One Cow Illustrates Eight Business Models

There are many types of businessperson today, and the old idea that you can’t start a new concern without first paying your dues with years of business school is seriously outdated. The tools now exist to help you get your business up and running, and to learn as you go – this the century of the autodidact.

That said, the more you know about business before you start, the wider your horizons when you come to imagine how your business idea might work out in the real world. Even if you don’t have the resources or the desire to hit the books at night school, you can feed your imagination by learning a few business basics online and keeping yourself up to date with videos and blogs.

One such fundamental piece of knowledge is an awareness of the essential business models that are running the world. Some have their foundations in classical models, while others are only possible because of the internet and other modern inventions.

It can help to picture these business models using the ‘one cow’ analogy: you can boil down a business model to its essential properties by learning how you would use the model if you had one cow and you wanted to make a buck or two selling milk.

So the Freemium model, for example, would see you giving the milk away for free – but charging customers for extras that make your product more usable or allow them to take it to the next level. So you would charge a premium for cartons or for ice cream or for flavorings to make a milkshake. Companies like Dropbox do this by giving you a certain amount of storage for free, but charging more for extra storage and more advanced sharing options.

The good people at Business Backer have created a helpful new visual lesson to help you picture just how eight of today’s most dominant business models work in the real world. So if you have a great business idea but you’re not quite sure how to monetize it, take a few minutes to learn how the cow does it – and then go study your model of choice until you know it inside-out!