7 Trends in Modern Business Models Startup Founders Should Know

Did you know that 90% of startups fail within the first few years of business? There are numerous challenges that can affect your career as well as your business. Nine out of 10 startups will fail, including yours, which is a hard truth that you must learn.

The most common reasons why most 90% of startups fail is because of the following:

  • There’s no market for their product.
  • They fail to create user-friendly products.
  • Around 25% to 35% of startups fail due to not hiring a virtual team.
  • About 25% of these startups ended because they ran out of money.
  • They don’t have a clear business model.

These are just some of the most common mistakes made by entrepreneurs. You have to learn from these mistakes to avoid failure. Many startups have started and failed ever since the Internet gained popularity.

Most new companies are having trouble finding a business plan that works for them. Another reason why these startups fail is that of a financial error that most entrepreneurs make in their lives. They spend more on marketing and hiring before having a growth strategy.

These problems lead to bankruptcy early on their carers. The latest trends in the modern business model formation have made it easier for entrepreneurs to find an online model that works for them. Some of these trends have been growing and changing every day. It’s up to entrepreneurs to be able to keep up with them.

These trends have been changing the way that small businesses and startups looking for new clients online. Here are some of the latest trends in the modern business model formation that you should look out for.

1- Online Crowdfunding & Fundraising

Most startups need a substantial amount of capital to get started. Many of them have used online crowdfunding and fundraising sites the help them raise money. Unfortunately, some individuals have abused this business model. Thankfully, the latest trends in this industry are tackling this problem.

Crowdfunding and fundraising sites are cracking down on the users who abuse their services. While these online services are mostly used for charitable products, a large number of for-profit startups have used them to their advantage. These companies will consider using monthly donations as a payment towards a product or service that consumers want. This has turned many worthy projects into successful companies.

2- Blockchain-Based Business Model

Online payments made with a debit card or credit card would take several days to process. A cryptocurrency is a digital asset that’s used to secure online transactions and verify the transfer of money. All online transactions are made instantly. Starting a blockchain-based business model makes it easier for startups to process payments online.

Once startups focus on the transaction side of their business, they’ll see tremendous growth. Online retailers and e-commerce sites are using blockchain-based business models because all of their transactions are processed in real-time. This reduces the risk of never getting paid for their products and services. All of the information about the transaction is safely stored, so there are very little disputes about whether a customer received something.

3- Shared Economy Business Model

The shared economy business model is a collaborative approach to providing products and/or services. It’s a hybrid model that uses an online platform and real-life interaction. Some transactions are made via online services or mobile apps. Thanks to companies like Airbnb and Zipcar, this business model is made possible.

These businesses run on par with car rental services and hotel chains. Uberization is the nickname for this business model, due in part to the popularity of Uber. Freelance work-at-home opportunities are now made possible due to its success and outsourcing seems to be on the rise, globally. This business model only works for a business that requires a physical exchange of goods or services.

This business model is only geared towards entrepreneurs who want to run their own business out of their home. Online auction sites and redistribution sites have filled this niche. There’s still room for another concept that alleviates the problems of larger companies while making it feasible for aspiring entrepreneurs.

4- On-Demand Service Dispatching

On-demand service dispatching used an online platform to send an individual to wherever their services or skills are needed. One big advantage of this business model is that it’s completely scalable and allows businesses to send independent contractors where they’re most needed. Companies like Lyft and Uber have thousands of individuals who use their cars to provide ride-sharing services. Since this business model doesn’t work with most industries, other businesses need to step up to add to this trend.

5- Drop Shipping

Drop shippers are notorious for running out of merchandise. That’s because they rely on merchandisers and wholesalers that help them fulfill orders and restock as needed.

Businesses who used this business model had to pay for a list of companies who provided them with merchandise before they could find the products they need to sell.

They’re turning to no-fee drop shipping directories to avoid those necessary fees. This has attracted the interest of small businesses and startups with small budgets that are interested in drop shipping. These firms use bloggers and site aggregators to keep them informed about the merchandising industry.

6- Monetized Open-Source Software

Though open-source software is free, the developers who make it still have to make a living somehow. Monetized open-software software has been created from the open-source software market. While most programs are free to use, some companies are providing subscription services or are receiving online donations.

This trend is changing the way that the tech boom is doing business. Developers who aren’t comfortable with releasing their entire code are turning to monetized open-source software. It allows them to develop new programs as they make an honest living.

7- Subscription-Based Sales Models

Many corporations and large companies are offering free versions of their products and services. This is similar to the shareware business model, but these subscription-based sales models are only used online. Small businesses who have a tight budget have provided their services in the subscription-based sales model since the updates are made automatically within the package.

Companies who use subscription-based sales models tend to get a larger number of leads than those who don’t. This removes the need to determine which market segments use a certain type of equipment. Game developers have also used their model as part of their startup launch. That hasn’t stopped gamers from claiming that it’s unnecessary for this market.

The Bottom Line

The future of startups and online businesses depend on these trends. Predicting the future of business models is complicated even for most experts because of how quickly the e-commerce industry moves. One advantage is that these trends aren’t going anywhere anytime soon. Startups and small businesses should look to adopt one of these business models before they crash without a goal in mind.

But you shouldn’t feel like you should follow someone else’s business plan without modifying it. Don’t be afraid to come up with som e of your own ideas. Add or make changes to your business model as needed, and you may end up in next year’s list of online trends.

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