10 Entrepreneurial Business Models

Examples from India

Introduction

A business model describes the rationale of how an organization creates, delivers, and captures value.

On the other hand, a business plan is how you execute the business model. If the business model does not work, the business is unlikely to do well.

1. Niche

Concentrating on a small, differentiated slice of the market

Success factors• Compatibility of niche needs and product

features• Size of niche• Willingness to pay• Accessibility

Perfint

Based in ChennaiPerfint concentrates on making robotics for oncology interventions only

2. Long Tail

in ecommerce, esorage and display of products has become very cheapEntrepreneurs are cashing in by selling small volumes of hard to find products

Success factors• Make everything available• Have a low price• Help find products

Long tail with Netflix

• Founded by Sachin and Binny Bansal in October 2007

• Both had worked for Amazon

• Growth:– 4 cr (2009)– 20 cr (2010)– 75 cr (2011)– 200 cr (2012)– 4500 cr (2015 – projected)

3. Mass Customisation

Combines the low unit costs of mass production processes with the flexibility of individual customisation

• Modularize products• Delay assembly• Use configurators to capture customer

preferences• Assemble and deliver

Online mass customised apparel

4. Freemium

Give away a free basic version and charge for upgrades

The free version can be;• Feature limited• Time Limited• Capacity limited• Seat limited• Customer Class Limited

Infoedge

Sanjeev Bikkchandani capitalised on the success of Naukri and extended the freemium model to other similar websites

5. Unbundling

• Breakup a product into independent components

• Strip away add-ons• Sell components as a complete product• Up sell add-ons• Increase in prices is possible

Zoho

1. Zoho Assist2. Zoho Business 3. Zoho Books 4. Zoho Calendar5. Zoho Challenge6. Zoho Chat7. Zoho Creator8. Zoho CRM9. Zoho Discussions10. Zoho Docs11. Zoho Gadgets12. Zoho Wiki 13. Zoho Writer14. Zoho Invoice15. Zoho Mail

16. Zoho Viewer17. Zoho Meeting18. Zoho Mobile 19. Zoho Notebook20. Zoho People21. Zoho Personal22. Zoho Planner23. Zoho Polls24. Zoho Projects 25. Zoho Recruit26. Zoho Reports27. Zoho Search28. Zoho Share29. Zoho Sheet30. Zoho Show31. Zoho Support

Directly competing against Salesforce.com and Microsoft, Zoho prefers selling their business tools as stand alone components rather than as part of a suite

6. Bundling

• There are economies of scale in production,• There are economies of scope in distribution,• Marginal costs of bundling are low• Production set-up costs are high,• Customer acquisition costs are high.• Consumers appreciate the resulting

simplification

Comprehensive Health checkups

Comprehensive health checkups have become revenue drivers at several diagnostic centres

7. No Frills

• Low prices are driven by low costs• Rarely will small firms have lower costs than

large firms• Decrease costs by removing ‘frills’ which are

costly but are not valued much by customers

No Frills

8. Premium

Giving the customer a reason to pay moreTypes of premium products • Premium• Uber Premium• Mass Class

VardenchiCharges a premium of about two to five lakhs over the price of a production line Royal Enfield

9. Open Business Models

Tapping into a community to build a business• Open source software• Crowd sourcing

– Crowdfunding– Crowdcreation– Crowdvoting– Crowd wisdom

• Problems can be explored at comparatively little cost, and often very quickly

• Payment is by results or even omitted• The entrepreneur can tap a wider range of

talent• Entrepreneurs gain first-hand insight on their

customers' desires• The community may feel a brand-building

kinship with the entrepreneur

I Am

400 people financed the movie by Onir Dhar

10. Multi Sided Platforms

• The entrepreneur acts like a go-between• To be effective, a sufficiently large pool is

needed on both sides.• A strong value proposition needs to be crafted

for both sides• Usually there are high network effects

Redbus

• Turnover of 150 crores and headed towards 1500 crores

• Walked into a space other had failed in• Success after they realised that bus operators

were customers too

(Bonus)11. Social Enterprises

Working on business-minded solutions to social problemsVijay Mahajan – “Single goal optimization is a 20th century anacronism”Social entrepreneurs approach social problems in a business like manner

Social Enterprises