Online Business Models 2020 — The 5 Business Models for Online Entrepreneurs

One thing I wish someone would have laid out for me when I first moved my business online was the 5 different types of online business models. Understanding the pros and cons of each type would have given me valuable insight into the type of business I wanted to build.

Here are the five types of business models in the online business world:

  1. Service Based/Agency Model
  2. 1–1 Model
  3. E-Commerce
  4. Information Products
  5. Group Coaching

These 5 business models have very different delivery models for how you interact with the end user or customer. Each has its own unique set of advantages and disadvantages as well as challenges along the way.

1) Service Based Business Model or Agency model is one of the original online business model (and what I did for the vast majority of my online years) it has it limitations in terms of how much you can grow since your bandwidth is directly related to how much your team can handle. If you enjoy managing people and projects this model is probably for you. With a service based model can expect to experience some of the following:

Who chooses this model: Typically professional services like accountants, financial advisors, lawyers, creatives such as web designers, social media managers etc and anyone who is in the service based industry..

Pros: Can be highly profitable as you scale

Cons: You are mostly managing people and projects as the business grows

2) 1–1 Model is a great model if you have a particular expertise and want to share that on a high level with people. This is great for you if you are a people person and like to work with people over a long period of time. With this model you will typically form deep connection with your clients and know them well. With this model you can expect the following:

Who Chooses this model — Coaches, consultants, advisors typically choose this model. They may opt to create packages vs simply doing hourly work

Pros: With 1–1 work you are providing a premium service with which you can charge a premium cost in exchange for a high-touch experience.

Cons: The only way to make more money is to charge more for your services do to the fact that there is limited to the number of hours that you can work.

3) E-Commerce is a great option for people who have a product that they created or want to sell someone else’s product. While e-commerce typically falls under the business to consumer category it can be highly profitable but with all business models there are certainly some challengings like inventory and dealing with shipping carriers.

Who Chooses this model: People who have created a product that they want to sell or people who are passionate about a particular industry for example, beauty product or fashion as an example.

Pros: Great for someone who likes being behind the scenes as you aren’t typically the face of the business with the marketing

Cons: There is typically a big upfront investment for inventory, storage, etc.

4) Information Products is a booming billion dollar and growing industry. Information products are a passive way to generate revenue online. Examples include, e-books, actually books, self-study courses, templates and swipe files, blueprints, and membership programs are a few examples. With this model you can expect the following:

Who Chooses this Model: Someone who wants to add an additional passive revenue stream to their business or someone who is fully booked in the 1–1 business or service model.

Pros: Information products are a great way to move client along the client journey and into a next level program. This is a great additional revenue stream for people who are already booked out.

Cons: Volume is key with this business model if this is the only type of product that you offer. This means building a community and email list is essential to success.

5) Group Coaching / Mastermind is a great model to transition to once you have proof of concept with what you have been teaching and are positioned as an expert in. This is a hybrid model of one to one and an information product. This is typically a higher touch program with some live and in person time with you clients. Oftentimes I see people make the mistake of starting here only to be left feeling frustrated since they don’t have the volume of people in their community to create conversions. This is great if you have been doing 1–1 coaching for a while or have a service based business and want to make a bigger impact. With this business model you can expect:

Pros: You can leverage the one to many approach to make more money in less time.

Cons: Having a system for how you teach and support clients is key plus you will need a community to launch to. This is not always great for beginners or people who are just starting their business.

These are the 5 different types of business models and you don’t need to choose just one…which I will share more about with you in a few weeks when I talk about mapping you client journey and creating your value ladder.

In the meantime, tell me what type of business model you currently have and is there one you want to transition to?

Business Strategist and Integrator. I help entrepreneurs build their online business ecosystems by focusing on one signature program and scaling it.