Choosing the right business model is one of the most important decisions you’ll make as a startup founder. It defines how your business makes money, serves customers, and operates day-to-day. Whether you’re drafting your business plan template, refining your pitch deck, or setting up your startup financial model, picking the right model will set the foundation for success.
Not sure where to start? Let’s break it down.
1. What Is a Business Model?
Simply put, a business model describes how your company creates, delivers, and captures value. It outlines:
✔️ What you’re selling (products, services, or both)
✔️ Who your customers are
✔️ How you’ll make money
✔️ Your cost structure and key expenses
2. Common Business Models for UK Startups
The best business model depends on your industry, target market, and revenue strategy. Here are some of the most common ones:
🔹 E-Commerce (Selling Online)
Perfect for: Retail startups, direct-to-consumer brands, and niche product businesses.
💰 Revenue: One-time purchases, subscriptions, or upsells.
⚡ Example: A sustainable clothing brand selling via Shopify.
Key considerations:
✔️ Choose the right e-commerce platform (Shopify, WooCommerce, Wix).
✔️ Handle logistics (warehousing, shipping, returns).
✔️ Stay compliant with UK consumer protection laws.
🔹 Subscription Model (Recurring Revenue)
Perfect for: SaaS startups, content creators, and membership businesses.
💰 Revenue: Monthly or annual subscription fees.
⚡ Example: A fitness app charging £10/month for exclusive workouts.
Key considerations:
✔️ High customer retention is crucial—focus on value delivery.
✔️ Manage recurring payments and reduce churn.
✔️ Offer flexible pricing plans to attract different customer segments.
🔹 Marketplace Model (Connecting Buyers & Sellers)
Perfect for: Startups that facilitate transactions between users.
💰 Revenue: Commissions, listing fees, or premium services.
⚡ Example: A marketplace for local freelancers.
Key considerations:
✔️ Solve the chicken-and-egg problem—you need both buyers and sellers.
✔️ Invest in a scalable tech platform.
✔️ Build trust through secure payments and customer reviews.
🔹 Freemium Model (Free + Paid Upgrades)
Perfect for: Tech startups, SaaS companies, and content platforms.
💰 Revenue: Free version + premium features.
⚡ Example: A project management app with a free basic version and paid pro features.
Key considerations:
✔️ Free users should see enough value to upgrade.
✔️ Offer compelling premium features that justify the cost.
✔️ Avoid excessive free users draining server and support costs.
🔹 Consulting & Services Model
Perfect for: Agencies, freelancers, and professional services.
💰 Revenue: Hourly rates, fixed projects, or retainers.
⚡ Example: A digital marketing agency charging clients per project.
Key considerations:
✔️ Focus on client acquisition and retention.
✔️ Build a strong personal brand or agency reputation.
✔️ Balance your pricing—don’t undervalue expertise.
3. How to Choose the Best Business Model for Your Startup
When deciding on a business model, ask yourself:
✅ Who is my ideal customer? (B2B, B2C, or both?)
✅ How will I generate revenue? (One-time sales, subscriptions, commission-based?)
✅ What are my startup costs? (Tech, logistics, staffing?)
✅ How scalable is my business model? (Can I grow without increasing costs too much?)
✅ What are my competitors doing? (And how can I do it better?)
4. Testing & Refining Your Business Model
Your first idea might not be the best one—and that’s okay. Many startups pivot their business models based on customer feedback and market demand.
📌 Use a startup financial model template to forecast revenue and expenses.
📌 Validate demand before launching—run a small test or MVP.
📌 Gather feedback and tweak your pricing or offering as needed.
5. Next Steps: Set Up Your Startup for Success
Now that you’ve chosen your business model, it’s time to take the next steps:
✅ Download a business plan template to outline your strategy.
✅ Use a pitch deck template to attract investors.
✅ Set up a startup cap table template to manage ownership.
✅ Open a business account with Revolut for Business to handle payments smoothly.
🚀 Got questions about choosing a business model? Drop them in the comments below!