In recent years, we have seen an unprecedented growth of companies that have taken advantage of the platform model to succeed in their chosen industries. Such a model capitalizes on the creation of value through being able to facilitate exchanges in interdependent groups. Is it the right model for your business? Read on and find out.

Before we proceed, if you need guidance in determining which business model is most suitable for your company, has people who can provide the enlightenment that you need.

Nature of Products and Services 

The first thing that you have to do is to think about what will be offered by the company. If there is a need to produce the product and the services, obviously, a linear model is more appropriate. A platform business model is only right for you if you plan to be the connection between the producer and the customer. This means that you will not have to produce anything. Your only role is to be the facilitator of exchange. For instance, in the case of Uber, they do not own any cars. They only connect drivers and passengers, but in turn, they earn from making this connection a possibility.

Presence of Technological Capabilities 

Platforms have a technology layer that involves the expertise of developers to create APIs and other tools that will facilitate exchange. A platform model is right for your business if you have the technology to make it possible. At its very core, you need to have an app or a website that will establish a connection between the interested parties. For instance, Airbnb has a website where all properties in a certain location are listed and customers can view them when they need to book an accommodation.

Demand from the Market 

When there is no demand, how will your business achieve profitability? With this, before you decide to choose a business that runs on a platform model, you have to first make sure that there will be a demand for such. A thorough analysis of the market will help to make this possible. You cannot just start a platform-based business because it’s the current trend. You first need to ask yourself – what is it that I can offer on a platform?

Scan the Environment 

Before you decide to choose a platform model, you should take the time to scan the environment where you will operate. You will need to evaluate key trends, market forces, industry forces, and macro-economic forces. There is a need to have an assessment of all factors that will have an influence on the success of the business. For instance, there should be enough producers and consumers so that the platform will work.

A platform business can be promising, but success is not guaranteed. It’s a complicated model that is not suitable for some industries. With this, before you take advantage of a platform, give it a careful thought to see that it’s the most suitable business model to pursue.

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