Business Models Guide

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Business models
Practical guide for startups and entrepreneurs

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SaaS
E-commerce
Media site
2-sided market
User Generated
Content
Mobile
Applications
B2B Service
Retail
B2C Service
B2C Products
B2B Products
Freelancing
In this section we will be talking about 12 different business
models
We will discuss for
every model
▪ Definition of the
business model
▪ Examples
▪ KPIs
▪ Most important
issues
▪ How to analyze it
in Excel

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Each model we will evaluate according to 3 criteria: difficulty of
implementation, money needed to achieve the break even, the scale that
has to be achieved for the business to be sustainable
Difficulty level Money needed Scale
▪ How difficult it is on a
scale from 1 to 5
(where 5 is very
difficult) to build a
startup in a given
model
▪ In the assessment we
take into account not
only the coding but
also the operational
and sales aspect
▪ It is a subjective
assessment based on
our experience ☺
▪ How expensive it is on
a scale from 1 to 5
(where 5 is very
expensive) to build a
startup in a specific
model?
▪ In the assessment, we
take into account both
cash expenditures as
well as opex for people
on human resources,
that sometimes do not
require cash (certain
aspect covered by
founder)
▪ Here you can
determine at what
market you need to be
a leader for the startup
to be sustainable
business
▪ To simplify the matter
we will use 3 levels:
 Country Level
 Regional Level
(more countries i.e.
Europe)
 Global

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What we will show in this presentation is a part of extensive on-
line course where I show the business models along with how to
calculate whether they make sense or not in Excel
Click to check my course
On-line Business Models in Excel –
Practical Guide
$45
$15

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I recommend reading the following books to get more insight
into business models. Click on the chosen cover to see details
on each and every book
Click for moreClick for moreClick for more

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SaaS should not be confused with subscription models
▪ Software as a Service
▪ SaaS company offers software on an on-demand
basis, usually delivered through a website it
operates
SaaS =
SaaS ≠ Subscription model
▪ Many SaaS generates revenue from monthly
subscription fee but there are plenty of SaaS that
are free or charger per usage

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Difficulty level Required funds Scale
Country level
Regional level
The product
must be global
SaaS is not that difficult and requires relatively small budget. If you are
interested in this model you immediately have to think at least about the
regional market. Your country (provided it is not USA or China) does not
suffice

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Just to remind you some examples of well known SaaS
businesses
Service provided Revenue model
▪ Virtual drive for
storage and sharing
files
Main sales tactics
▪ Subscription fee ▪ Freemium
▪ Mail service ▪ Free to users
▪ Revenue from ads
▪ Free
▪ Designing graphics –
drag and drop ready
made elements
▪ Pay per used
elements
▪ Freemium
▪ Access to books
(library)
▪ Subscription fee
▪ Pay per page/book
▪ Free trial
▪ Creation of
animation movies
▪ Creation of
webpages esp. blogs
more
more
more

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When you look just at the sales funnel you can see how SaaS takes
the visitor to trial and then to paid user. Some of the paid users
may become your ambassadors and help you get new customers
Visitor
Freemium / Trial User
Paid User
Engaged Heavy
User
Ambassador
Conversion

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Conversion
rates
Churn rate
Customer
Acquisition Cost
(CAC)
Customer
payback time
Average
revenue per
user (ARPU)
Life Time Value
of the Customer
(LTV)
Monthly
Recurring
Revenues (MRR)
Engagement
metric
There are some KPIs for revenue side of SaaS model that you
have to follow…

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Quick achievement of theproduct-market fit
Minimizing Churn rate
Acquisition tactics – customer acquisition plan
Integration with other SaaS and IT systems
You should test and find optimal solution for the following
key topics

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To get the Excels showing the models and more details go to
my on-line course
Practical Guide
$45
$15

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In e-commerce you will have 3 types of players depending on
their presence in off-line and their approach to both channels
E-commerce
Pure players
Off-line players with
separate on-line presence
Multichannel /Omni
players

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E-commerce due to the low margins (for physical products) is very
difficult. It requires not that big budget but quite often country level is
enough to have stable, profitable business
Country level
Regional level
The product
must be global

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Customer behaviors has huge impact on the business model
and on what the e-commerce should concentrate on
▪ Less than 40% of the buyers will buy this year
▪ Focus is on customer acquisition
▪ Loyalty program are not good investment
▪ 70% of e-commerce businesses are in this
model
Acquisition
mode
Description of the business model Examples
▪ E-commerce selling only 1 type of Slow
Moving Consumer Goods (SMCG) bought
infrequently i.e. vacuum cleaner, scuba
diving, furniture
▪ E-commerce for 1-time in the life event:
strollers,
▪ 40%-60% of the buyers will buy this year
▪ You have a nice mix of new and returning
customers
▪ Focus is on customer acquisition as well
increasing the value of the customer (increased
frequency and increased purchase per visit)
Hybrid mode
▪ E-commerce that sells SMCG with
relatively big frequency of purchase(1.0-
2.5 times a year ) i.e. shoes (Zappos)
▪ More than 60% of the buyers will buy this year
▪ Focus is on increasing the value of the
customer (increased frequency and increased
purchase per visit)
▪ 10% of businesses are in this model
Loyalty mode
▪ Very strong brands with high frequency of
purchase (i.e. Zara, Amazon)
▪ Marketplaces i.e. Udemy, Uber
Source: Lean Analytics: Use Data to Build a Better Startup Faster; A. Croll, B. Yoskovitz

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Just to remind you some examples of well known e-
commerce businesses
Products sold On-line / Off-line situation
▪ Virtually everything
esp. books, toys,
fashion
Mode
▪ Pure on-line player ▪ Loyalty mode
▪ Fashion ▪ Multichannel player ▪ Loyalty mode
▪ Tickets for events ▪ Pure on-line player ▪ Acquisition mode
▪ Groceries ▪ Multichannel player ▪ Hybrid mode
▪ Razors and
cosmetics for men
▪ Pure on-line player ▪ Loyalty mode
▪ Fashion ▪ Pure on-line player ▪ Hybrid mode
more
more
more

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Conversion
rates
Average
shopping cart
size / Average
transaction
value (ATV)
Abandonment
rate
Life Time Value
of the Customer
(LTV)
% traffic
generated by
non-ad methods
Customer
Acquisition Cost
(CAC)
Number of
purchases per
visitors per year
Return rate
Average
additional sales
for click and
collet
% click and
collect orders
There are some KPIs for e-commerce model that you have to
follow…

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Getting a lot of cheap traffic
Pricing – (multi-tier pricing, dynamic pricing)
Understanding your customer and marketing automation
Managing the long tail (both in terms of offer and logistics / availability)
Continuous optimization of your site - conversions, SEO, usability, etc.
key topics in e-commerce

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my on-line course
Practical Guide
$45
$15

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Have also a look at my presentation how to conduct properly
market research
Market research
presentation

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Media site model is all about creating inventory of content
and monetizing it
Create interesting
content
Draw
attention
Monetize
the
attention

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As you guess on the most important aspects is content
creation and monetization. There are many options available
▪ You
Content
creation
▪ Outsourced
▪ Aggregate other
people’s content
▪ Mix
Channels used
▪ 1 on-line channel
▪ Multichannel yet
only online
▪ Multichannel –
both on-line and
off-line
Revenue
sources
▪ Ads (CPM, CPC,
CPA,CPS)
▪ Affiliation
▪ Sponsorship
▪ Licenses
▪ E-commerce
▪ Paywalls▪ User Generated
Content
Getting the
traffic
▪ Direct
▪ Subscription
(membership
clubs)
▪ Emails
▪ Notification (from
site where you
subscribe to i.e.
YouTube, mobile
apps)
▪ Product
placement
▪ Native advertising
▪ SEO
▪ Interlinking
▪ Social Media

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Media site is still cheap and relatively easy business – provided that you
will find your niche and you will not be too greedy. Usually suffice to find
a nice niche within the country to be profitable and stable
Country level
Regional level
The product
must be global
Difficulty level Necessary money Scale

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Just to remind you some examples media site businesses
Content creation Channels used
▪ In-house and subcontractors
▪ Some generated by users
Revenue sources
▪ www and mobile apps
▪ YouTube
▪ Social media (esp. Facebook)
▪ Product placement
▪ In-house and subcontractors
▪ Some generated by users
▪ Printed newspapers
▪ www and mobile apps
▪ Social media (esp. Facebook)
▪ Payment for newspapers –
digital (paywalls ) and
printed
▪ Ads
▪ Affiliate
▪ In-house and subcontractors ▪ www / blog / podcast
▪ Social media (esp. YouTube,
Facebook, Twitter)
▪ Email list
▪ Sponsorship
▪ Affiliate
▪ E-commerce (books,
trainings)
▪ Ads
▪ In-house and subcontractors ▪ Mainly YouTube
▪ Social media to spread the
movies
▪ Ads
▪ E-commerce (courses,
clothes)
▪ Sponsorship
▪ Affiliate
more

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Page inventory
Unique visitors
(UV)
Average # of
visits per UV
Average time
per visit
Page per visit
Number of
emails
subscribing to
your site
Click Through
Rate (CTR) for
ads
Conversion rate
Ad rates
Churn
Number of
subscribers
Views per movie
Total numbers
of movies
Basic KPIs for media sites track the content creation side of
the business

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Getting a lot of cheap traffic
Segmentation of the audience and achieving content-segment-fit
Creating community
Finding way to monetize the audience attention
Cross-selling (content and product)
key topics in media site business

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my on-line course
Practical Guide
$45
$15

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2-sided market is trying to create a connection between the
demand and supply enabling them to match and do the
transaction
Patient DoctorMarketplace
• On-line booking
• Reviews
• Statistics for doctors

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There are different types of 2-sided markets
▪ On-line sale of
physical products
Marketplace
▪ On-line sale of
on-line products
▪ Purchase of
services
▪ Crowdfunding
Networks
▪ Infrastructure
▪ Energy market
▪ Telecommunication
market
Sharing
platforms
▪ Sharing physical
resources
▪ Sharing on-line
resources
Matching
models
▪ Dating sites
▪ Work Platform

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2-sided market is one of the most difficult and the most expensive type of
business. Increasingly, you have to be a regional player for the business to
make sense and to be stable in the long run
Country level
Regional level
The product
must be global

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Just to remind you some examples of 2-sided markets
Type of 2-sided market Product offered
▪ Marketplace
Revenue sources
▪ On-line courses ▪ Commission from sold
through Udemy courses
(3%-50%)
▪ Marketplace ▪ Driving / taxi services ▪ Commission from trips
made (20%)
▪ Marketplace ▪ Designs; mainly delivered
through
▪ Commission from contest
(5-40%)
▪ Revenue from sold ready-
made designs
▪ Sharing platform ▪ Shared trips ▪ Reservation fee around
10%
▪ Sharing platform ▪ Sharing knowledge ▪ Donations
▪ Marketplace ▪ Apartments rental ▪ Commission from provider
– 3% and from
guests 6-12%
more
more
more
more
more

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Just to remind you some examples of 2-sided markets
Type of 2-sided market Product offered
▪ Matching model
Revenue sources
▪ Peoples CVs and their
strength appraisal
▪ Advertising
▪ Added services (for
recruiters)
▪ Matching model ▪ Tinder paid version▪ Hot or not selection of
interesting people with a
chat service
▪ Marketplace ▪ Subscription plan from 0-25
EUR per month for doctors
▪ Booking visits at the doctor
of your choosing
▪ Marketplace ▪ Commission from sellers –
above 10%
▪ All sorts of mainly physical
products
▪ Marketplace ▪ Markup on store prices
▪ Commission from stores
▪ Delivery of groceries fro
chosen shop
more
more
more

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Engaged buyers
Active suppliersTotal searches
Average
transaction
Transaction to
searches ratio
Average number
of products per
supplier
Average number
of searches per
engaged buyer
Life Time Value
of the Customer
(LTV)
Customer
Acquisition Cost
(CAC)
Supplier
Acquisition Cost
(SAC)
Basic KPIs for 2-sided market are connected with the supply
and demand creation

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Chicken-and-egg problem
Level of centralization
Liquidity
Understanding the customer and loving the problem
Choosing the right side to concentrate on
Distribution and Activation
key topics in 2-sided market

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my on-line course
Practical Guide
$45
$15

41
Check my extensive presentation on productivity hacks to see
how you can me 10x more productive
Management consultant
productivity hacks
How to be lazy and still get things done
presentation

42
I recommend also looking at some techniques to improve
your business. Click on the cover below to go to the
presentation
How to become world class
analyst
A practical guide
presentation

43
If you want to learn how to make in Excel advanced analysis
that you would do as a business analyst go to my on-line
course
How to become world class Business
Analyst? Cases in Excel
$45
$15

44
If you need more detailed version on productivity hacks you
can check our course on productivity hacks
Management Consulting
Productivity Hacks
$45
$15

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Check my presentation on starting and running consulting
company
How to create management
consulting presentations?
A practical guide
presentation

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Check my presentation on on-line models to understand
them properly
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presentation

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You can also find useful some tips on Excel
Essential Excel for Business
Analysts and Consultants
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presentation

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Presentations
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Consultants
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them properly
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analyst
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presentation

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them properly
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