to satisfy its customers. Thus, you should always understand what your target audience is looking for from your product. Evaluate what your competitors are doing to serve their customers and then try to improve your products.
2.    Identify Your Competitor's Weaknesses and Strengths
A thorough knowledge about your competitors will help in growing your business. Knowing their weaknesses will allow you to work on those areas to satisfy customer needs. However, knowing their strengths enables you to create strategies to stay ahead of them.
3.    Experiment with Your Plan
Put your business plan into action. This will help you understand if your planning has been right or still needs some improvement. Remember, problems at the grassroot level can create huge issues for your company. 

How to Implement a Business Model Successfully?

Successful implementation of a business model requires a plan with clarity. Understanding the needs of your target audience and evaluating your competitors’ strengths and weaknesses is key to a successful business plan. 
Thus, it is vital to design a model that meets your customer’s needs, while excelling in the areas where your competitors are failing. Doing this will help you create a fruitful business model that makes your company sustainable in the long run.  

What are some of the Advantages of Having a Good Business Model?

Some of the notable advantages of having a good business model includes:

  • A good business model enables a company to gain a competitive edge in the market, especially in the domain it operates in. 
  • It also gives a good reputation to the company, making it easier for them to get investors. 
  • Having a strong business model will lead the organisation to have a consistent income and even increase cash reserves and investments. 
  • A suitable business model can be a pillar for creating financial stability in an organisation. 

Want to Get Funds for Your Business?

Financial backing is as important as having a strong business model for both new and established enterprises. As you move towards your business expansion goals, you will come across numerous unexpected expenses that could potentially disrupt your cash flows. 
If you find yourself in such a situation, an unsecured Business Loan can be a good option for you. You can avail of funds up to Rs.50 Lakh with Poonawalla Fincorp’s unsecured Business Loans. Our loan application process is fully digital, so you can apply for a Business Loan from the comfort of your home. 
Our eligibility criteria for Business Loans are easy to fulfill and you can follow the below steps to apply for a Business Loan:

  • Step 1: Find the ‘Apply Now’ button and click on it.
  • Step 2: Fill in your name, phone number, email, PAN number, etc.
  • Step 3: Upload the documents required and submit your application. 

Once done, you will get your loan application results in 2 minutes.

ALSO READ :- Latest MSME Classification Explained: Criteria, Structure, Features

Examples of Successful Business Models

You can refer to some of the most successful business plans of the modern era in the below points:

1.    Freemium Model
Many companies use this model to offer their customers a free version of their product or service. The motive is to give an idea about your product to the customers. If they like it, then they buy it. However, a free version of any product or service has limited features. 
2.    On-Demand Model
The term explains itself wisely, many businesses use this model to serve customers as per their demand. For example, print-on-demand is a popular method of operating. Customers need to fill up a form and explain what design they need on their t-shirts. Businesses fulfill these needs by printing those designs on a t-shirt and delivering it to them. With the increase in online purchases, this model has been growing rapidly.
3.    Reseller/Dropshipping Model
This model has been in trend for a while now. Businesses with this model don’t need an inventory, as take images from the wholesaler and promote it on their website. As soon as someone orders a product, it gets directed to the wholesaler, who packs and delivers it. After fulfilling an order, the business receives its margin, and the rest goes to the wholesaler. 

The Future of Business Models

With the ever-improving technology and increase in internet usage, online business models are the future. Businesses with enhanced online presence will perform better and make more profit than the ones with poor online presence. However, the competition will keep on increasing as online marketplaces offer endless options to customers before making a purchase. Thus, designing an optimised online business model is vital for long-term sustainability and profitability.

To Conclude

Business models designed with proper research can help a company flourish. However, any discrepancy in this process could result in a downfall for even established companies. Hence it becomes imperative to go through the different types of business models and choose the one that increase the profits.

Frequently Asked Questions About Business Models

1.    How many types of business models are there in India?
There are 4 commonly known business models in India. These include the business-to-business (B2B) model, business-to-consumer (B2C) model, subscription-based model, and on-demand model.
2.    What are the 4 types of business models?
Business-to-business (B2B) model, business-to-consumer (B2C) model, subscription-based model, and on-demand model are the 4 types of business models.
3.     What is the most common business model?
Depending on the nature of the industry and the type of business, entrepreneurs and business owners can choose a business model that suits them best.


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poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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