Visionary business leader Ronny Zaman has interests in several industries today, including the pharmaceutical, construction and energy sectors. This article will look at business models and how choosing the right one can make or break a company.
A business model is essentially a plan outlining what the enterprise will do and how it will deliver value to customers to generate a profit. Business models contain an overview of the products or services the company intends to sell, identifying its target market, detailing anticipated expenses and outlining how it will make a profit. For established organisations and new start-ups alike a business model is vital, helping the enterprise to motivate management and staff, recruit talent and attract investment.
Common types of business model include:
- Manufacturers, sourcing raw materials and producing finished products for sale to retailers, distributors or direct to customers
- Retailers, the last link in supply chains that buys finished goods, selling them directly to customers
- Franchises, leveraging existing business models, enabling franchisees to open outlets of an established brand in new locations in return for a percentage of their earnings
- Subscription, e.g. produce subscription box services
- Affiliate, receiving a commission from companies to promote their services or goods
- Fee-for-service, e.g. a consultancy offering specialised insights
- Pay-as-you-go, either fixed fee or calculated periodically on the basis of goods or services provided
- Brokerage, serving as an intermediary between buyers and sellers
- Bundling, incentivising customers to buy multiple products by offering price discounts
- Marketplace, receiving compensation for providing a platform where transactions are conducted
- Fremium, introducing customers to basic, limited-scope products then encouraging them to invest in premium, advanced offerings that require payment, for example LinkedIn
Selecting the most appropriate business model is critical to ensuring a company’s success. Entrepreneurs must ensure that their business model aligns with market demands as well as their personal values and long-term goals.
Franchising remains a popular business model in 2025, providing franchisees with a ready-made business blueprint and significantly lowering the risk of start-up failure. One company that has perfected this model is McDonald’s, which typically requires a significant initial investment from franchisees ranging from $1.3 million to $2.3 million depending on location. Franchisees also have to pay ongoing loyalties ranging from 4% to 5% of gross sales.
Subscription-based models offer significant advantages for businesses seeking to ensure a steady and predictable revenue stream. Other popular business models in 2025 include lean start-up models, renowned for their flexibility and cost-effectiveness, and cooperative business models emphasising shared decision-making and business ownership, representing a democratic approach to running a business. One major advantage of the cooperative business model lies in the alignment between the business and the community it serves, encouraging brand loyalty while strengthening long-term sustainability. Nevertheless, several challenges are inherent with this particular business model, chief among them lower individual financial returns compared with other business structures.
A primary component of any well-thought-out business model is the value proposition. This details goods and services offered by the company, providing an overview of why they are desirable to customers and identifying how they differ from those offered by competitors. The business model of a new start-up should also cover aspects such as financing sources and projected start-up costs, a review of the competition and target customer base, the marketing strategy, and projections of anticipated revenues and expenses. The plan may also delineate scope for partnering with other established companies. For instance, the business model for an ad agency may identify benefits from an arrangement for referrals from a partner organisation in the printing industry.
To enable them to better anticipate challenges and trends ahead, businesses need to update their business model regularly. From an investor’s perspective, business models help them to identify the most appealing investment opportunities. For employees, a business model provides clarification as to the future of the company by identifying its vision and goals.