When you’re just starting your business, wondering how to choose the right business model can feel overwhelming. It’s not just about how you’ll make money—it’s about how your entire business will run, grow, and survive long-term.
Some beginners make the mistake of copying what others are doing without understanding if it fits their product, market, or goals. But your business model is like the engine of your business. If it’s not the right fit, your business may struggle to get traction or burn out too fast.
So let’s break down 10 important steps that will help you pick the best business model with confidence and clarity.
10 Steps to Choose the Right Business Model (Even If You’re Just Starting)
1. Understand What a Business Model Really Is
A business model isn’t just how you make money. It’s how your whole business operates. It includes:
- Who you serve (your customers)
- What you offer (your product or service)
- How you deliver it (your process)
- How you earn (revenue streams)
- How you keep costs low (operations and cost structure)
Before picking a model, make sure you clearly understand these parts.
If you’re confused, think of a local coffee shop. Their business model includes selling coffee (product), to commuters (audience), in a shop near a train station (delivery), with a simple menu and fast service (operations), and profits come from volume sales.
You need this kind of clarity for your idea too.
2. Define What You’re Offering
What are you actually going to sell?
Is it a physical product, a digital download, a service, a membership, or software? The kind of thing you sell has a big impact on the business model you choose.
For example:
- A product might suit a retail model or e-commerce.
- A service may fit a freelance, agency, or subscription model.
- A course or digital product may work best as a low-overhead digital business.
Don’t try to force your offer into a business model that wasn’t built for it.
3. Know Your Target Audience
You can’t choose a good model if you don’t know who you’re serving.
You need to answer:
- Who are they?
- What do they need?
- How do they like to buy things?
- What are they willing to pay for?
Let’s say you want to help busy working moms with meal planning. Will they want a mobile app? A subscription box? A one-time ebook? You have to match their behavior to your model.
The better you know your audience, the smarter your business model choice will be.
4. Look at How People in Your Industry Are Making Money
You don’t have to reinvent everything. Look at what others in your space are doing.
Ask yourself:
- What’s the most common business model in my niche?
- Are there gaps they’re not filling?
- Could I improve their model or combine parts of different ones?
Examples:
- Many coaches use 1-on-1 services, but some now use group programs or courses to earn more with less time.
- Many ecommerce stores use dropshipping to avoid holding inventory.
Find the models others are using—but don’t copy blindly. Just use it to guide your thinking.
5. Decide How You Want to Deliver the Product or Service
Delivery is a key part of your model.
Are you selling online or offline? Are you delivering it directly or through a partner? Is it a one-time delivery or ongoing?
If your delivery model isn’t realistic, your business won’t work well.
Examples:
- If you want low stress and less manual work, you may prefer a digital delivery model.
- If you love client work, a high-touch consulting model may fit better.
Be honest with your lifestyle and strengths.
6. Choose Your Revenue Model
This is the part most people think about—how you make money. But it’s just one part of the whole model.
Ask:
- Will you sell one product at a time (transactional)?
- Will you charge monthly (subscription)?
- Will you rely on ads or sponsorships?
- Will you charge for access (like a membership)?
For example:
- A fitness coach could charge per session, or build a monthly group training plan with recurring income.
- A website owner could make money through affiliate links or digital product sales.
Pick one that gives you consistency and matches your audience’s buying habits.
7. Understand Your Cost Structure
Now ask: how much will it cost you to run the business?
You need to know this before choosing a model.
- If your costs are high (physical products, shipping, staff), you need a high-margin model.
- If your costs are low (digital product, solo service), you have more freedom.
If your revenue model doesn’t cover your costs plus profit, your business won’t be sustainable. Keep the numbers simple, but realistic.
8. Think About Your Growth Goals
Are you building a solo business to support your lifestyle? Or are you hoping to scale and grow a team?
Your growth goals affect your model.
- If you want to stay solo, a premium service model might be best.
- If you want to scale, you might move toward SaaS, subscription boxes, or ecommerce.
Don’t choose a model that will outgrow you—or limit you—too early. Let your business model support your future, not just your start.
9. Test It Before Going All In
Don’t build the entire business before you test if the model actually works.
Try small experiments:
- Sell a mini version of your product.
- Offer a free trial.
- Run a presale before launching.
If people don’t buy, your model might need to change. Testing saves you time, money, and frustration.
10. Be Ready to Adjust
The truth is, most businesses adjust their models as they grow. You don’t need to get it perfect on day one.
Start with what makes the most sense for now. Watch your numbers. Get feedback. Be flexible. A business model is a living part of your strategy, not a one-time decision.
Sometimes, the best model shows up after you start.
Final Thoughts
Choosing the right business model when you’re just starting out is one of the most important steps you’ll take. It shapes how you earn, grow, and serve your customers.
Don’t rush it. Understand what you’re offering, who you’re serving, how you’ll deliver it, and how you’ll earn from it. Study others, test small, and build smart.
There’s no perfect model for everyone—but there is one that’s right for you, right now. Start with that. Adjust as you learn. And grow with purpose.
