What is a Business Model? 20 Business Models You Should Use

A business model is the foundation that helps a company define how to create value, generate revenue, and achieve sustainable growth. But what is a business model, how should it be built, and what are the popular models today? This article will help you understand everything from the concept to how to choose and apply one in practice.

1. What is a business model?

A business model is the overall plan of an organization or company (which can be in written or graphical form) that describes how the company generates revenue and profit by providing products and services to a defined customer group in a specific market.

The basic requirement of a business model is to specify the type of products or services the business will offer, its marketing methods, operational, production, and sales costs, as well as its profit expectations.

What is a business model?

2. Why is it necessary to choose the right business model?

Choosing the right business model acts as a strategic “guiding star,” helping a business accurately position its customer segments, optimize revenue streams, and establish sustainable competitive barriers to survive in a volatile market.

The important roles of shaping a business model are:

Strategic Direction: Acts as a guiding star, helping the business focus its resources on long-term goals and core values.

• Create a unique advantage: Helps the business differentiate itself, building barriers to prevent competitors from copying ideas and operational methods.
• Optimize resources: Minimizes waste by establishing a specific, detailed roadmap for each stage of the organization’s development.
• Enhance adaptability: Creates a flexible foundation for the business to react quickly to market fluctuations and technological changes.
• Ensure sustainable cash flow: Clearly defines methods for generating revenue and value, ensuring the financial health of the business.

3. Differentiating between a business model and a business plan

4. Guide to Building an Effective Business Model

As analyzed, businesses can create a model that suits their goals and resources. However, to ensure this model is feasible and delivers optimal results, you need to follow these 5 steps:

Step 1: Survey Customer Needs

Understanding customer needs is the most important step in building a business model. Products or services are created to meet customer needs. Therefore, businesses need to identify what customers need, which customer group their product is for, and what to do to make customers interested in the product. By identifying the target customer audience, businesses will know who they are, what they need, and what they want. From there, businesses can develop suitable and effective business ideas and directions.

There are many ways to collect information to survey customer needs, such as phone calls, emails, face-to-face meetings, online surveys, using social media, distributing flyers, etc. Ensure this method is convenient for your target customers. Survey questions should be designed to be clear, concise, easy to understand, and aligned with the survey’s objectives. You can use the following types of questions:

• Closed-ended questions: Questions with pre-set answer choices, helping you easily collect data.
• Open-ended questions: Questions that allow customers to answer freely, helping you gather more detailed information.

The benefits of understanding customer needs help businesses:

• Create products/services that meet the actual needs of customers.
• Increase the company’s competitive advantage.
• Build a strong relationship with target customers.

Step 2: Develop Business Ideas that Align with Customer Needs

After clearly understanding the needs of target customers, businesses need to create products or services that solve the problems, difficulties, and concerns customers are facing. This is a crucial goal that every business must pursue throughout its operations, as it helps attract customers, generate revenue, and achieve sustainable growth.

For a business idea to be suitable, satisfying, and pleasing to customers, the product or service must meet criteria for price, quality, and design. Develop business ideas based on the following factors:

• Market demand: This is the most important factor when developing business ideas. You need to research what the market currently needs and which products or services are popular. If you can meet market demand, you will have a better chance of success.
• Business capabilities: You need to consider your capabilities in terms of capital, knowledge, skills, experience, etc., to choose a suitable business idea. If you don’t have sufficient capabilities to execute the business idea, you will find it difficult to succeed.
• Market trends: You need to grasp market trends to choose a suitable business idea. Emerging market trends often have great potential for growth.

In addition, businesses also need to continuously innovate and create to meet customer needs in an ever-changing era.

Step 3: Plan Appropriate Production and Distribution Costs

Effective cost management is a critical challenge for every business. To avoid losses, the selling price of a product or service must be calculated to cover costs and generate a profit.

Production cost is the largest cost component for a business, including all necessary expenses to produce a product, such as raw material costs, labor costs, and general production overhead. Businesses need to find suppliers of quality raw materials at reasonable prices, tightly control the production process, and build a competent workforce to minimize costs.

The production cost planning process usually includes the following steps:

• Information gathering: Businesses need to collect complete information about factors affecting production costs, such as raw material prices, labor costs, fixed asset depreciation costs, etc.
• Information analysis: Businesses need to analyze the collected information to identify controllable and uncontrollable factors.
• Goal setting: Businesses need to set production cost targets for a specific period.
• Cost planning: Businesses need to create a detailed cost plan for each cost element.
• Plan implementation: Businesses need to implement the established cost plan.
• Monitoring and control: Businesses need to monitor and control production costs during the plan’s implementation.

Some common production cost planning methods:

• Standard costing method: This method is based on setting cost standards for each cost element. Actual costs are compared with standard costs to identify variances.
• Cost analysis method: This method breaks down production costs into different cost elements to identify the causes of cost fluctuations.
• Cost forecasting method: This method uses forecasting techniques to predict future production costs.

Besides production costs, businesses also need to pay attention to other costs such as marketing, sales, and administrative expenses. Businesses need to choose appropriate distribution channels, build effective marketing strategies, and manage costs tightly to avoid unnecessary expenses.

Step 4: Finalize the Model and Begin Implementation

After completing the research process, businesses need to start implementing the business model. During this process, businesses will face many unexpected issues. However, businesses need to be prepared to embrace changes to adapt and grow.

5. Classification of Business Models by Transaction Type

5.1 Canvas Model

The Business Model Canvas is a tool that helps businesses systematize their business strategy, created by Alexander Osterwalder and Yves Pigneur. This model is used by many of the world’s leading companies to manage and formulate business strategies, creating new growth drivers. The goal of the Canvas model is to position and implement a business plan to stabilize operations and increase profits.

The 09 basic elements in the Canvas model include:

• Key customer segments (Customer segment)
• The value the product brings to customers (Value Proposition)
• Media and distribution channels (Channel)
• Customer Relationships
• Projected sales revenue (Revenue streams)
• Key resources for the project (Key resources)
• Project partners (Key partner)
• Key activities
• Operating cost structure (Cost Structure)

4.2 B2C Model

The B2C (Business to Customer) business model is a form of e-commerce in which businesses sell or provide services directly to individual consumers through online channels or traditional stores. This is one of the most popular and widely used models in the business world today.

In the B2C model, businesses create online shopping experiences or physical stores to attract and serve the target audience of end consumers. These businesses often aim to provide quality products or services based on an understanding of customer needs and wants.

The B2C model simply provides products directly to the end-user. Some examples of popular B2C models are:

• Restaurants
• Coffee shops
• Convenience stores
• Grocery stores
• Hair and nail salons
• Beauty spas
• Pet stores

5.3 B2B Model

The B2B (Business-to-Business) business model is a form of e-commerce in which businesses or organizations purchase and trade products, services, or raw materials with each other. Unlike the B2C (Business to Customer) model – where businesses transact directly with individual consumers, in B2B, transactions primarily occur between businesses or organizations.

The B2B model often involves providing professional, high-quality products or services, which are typically used to manufacture or support the business operations of other companies. B2B transactions can include the sale of materials, equipment, software, consulting services, and many other products or services.

5.4 C2C (Consumer to Consumer) Model

The C2C (Customer to Customer) business model is a form of e-commerce in which individuals or consumers directly buy and sell goods or services to each other through online platforms or third-party intermediaries. This is an increasingly popular trend in the business world and has changed the way people shop and do business online.

The most obvious examples of the C2C model are e-commerce websites or applications like Shopee, Lazada, Tiki… or auction and exchange transaction units and websites like Chợ Tốt…

6. Top 20 Popular Business Models in Vietnam

There are many new models today that exist in various forms, applied by businesses to provide value and solutions to customers. Below, 1Office would like to share with you the most popular types of business models.

6.1 Direct Sales Model

The direct sales model is a business form where products or services are sold directly from the manufacturer or supplier to the consumer without going through intermediary channels like traditional retail stores. The direct sales model is often used in fields such as technology, cosmetics, dietary supplements, healthcare products, and many other industries.

An example of a company that has successfully applied this model is DELL, a leading global manufacturer and seller of personal computers, which uses sales methods like phone or online (email, website…) without the involvement of intermediaries such as agents or distributors.

6.2 Online Business Models

In the age of technological development, the online business model is becoming increasingly popular and explosive. This form of business is mainly conducted on platforms such as social networks, e-commerce platforms, and websites.

Compared to the traditional model, the online model has many outstanding advantages, such as:

• Saving costs on premises and staff
• Reaching a wide range of customers
• Convenience for customers in selection and payment

The online model is convenient for both sellers and buyers. Sellers can easily start a business and reach potential customers, while buyers can shop anytime, anywhere. That is why online sales are considered the trend of the present and the future.

6.3 Affiliate Marketing Model

Affiliate marketing is a way of earning money by promoting someone else’s products/services on online platforms. The marketer will receive a commission when a customer clicks to buy or view the product/service through their link.

For example, KOLs/Reviewers on TikTok, Facebook, etc., can earn commissions by promoting products on Lazada and Shopee and embedding the affiliate product link in their posts or videos. When a customer clicks to buy or view a product through their link, they will receive a commission from the product/service provider.

6.4 Agency Model

Businesses operating on the Agency model are units that provide marketing services to other businesses. The personnel of an Agency are marketing experts with expertise and experience; they will consult and implement marketing campaigns to help client businesses achieve their goals.

For example, the Durex brand collaborated with the Dentsu Aegis Agency to execute marketing campaigns aimed at spreading unique messages, attracting user interest, and increasing brand recognition.

6.5 Consulting Model

The consulting model is a business model where a company provides advisory services to other businesses. The company will hire experienced consultants to solve clients’ problems. Clients will pay the company on an hourly or daily basis.

For example, HRchannel is a consulting firm that provides talent recruitment services. In addition to recruitment, HRchannel also offers consulting and training services to help businesses improve their operational efficiency.

6.6 Freemium Model

The Freemium model is a type of business that combines free and paid services. This is a very popular model for businesses dealing in software products – Software as a Service (SaaS). The company provides a free version for users to experience, in which some features or usage time are limited. If users are satisfied with the free version, they can upgrade to the paid version to use more advanced features.

Example: Office applications: Microsoft Office offers a free version for users on mobile phones and tablets. This free version includes basic features such as word processing, spreadsheets, and presentations. Users can upgrade to the paid version to use more advanced features like advanced formatting, collaboration, cloud storage, etc.

6.7 Multi-sided Platform Model

The multi-sided market business model is a type where a company provides services to both sides of the market participants. In this model, the company finds the intersection point between the two sides and provides services to help them meet each other’s needs.

For example, TopCV – a job connection platform, provides services for both recruiters and candidates. For recruiters, TopCV helps them filter and search for suitable candidates. For candidates, TopCV helps them connect with the job positions they desire.

6.8 Peer-to-Peer Model

The Peer-to-Peer (P2P) business model is a form where the company acts as an intermediary, directly connecting the supply and demand sides. The company earns profit from commission fees after each successful transaction.

This model is being adopted by many businesses and brings in huge profits annually. A typical example is the e-commerce platform Shopee. Shopee operates on a mechanism of letting sellers rent online stalls and connecting buyers to the platform. For each successful order, Shopee collects a 5% service fee from the seller.

6.9 Subscription-based Business

The subscription business model is one where a company earns profit from users paying a fee to use a service for a fixed period (day, month, year). Users can renew their subscription to continue using the service. This model requires the business to strive to provide attractive services and retain customers.

Example: The entertainment streaming service FPT Play charges a monthly or annual subscription fee for users to watch theatrical releases and new blockbuster movies.

6.10 E-commerce Model

E-commerce is a form of online business where buyers and sellers can transact with each other via the Internet. This model has become a key sector of the economy and is projected to continue its strong growth in the coming years.

To build an e-commerce model, sellers need to create a product catalog on a website or e-commerce platform. Buyers can place orders online and pay via bank cards, e-wallets, etc. The seller will use the order to manage customer information and proceed with delivery.

Currently, many companies have been successful in the e-commerce field, such as: Shopee, Lazada, Tiki, Sendo… These companies have built reputable website systems and e-commerce platforms, meeting the shopping needs of a large number of consumers.

6.11 Profit from Add-on Products Model

This business model is based on selling a main product at a low price to profit from mandatory add-on products. For example, printers are sold cheaply so that users will buy more ink at a high price.

6.12 Privacy Model

The development of the Internet and the rise of companies collecting user data have threatened people’s privacy. To address this issue, the Privacy model has been applied. This model ensures that the subject is not observed or tracked by anyone or anything.

Besides Google, some other search engines like DuckDuckGo are also applying this model. The tool will route user data to private navigation and monetize by selling local keywords.

6.13 Franchising Business Model

Among the popular business models in Vietnam today, franchising is considered the most familiar and common model. The franchisor will authorize the franchisee to be allowed to trade products or services, use the brand, business secrets, etc., and will collect fees for a certain period of time.

Illustrative examples of this model are chain store brands such as Mixue, KFC fried chicken, Lotteria, Kichi Kichi conveyor belt hot pot, Starbucks, Subway, McDonald’s,

6.14 Education Industry Business Model

This is a business model based on an educational platform with the main target customers being teachers, pupils, and students. Businesses operating under this model provide products and services, which are tools and applications that can meet the learning and working needs of customers in the education sector to generate profit. It can be said that this model is based on a principle that blends the Freemium model and subscription features for learning more lessons and using more advanced features.

6.15 Business from User-Generated Content

A business based on user-generated content is a unique model where a company builds an online platform that allows users to share and provide content. This platform attracts users with useful information that solves their needs. As the number of users grows, the platform generates profit through advertising.

Quora is a prime example of this model. This platform allows users to ask and answer each other’s questions. As a result, Quora provides a vast and useful repository of knowledge for users. Quora makes money through advertisements displayed on the platform.

In Vietnam, the VOZ forum also applies a similar business model. It is a large forum with many different topics, from technology and entertainment to social life. VOZ members share and discuss these topics, creating a vibrant and engaging space. VOZ makes money through advertising and affiliate marketing.

6.16 Blockchain Model

Blockchain is a distributed technology that allows data to be stored in the form of interconnected blocks. This data chain cannot be changed or deleted; information can only be added.

Blockchain is widely applied in many fields, including finance, supply chain, healthcare, education, and more. Some businesses applying blockchain in their business models include Binance, Northern Trust, and others.

6.17 Family Business Model

The family model is a form of private enterprise where the business owner and key management members are related by blood. A prime example is Samsung, with founder Lee Kun Hee and members of the Lee family clan holding the majority of the corporation’s shares.

6.18 Multi-Brand Model

The multi-brand model is a form of business where a company owns and manages multiple different brands in addition to its core brand. These brands can operate in the same field or in different fields.

The benefit of this model is that it helps the business minimize risk if a sub-brand fails to win over customers. This is because each brand has its own positioning and market, so the failure of one brand does not affect the others.

Some prime examples of the multi-brand model are giants in the FMCG industry like Unilever (Lifebuoy, Dove, Vim, Knorr, Close Up…) and P&G (Comfort, Head&Shoulder, Tide, Downy,…).

6.19 Humanistic Business Model

The humanistic business model is a human-centric model aimed at creating sustainable profits without harming the environment and society. Businesses following this model will invest in human resource development, improving the lives of workers, and enhancing human living services.

For example, the fresh milk corporation TH True Milk invests in developing a sustainable value chain, including a system of dairy farms and green agriculture with modern, environmentally friendly production processes. This model not only provides consumers with clean, high-quality milk products but also creates many jobs for people, contributing to the country’s economic development.

6.20 Direct-to-Consumer Business Model

The Direct-to-Consumer (D2C) model is one where a business interacts directly with customers without going through intermediaries. The benefit of the D2C model is that the business can easily convey its message to customers, receive feedback quickly, and better understand their needs.

BAEMIN is a prime example of the D2C model. The brand has implemented many creative and effective marketing campaigns, focusing on the emotions of young customers. BAEMIN is very active on social media and invests in producing trending content, inviting influential KOLs/Influencers within its target customer group.

6.21 Distribution System-Based Business Model

The distribution system-based business model is one where a business connects with end consumers through members of its distribution channel. This is the most common model in business, especially for companies dealing in consumer goods.

Vinamilk is a prime example of this model. The company owns a diverse distribution channel system with multiple levels of loyalty, from supermarkets, distributors, and agents to retail stores and chain stores. As a result, Vinamilk can reach consumers everywhere in the country.

6.22 Multi-Source Aggregated Revenue Business

A business with revenue from multiple sources can increase profits and scale by tapping into additional revenue streams, not just from a single product or customer segment.

For example, at the KIDO corporation, revenue is aggregated from many different industries, including cooking oil, ice cream, snacking, and joint ventures. This helps KIDO minimize business risks and maintain sustainable growth.

7. New Business Models Emerging in Vietnam

The flat economy has broken down barriers between countries, helping businesses access advanced techniques and new models. Below are some new and highly potential models in Vietnam.

7.1 Mobile Business Models

This is a fairly common model abroad, most often seen in the form of selling food from pickup trucks or buses. The mobile format means being able to move to many places using a vehicle to conduct business without building a fixed store. This model can be applied to many different industries, from food and beverage, and entertainment to services…

Advantages of the mobile business model:

• Cost savings: Since there’s no need to rent premises, the mobile format can help save significant costs.
• Flexible and easy to move: The vehicle can easily move to densely populated areas where there is high shopping demand.
• Reach more customers: The mobile business model can reach many customers in different locations.

Common types of mobile business models:

• Selling fast food, snacks, street food, etc.
• Selling clothes, fashion accessories, souvenirs, etc.
• Mobile barbershops, mobile vehicle repair, etc.

7.2 Pet Hotel Business Model

The pet hotel business is a specialized service for pet owners, where they pay for care and lodging services for their pets for short or long periods, such as when they travel or go on business trips. This is a rapidly growing industry that is increasingly popular today, as many people consider their pets to be family members.

This model provides services such as accommodation, nutrition, medical care, and entertainment for pets. Pet hotels are often designed with a safe, comfortable, and convenient environment, providing adequate food, water, and suitable recreational activities.

7.3 Hybrid Business Model

Combining different business models can bring maximum benefits to a business if applied reasonably. By implementing multiple business models simultaneously, a business can reap the following benefits:

• Increase revenue and profit: Tapping into multiple income streams helps businesses reduce dependency and risk from a single model, while creating opportunities to increase revenue and profit.
• Increase competitiveness: A diverse combination of models helps businesses create differentiation and an advantage over competitors, thereby enhancing their competitiveness in the market.
• Expand the market: By applying multiple sales models, businesses can reach different groups of potential customers, making market expansion faster and more effective.
• Easily adapt to the market: In a constantly changing market, businesses can proactively adjust their business strategies when applying multiple models, which increases flexibility and adaptability.

Typical examples of businesses applying diverse business models include Amazon, which combines online sales, an e-commerce marketplace, and an affiliate marketing model. Google also applies multiple models such as hidden revenue and paid Premium services, helping them profit from various sources.

However, implementing multiple business models also presents several challenges:

• More complex management: This requires businesses to have an effective management system to avoid errors or confusion during operations.
• Increased costs: Combining multiple models will inevitably increase operational and management costs.
• Conflict of interest: Each business model has different strategies and goals, which can lead to conflicts of interest between departments or in the overall development direction.

Combining multiple business models can bring great benefits, but businesses also need to be careful to properly address the accompanying challenges.

8. A Detailed 5-Step Process to Build Your Own Business Model

Step 1: Survey Customer Needs

Surveying customer needs is a crucial step in building a business model, helping the business clearly understand the true wants and needs of its customers. The goal of the business is to create a product or service that customers will be willing to buy and use. To succeed, the business needs to specifically identify the needs of its target customer group and then find ways to attract their interest in its product or service.

When a business can clearly answer questions related to customer needs and demographics, it means it has correctly identified the target customer group it wants to serve. With this clear vision, the subsequent steps in developing business ideas and strategies will be easier and more effective.

Step 2: Develop a Business Idea

After clearly understanding the target customer group, the business will focus on creating real value for customers. This means developing a product or service aimed at solving the problems customers are facing. The business idea must be based on meeting needs while also generating revenue and ensuring the sustainable development of the business.

To achieve customer satisfaction, the business idea needs to meet criteria for price, quality, and product design. Additionally, the business must continuously innovate and be creative to maintain its position in a constantly changing market.

Step 3: Plan Production and Distribution Costs

Planning production and distribution costs is a step where the business needs to carefully calculate its pricing strategy, how to sell products without a loss, and how to manage incurred costs effectively. This is a problem that every business must have a plan to solve to ensure the business model achieves the desired profit.

To do this, the business needs to find raw material suppliers with reasonable prices while still ensuring quality. At the same time, optimizing the production process and building a responsible, highly skilled team are also very important to ensure efficient operations.

In addition to production costs, costs related to marketing and sales also play an essential role. Each distribution channel has its own characteristics, so it is necessary to build a suitable marketing strategy for each channel to avoid unnecessary costs and minimize the risk of losses.

Step 4: Build a Marketing Strategy

Building a marketing strategy is an indispensable element to ensure that the company’s product is known to many customers. Combining various advertising campaigns will help enhance market reach. After each campaign, the business needs to evaluate feedback and opinions from customers to adjust and improve the marketing strategy to be more suitable.

A Marketing strategy can include activities such as using traditional media, social networks, participating in exhibitions, organizing trade fairs, or implementing promotional programs and giveaways.

Step 5: Finalize the Business Model

After analyzing and implementing the steps above, businesses need to finalize their business model. During implementation, unforeseen issues may arise. However, it is crucial for businesses to be prepared to accept change and flexibly adapt to emerging situations, thereby ensuring long-term stability and growth.

9. Common Mistakes When Choosing a Business Model

Choosing the right business model is a crucial first step that determines a company’s survival. However, many startups and even long-established businesses have failed at this stage due to basic mistakes. Here are the common errors you should avoid:

• Following trends without understanding customers: Many businesses jump into “hot trends” like opening coffee shops, developing tech apps, or starting online businesses without analyzing actual demand. Copying others’ models without market research, understanding consumer behavior, or having a unique selling proposition will result in products/services that don’t reach the target audience, leading to quick failure.
• Building an overly complex model: Some businesses design cumbersome models from the start, with multiple revenue streams, numerous management processes, and high costs. This makes operations confusing and difficult to manage effectively, especially when the business lacks sufficient management experience.
• Misjudging internal capabilities: Another major mistake is choosing a business model that requires large capital investment, modern technology, or a high-quality team when the company lacks the resources. This leads to “running out of steam” midway; the model cannot operate as planned.
• Lacking a long-term vision: Some businesses focus only on short-term profits, neglecting sustainability, scalability, or future trend changes. As a result, their model quickly becomes outdated, uncompetitive, and unable to retain customers.

10. Frequently Asked Questions about Business Models (FAQs)

How can I protect my business model from being copied by competitors?

To avoid being copied, businesses need to build a competitive advantage based on proprietary technology, a loyal customer community, or a personalized service experience that competitors cannot easily replicate in the short term.

Why should new businesses start with the Business Model Canvas?

The Canvas model helps managers systematize the 9 fundamental elements of a business on a single page. This allows for quick identification of strategic gaps, resource optimization, and easy model adjustments when the market changes.

How do I know if a business model is viable?

A model is viable when it solves three key problems: Market demand (do customers really need it?), Economic value (is revenue sufficient to cover costs and generate profit?), and Feasibility (does the business have enough resources to implement it?).

What are the benefits of combining multiple business models?

Combining models (like Amazon or Google) helps businesses diversify revenue streams, reduce the risk of relying on a single product, and rapidly expand their customer base through various approaches.

How can I operate a business model effectively and avoid cost leakages?

For a business model to be more than just on paper, a company needs a solid “operating system” to execute its strategy. The 1Office all-in-one management platform is the pioneering solution that makes this a reality through its breakthrough strengths:

• Operate entirely on a unified platform (Work – HR – Sales).
• AI Agents simplify all tasks from data retrieval and analysis to decision-making.
• Flexible No-code customization for every model.
• Centralized data management, real-time metric tracking.
• CRM optimizes the sales funnel, increasing revenue efficiency.

Discover now how 1Office helps your business operate leanly, intelligently, and break through sales targets!

Register for a free feature Demo!

11. Conclusion

A business model is the foundation for the success of any enterprise. Therefore, if you intend to start a business, you need to conduct thorough research and define specific, clear courses of action to build a suitable model. We hope the information above from 1Office  will help you find the most suitable business model.

Don’t let your business model be held back by disparate management tools. Let 1Office help you realize your strategy, turning ideas on paper into real, sustainable revenue figures!