Choosing the Right Business Model: A Founder’s Guide
Starting a business is exciting — but one decision can shape your growth trajectory more than any other: your business model.
It’s not just about what you sell, but to whom, how, and how you make money. Get this wrong, and you risk wasting years chasing the wrong audience or revenue structure.
Let’s break down the most common business models, real-world examples, and how you can strategically choose one for your venture.
Popular Business Model Types (with Examples)
B2B (Business-to-Business)
You sell products or services to other businesses.
✔️ Example:
- Salesforce (CRM software for companies)
- Canva Pro for Teams
✅ Strengths:
- Higher deal values
- Repeat business
- Long-term contracts
⚠️ Challenges:
- Longer sales cycles
- Requires trust and relationship-building
B2C (Business-to-Consumer)
You sell directly to end customers.
✔️ Example:
✅ Strengths:
- Massive potential audience
- Easier to test and pivot products
- Can go viral with the right marketing
⚠️ Challenges:
- High competition
- Price sensitivity
- Customer loyalty is hard-earned
B2B SaaS (Software as a Service)
A software-based product sold on a subscription basis to businesses.
✔️ Example:
- HubSpot (Marketing and sales tools)
- Slack (Team collaboration)
✅ Strengths:
- Recurring, predictable revenue
- High margins once scaled
- Easier to upsell to existing customers
⚠️ Challenges:
- Upfront development costs
- Requires onboarding, support, and retention focus
B2C SaaS
A software product sold directly to consumers.
✔️ Example:
- Calm (Meditation app)
- Spotify
- Duolingo
✅ Strengths:
- Large, global user base
- Direct access to customer data
- Potential for viral growth
⚠️ Challenges:
- High churn rates
- Lower average revenue per user (ARPU)
B2B2C (Business to Business to Consumer)
You sell your product/service to a business, which then sells or delivers it to consumers.
✔️ Example:
- Swiggy partners with restaurants
- UrbanClap partners with service providers
✅ Strengths:
- Access to existing customer bases
- Shared operational and marketing costs
⚠️ Challenges:
- Complex business relationships
- Dependency on partners
How to Choose the Right Business Model
“A business model isn’t chosen, it’s discovered through testing and learning.” — Alex Oppenheimer
When evaluating models, ask:
1. Who do you want to serve?
- Is it a business, consumer, or both via partners?
2. What’s your product type?
- Physical good, service, or software?
3. What’s your expected revenue structure?
- One-time sales, recurring subscriptions, or transaction-based commissions?
4. What’s your growth strategy?
- Direct sales, viral growth, partnerships, or advertising?
5. How much upfront capital do you have?
- B2C is usually cheaper to start
- B2B SaaS needs more tech investment upfront
💡 5 Common Mistakes While Choosing a Business Model
- Picking a model just because it worked for someone else.
- Ignoring customer discovery and product-market fit.
- Overlooking operational costs (customer acquisition, support, partnerships).
- Misjudging the scalability potential.
- Sticking to a model that isn’t working without pivoting.
🎯 Pro Tip:
You can layer business models.
For example:
- Amazon started B2C retail → expanded into B2B cloud services (AWS)
- OpenAI offers B2C ChatGPT subscriptions + B2B API integrations
