Knowing what type of business model to use for your new venture is no easy task — and even understanding the difference between each of the major models can be difficult too.
Don’t worry though. Funding solutions company Business Backer has found an easy way to explain the difference between business models using a cow to help describe them. Before you roll your eyes, this metaphor will help you understand everything you should know about business models.
For example, do you know what the direct sales model is? If not, think of it like this: You have one cow, you sell milk door to door. It’s as simple as that. Still not sold? Try this: If you have one cow, people can buy milk for 50 cents, and people can also buy high protein, lactose-free, low fat yogurt for $50. Do you know what model this is? It’s the loss leader model — where a product is sold below average market price in order to increase sales for other products with a higher demand.
So if you’re unsure what model to use for your business, or if you simply want to educate yourself on the differences between major business models, check out Business Backer’s infographic below.