I have been working with franchisors and am well into planning a new online service to assist them and franchisees with a range of issues. I was wondering about the business model. Should I charge for the online service? Or will I charge for advertising on the website?
It’s a shame you are well into planning this business without asking this crucial question sooner. Next time, ask yourself a split second after you have the BIG idea, who will pay me for this? (That is unless you are a philanthropist, an idiot or the guys running Twitter, in which case you can do what you like.)
Firstly, let’s look at your second idea. In this case if you are going to charge for advertising on your website, you are a publisher and your business will be selling ads. Your aim will be to create compelling content to attract a specific market segment in large enough numbers that advertisers will pay enough money to reach. It is a very tough business and your competitors are the ruthless News and Fairfax.
Does that sound like what you set out to do? Didn’t think so.
Your alternative is to charge the franchisees. This means the new online service has to be so compelling they will pay for it. And enough of them will pay sufficiently for it to cover your costs and make a profit. To get them to fork out, your service will have to be something they can’t get anywhere else and something they really need.
I suspect they would prefer to pay for you to provide this service personally rather than online.
The second point is you will be running a subscription business. This has its own challenges.
Remember something important about the web. Many people think it is just another form of distribution. But setting up online service businesses can be costly and distracting.
You might be better off to set up an advisory service, making yourself available to people when they have a crisis and using the website as a highly effective marketing tool.
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