Thanks to technology, in this day and age there are more business models to choose from than ever before. Today you can start a business part-time or full-time, at home or totally mobile, online or in a brick-and-mortar commercial location!

The key is to choose a business model that fits your Life Plan. This will ensure that you spend the right number of hours each week, take the right level of risk (some models involve more risk than others), are practical in terms of your financial wherewithal, and gain the kind of satisfaction and success that only you can define.

First off, you have to make a key choice: How much time do you want to devote to your business?

When you go for a full-time business model, you leave behind whatever you were doing previously to commit yourself completely to your startup. When you make this leap, expect to spend more hours working than you ever did working for someone else.

In contrast, you can start up part-time. With this model, you adapt your business to time-consuming obligations you already have, such as your day job, parenting responsibilities or any other activities that would keep you from making your startup your total focus.

Once you've determined whether you see yourself as a part-time or full-time entrepreneur, consider our list of business model options.

In this step, we will focus on seven business models:

1. Home-based
2. Brick-and-mortar
3. e-Commerce
4. eBay
5. Franchising
6. Licensing your product
7. Multi level marketing

Business Model Options

Home-based

Drawing upon technology, you can create a legitimate and competitive business from home. It's part of our culture now, with more than half of all businesses sharing the same address as your kitchen and bed. Home-based businesses can be run full-time or part-time, and may or may not be web-based.

Upside

• Less risk and lower startup costs than a brick-and-mortar business because it allows you to test the entrepreneurial waters without having to spend money on real estate, staff, etc.
• Easily scaleable — you can make your home-based business as big or small as you'd like to suit existing commitments, such as parenthood and a day job.
• Outsourcing is a great strategy to keep things simple at home—you can contract with other companies to do your public relations, warehousing, shipping, web management, even manufacturing.

Downside

• Shipping activities and customer traffic in residential properties are restricted by local zoning ordinances (check with your local government for details).
• Working at home can come with lots of distractions and can infringe on your other domestic commitments.
• If foot traffic is necessary in your business, your home may not make the desired impression on customers.

Brick-and-Mortar

This is a business with a classic physical location outside of the home. It involves a dedicated facility—whether retail, wholesale, service or manufacturing.

Upside

• Gives you an opportunity to work face-to-face with people and become more involved in your community.
• A physical location may attract walk-in traffic to supplement traffic you gain through marketing efforts, depending on your type of business.
• Gives you a dedicated space to go to work each day and become mentally and physically immersed in running your business.

Downside

• Higher risk and startup costs (build-out costs to set up your location, lease/purchase costs, etc.)
• Requires a full-time commitment upfront to get the facility ready for business, as well as personnel to staff it.
• If your concept is retail-oriented, you must acquire inventory to merchandize your store.

e-Commerce

In this model, you don't have foot traffic in your business, only traffic (hopefully) to your website. You sell your product(s) through your website. This can apply to businesses that sell to consumers or to other businesses.

Upside

• As with a home-based business, this is a lower risk, lower cost business to start. You don't necessarily have to have lots of personnel, inventory and facilities.
• You can choose to do it full-time or part-time.
• Easily scaleable — you can make your e-commerce business as big or small as you'd like to suit existing commitments, such as parenthood and a day job.
• You can tap into a national, or even global, customer base through the Internet.

Downside

• As with a brick-and-mortar store, shipping, inventory purchasing and storage, and credit card processing can all become headaches if you don't do them right, particularly if you are a one-person show.
• Over 800 million people access the Internet globally, but it's a challenge to A) get that traffic to come to your site and B) convert them into a customer confident enough to make a purchase.

eBay-preneurship

You can use eBay as a location for your online store, which allows you to tap into their huge marketplace.

Upside

• Lower cost, lower risk than starting an independent e-commerce site as there are a great many tools to help eBay sellers get their businesses off the ground (e.g. PayPal to accept payment, a ready-made marketplace, online store templates, market research tools, etc.).
• eBay has a huge following worldwide already, so you could potentially be tapping into a vast existing customer base.

Downside

• As with a brick-and-mortar store, shipping, inventory purchasing and storage, and credit card processing can all become headaches if you don't do them right, particularly if you are a one-person show.
• Over 800 million people access the Internet globally, but it's a challenge to A) get that traffic to come to your site and B) convert them into a customer confident enough to make a purchase.

Franchising

When you're a franchisee, you use someone else's proven business concept as your entrepreneurial roadmap. Typically, this is in exchange for an upfront fee and a portion of revenues over time to be paid to the franchisor.

Upside

• Lower risk than opening an independent brick-and-mortar business because franchising provides you with a streamlined process to start your business, as well as other support such as marketing, business plan estimates and samples, assistance with real estate issues, and staff training.
• Provides you a recognized, established brand to attract customers more quickly.
• Some franchises participate in a streamlined SBA loan program that could make your loan application process simpler.
• Success rates for franchises are higher than non-franchise businesses.

Downside

• You've got to be able to pay the upfront franchise fees.
• Franchise guidelines can be strict and limit your ability to get creative with your business.
• Your financial upside is somewhat limited because you must pay your franchisor a cut of your profits.

Licensing your Product

If you're working a day job and don't want to run a company, you can still take advantage of your great product idea by licensing it to another company that has the entire infrastructure in place to properly manufacture, market and sell it.

Upside

• Lower risk because you can work on your product part-time.
• Lower cost because your main expense is producing a prototype of your product and testing it to make it attractive to potential licensees (rather than the cost involved in setting up an entire business to make, market and sell the product).
• If you do successfully license your product, you could receive royalties long after you've stopped working on the product, and you can have the freedom to move on to the next big idea!

Downside

• Finding the right licensee takes tenacity and determination, and can take a long time — don't quit your day job!
• Unless your product gets sold in a significant enough volume by the company you license it to, the amount of royalties you receive can be low or non-existent.
• It's extremely difficult to get through the door of big companies to start a negotiation. That's partly why less than 3% of all patented ideas actually make it to market through licensing arrangements.

Multilevel Marketing

MLM is a marketing and distribution structure. People at the top sell to those below them, who in turn sell to those below them. The higher up you are in this structure, the more money you can make. The challenge with MLM businesses is that people at the top are frequently the winners. The vast majority of people at the bottom end up spending money and time to get involved and end up losing whatever they put in.

If you're determined to get involved in a MLM business opportunity, be sure to check with at least a handful of other people who've entered at your level (who you identify on your own, separate from people the MLM promoter refers you to), and see what they have to say. Find out their perspectives on how—and if it's possible—to be successful.

Upside

• Typically, limited startup costs (a membership or initial inventory commitment).
• You can do it based from home.
• You are provided tools, products and sales techniques that are pre-packaged for you.

Downside

• Most people lose money in MLM activities because they can't sell the product as effectively as they thought they could.
• Credibility can become an issue, especially if you start treating friends like they're customers instead of friends.

StartupNation provides expert advice, community forums and resources for entrepreneurs starting a small business, from business plan and life plan development to marketing and sales techniques.

More about Choose a Business Model

Articles

• 10 Tips for Landing a Product Licensing Deal - Inventors can either build a new company to commercialize their product, or they can license their product to an existing company that already has the resources in place to get the product out into the market. This article offers 10 tips for how best to license a product to an existing company.
• Choosing the Right Business - Choosing the right business for you has many variables--far more than simply what business would make you the most money. But if you make a smart choice, you could find fun, fulfillment, greater control, AND make lots of money along the way. To help lead you down the right path, we provide important tips for your decision-making process.
• Franchise Pros and Cons - For many entrepreneurs hoping to launch a business, buying a franchise seems like the best ticket. But is going the franchise route really a better choice than starting something from scratch? The key to making the right choice between franchise or startup — and which franchise to buy — is research. Learn how to investigate before you invest.
• How to Start an eBay Business - We cover seven main steps for starting an eBay business.
• Learn How to Start Up Your Own At-home Business - If that clogged commute has got you down and you want to make a lifestyle change, consider running a business from home. This article shares some of our experience and wisdom about operating a business from home.

On Demand Seminars

• Home-Based Business Tips - Learn the fundamental things you absolutely must have in place for your home-based business to work.
• How to Start and Grow an eBay Business - Phil Dunn, co-author of "The 7 Essential Steps to Successful eBay Marketing" teaches you how to get your own business started on eBay.
• Is Franchising for Me? - Mark Cory, franchise advisor with Franchise Network, talks about the pros and cons of franchising to help you decide if it's the way to build your dream business.
• StartupNation's 10 Steps to Open for Business — Step 2: Select a Business Model - Learn which business model fits your life and business plan, including eBay, franchising, home-based businesses, and more.

Radio Shows

• 10 Steps to Starting and Growing a Business on eBay - We unlock the mystery of successful e-commerce on eBay by interviewing a panel of three successful eBay-preneurs.
• Franchising Delivered to Your Door - We discuss franchising both from the franchisor and franchisee perspective with The UPS Store.
• Starting & Running a Virtual Company - Running a virtual company means finding contributors and partners who might live anywhere in the world & bringing them into your company. Find out how.
• The 8 Things You Need to Make a Home-Based Business Work! - We talk with Lesley Spencer, founder of Home-Based Working Moms, about home-based business necessities.

Key Moves

• Getting in the Zone for a Big Idea - Abbie Rapport is always thinking up new product ideas - but she's turned one memorable idea in particular into a successful business.
• Reducing Risk by Buying Existing Franchise Locations - Dan Brady achieved franchising success by re-packaging existing UPS stores.
• Taking a Fresh Look at an Old Product Category - Adam Lowry "cleaned up" by coming up with a fresh, marketable spin on an old product - soap.