Hope you all had fun at our May meet up. We also had a great time. We had Seyi Taylor of Bloovue talk to us and give us real life insights into Business Models for Internet and Mobile Businesses.
Here are some of the insights that he gave
The types of business models to operate
There are several business models that you can use which gives a wide range of options. There is the subscription based model which states that the user of the service pays periodic fee for continued use of the software or service. Popular applications of this model can be found in premium blogs, antivirus software, Magazines (online and offline), Online media download service (ITunes, Samsung Media Hub). Subscription based service can either be for a fixed number of services or for an unlimited number of services. The idea behind this basically is that if you product or service is good, people would re-subscribe and if it sucks, they would just move on.
There is also the fremium business model which basically means you’re giving away your product for free, it could be ad supported or not, and it would be used to gather a kind of customer base who would then pay to unlock more features that would be provided in a premium version of your product. Your product can be feature limited or time limited. A good example of this is Dropbox which offers new users 3 GB of space, then outlines several steps for users to get more space. One of such steps could be installation of the software on a certain device or installing Dropbox on your personal computer. One thing to note is to make sure that you never make the free version too good that people wouldn’t want to get a paid version. You always have to strike a balance so that the payments from the premium users would offset the cost of the free users.
And last of all, there is the advert based model which depends on revenue from adverts being displayed on the site. Adverts are placed either through an ad platform like Google Adsense or Kontera, or by the owner of the service or business. The later is favoured more because it allows the owner of the service or website to charge a premium on the advert rates. However, the drawback to this is that the website / service must have a lot of page views / users in order for the model to be profitable.
If you want to start something, start right now.
If you’re looking to launch a fantastic product to the market, find the most cost effective way of bringing it to market. This is because as a start-up, you don’t have any extra money to spare unless you have a large personal fortune which is used to sustain your business. Don’t play the waiting game and delay your launch because you have gathered enough money. Use money essentially for running the core of your business. For example, if you are running your application on expensive dedicated servers and it can easily scale on a shared server, switch to a shared server and plough the saved cost into another part of your business (such as advert costs or office rental space)
VC’s won’t give you money for an idea but for a finished working product.
Venture capitalists won’t give you any money for coming to them with demos and simulations. They won’t give a penny to you even if you show them the most tastefully crafted PowerPoint in the world. All they want is to see a working product that has an existing customer base before they give you the cash. This gives them a sense of satisfaction knowing that they have put their money into an actual working product. So if you have an idea, don’t just sit there working on presentations of how your idea is going to work as a product, but instead spend your time working on the actual product and gathering more users because feedback can help you improve your product over time. So that when it comes to the time when you’re to meet the venture capitalists, you’d be able to convince them to invest in your product.
Create a product that solves a problem, not a product that creates one
When developing a product or service, think of how it simplifies the user’s life. What does your app or service do to help? Or does it just create another distraction. For example, Bloovue allows users to create ads on the fly, DealDey allows people to explore deals that are ongoing in their cities. Create a service that helps to solve a problem and people would pay to have it. It’s as simple as that.
Make sure you’re not spending too much to acquire new customers.
Are you spending a lot to acquire a new customer? For example, to acquire a new customer that would bring let’s say 5000 Naira, are you spending 3000 Naira just to acquire that customer. If yes, then you have to cut costs in order for your business to stay profitable. Else you’ll end up spending all your money before you even make any. Use social media tools like Facebook and Twitter to spread the word about your service and also to get feedback from those using your products / services. Also use targeted advertising platforms which only bring up ads when someone searches for specific keywords that you specify.
Last but not the least, just do it
If you have a service or product, launch it in time. Don’t just restrict it to just you and your friends else someone will come and eat your lunch. So many services have never taken off all because their founders didn’t have the insight to launch the product on time. Once you’ve discovered a need and you have something to satisfy that need, just go with it. It’s always a tough journey at first but with time, and with feedback from users, you’d get a better product later on.
Remember time has run out already… it’s now or never.
See you all at our next meet up.