EN | HR | ES | IT | HU | SK

RESTART Resilience and Training for SMEs

Business models for MSMEs in the post-COVID era
Feedback submited
Rate our course:

Get a step-by-step guide to building your own business model - and start seeing success right away.

Profitable and sustainable: Explore the keys to building a business model that can stand the test of time.

The ultimate guide to business models: Unleash your company's full potential with expert insights and strategies.


MSME business models (BM)

MSME business models (BM)Click to read  

The most important common objective of enterprises is to create value and make profit.

Companies differ from each other in terms of how they plan to do that.

The business model is the concept for the operational and profit-making model of an MSME: turning it into a business plan defines the exact function of how the company works and how it makes profit.

Sidenote: there are also so-called ‘social enterprises’. Their primary goal is to have a social impact, and not to maximize profit for the sake of owners – yet they also have to have a good business/operational plan that allows them to be sustainable (see RESTART Training Module 5. Sustainable, social, and green entrepreneurship)
Basic modelsClick to read  

  • input materials (supplies)
  • production tools (machines, equipment, IT)
  • location (office, factory, shops, etc.) costs
  • human resources costs (including all tax and social contributions!)
  • marketing and sales costs
  • administrational costs (registration fees, accounting, administration)
  • cost of access to capital
  • expenses of financial activities (exchange rate loss, interest paid, etc.)
  • ! calculate all taxes, and fees to be paid
  • revenues from sales (operating revenues)
  • revenues from subscriptions, fees, licenses
  • revenues from activities indirectly related to your key profile (e.g. if you have a warehouse and rent half of it to someone else
  • Revenues from financial activities (interest paid on your funds, etc.)


The basic model differentiates between fix and variable costs:

Fix costs: that need to be paid regardless of how much product or service you sell.

  • Fix costs are for example:  the cost of office/warehouse/shop, if you decide to rent/buy one, the cost of administration for an MSME (an accountant).
  • On the short term, fix costs can also include employment costs (as it is not easy to hire/lay off personnel due to labour market conditions and regulations) but many count them as variables on the longer run (depending on the flexibility of the given labour market & employment scheme)
  • On the short term, amortisation/depreciation costs are also fix (if you buy an expensive equipment, you will be able to write it off over the next couple of years).
    Variable costs depend on how much you are producing
  • Typical variable costs are the costs of the supply you need – input materials – for your production

One-time, set-up costs include legal fees for creating the company, logo and web design, etc.

Calculate all costs! Use online tools if needed. Consider cost-efficient solutions.

The basic model must be built on a preliminary market research that investigates in details:
  • Your potential customers – the size and availability of the population as well as their capacity to pay for your products/services. Learn about the specific preferences, details they currently buy and try to access their potential demand for something you aim to offer.
  • Your potential competition – the companies already present in the given market, their level of price/quality, their reach regarding the customers, their marketing and sales strategies, etc.
  • Your potential collaborators – let those be your future suppliers or other small businesses with whom you are not competing directly but cooperate (e.g. opening up a joint shop, sharing logistics, etc.)
  • There are several ways and expert strategies to approach the research and do it yourself  based on sufficient data or have someone do it for you.
Rules of thumbsClick to read  

A business model is a general framework, a main and general approach to running your business. The business plan builds on this, with a more detailed and structured set of information, tailor-made for your business. In a slightly different approach, the business model establishes your revenue-making process while the business plan defines your goals and strategies. In all concepts, the business plan is derived from the business model.

When setting up your business plan:

Calculate costs and revenues on at least a yearly basis, better on a 3-year basis in order to:

  • allow for all types of costs and revenues to show
  • allow for trends and dynamics to emerge

Look at issues from all angles to find hidden costs and potential for additional revenues.

  • In case of costs, think about not only regular costs but potential, infrequent items as well (such as legal costs, etc.). Some hidden costs lie in suboptimal work and  process organisation.
  • In case of revenues, think of your assets from a different perspective - can you make more money with them? What is the most efficient way of using your assets? (If you have a truck that is not always full – can you combine your logistics with another MSME and rent out parts of your routes/cargo hall?

Differentiate between costs and investments! (in other terms: expenses and expenditures). Be motivated to cut costs where it does not hurt, but:

  • Make sure you are aware of the quality of supplies, inputs, and human resources you get for your money
  • Investments are supposed to move your enterprise forward and bring you more profit in the future. Do not underestimate their necessity. 
Typical ways to financing an enterpriseClick to read  

Typical ways to financing an enterprise:

Financing the start (e.g. securing funds while there is no track record yet on performance)

Financing regular business operations

Financing larger investments (e.g. new equipment, new production site, etc.)

Financing innovation, research, development

The owner’s own funds (bootstrapping, sweat equity)

Sales revenues shall finance the operations, at least on a longer term

From own saved funds / capital reserve

From own saved funds / capital reserve

The “3F” –  investment from Friends, Family and Fools

Short-term liquidity challenges can be managed by own funds, or…

From specific bank loan (usually with mortgage or other security/guarantee conditions)

Using governmental or EU funds to co-finance the investment

Business angel investment, sometimes venture capital (only for scalable start-ups)

… bank credit specifically for liquidity management

Renting or leasing

Based on contracts from clients (procurement of innovation)


… matching and managing  payment conditions set with suppliers and buyers

Using governmental or EU funds to co-finance the investment



Traditional business models (BM)

Traditional business models (BM)Click to read  

We call “traditional business models” the models defining our economies before they were completely disrupted by the emergence of transformative IT solutions – first the internet, then mobility, and nowadays ML and AI (machine learning and artificial intelligence).

In other words, the traditional models characterize the typical business behaviours we see throughout the 20th century.

Sidenote on industrial revolutions: throughout economic history, major innovations have forced existing business models to transform and adapt to new possibilities and conditions. Historians credit the emergence of farming, later the emergence of manufacturing responsible for a complete shift in existing “business models”.  The first industrial revolution (due to the steam engine and mechanization), the second (due to the invention of electricity and division of labor in industries), the third (by establishing global production chains in the 2nd half of the 20th century), and the fourth (supported by IT and robotization) all forced economic actors to re-think their strategies and business models. The 5th revolution, driven by new IT developments and artificial intelligence, is at our doorstep – we are experiencing the shift to new models in our everyday.
B2CClick to read  

From Business to Consumers - Traditional small businesses exist since the dawn of human societies. They are simply built on the realization that a small company – originally within a family or with a specific group of professionals (guilds, etc.) – can produce/offer goods and services for other people - for their communities – their customers.

If you want to reach out directly to your customers, you must find sales opportunities to meet them.

In a B2C business model, the entrepreneur has to plan for….

Producing or procuring the products/services
  • Either directly producing from basic supplies/supplied parts,
  • Or procuring goods
The logistics and point of sales
  • Where to store and how to get the product/services to the point of sales
  • Where to meet the customer – point of sales
Marketing and promotion
  • How to convince the customers to buy these products/services
  • How to brand, market, promote the company itself
In return, …
  • Gets direct response from the customers on the products/services
  • Accesses timely data on sales
B2BClick to read  

From Business to Business (and, similarly, Business to Government) - Selling your goods and services to another company or public/governmental agencies differs from simple B2C businesses in several aspects. Most importantly, you have to deal with a much smaller number of clients but in return, it is harder to get them and it is more crucial that you keep them (or at least build a good portfolio so you will not be depending on 1 or 2 sole buyers.)


In a B2B business model, the entrepreneur has to plan for….

Producing or procuring the products/services
  • Directly producing from basic supplies/supplied parts, setting up services

Reaching business/governmental buyers or retailers

  • Either selling to other companies and /or public actors
  • Or selling to distributors, retailers who are then on responsible for getting the product to the market

Marketing addressing business/governmental
buyers (different marketing than B2C)

  • How to convince the clients/retailers to buy these products/services
  • How to brand, market, promote the company itself
In return, …
  • Production in larger quantities is usually necessary
  • Longer-term, more stable contracts can help the sustainability of the company
FranchiseClick to read  

In the franchise model, the concept is based on one successful model, that has proven itself to work and make a profit in a given environment. The owner of this model – the franchiser – sells the “recipe” – to the franchisee. The recipe includes the exact business model, the brand and respective intellectual property, often the connections to supplies/suppliers, and somewhat strict regulations on operations (to protect the main brand).

In the franchise model, the entrepreneur has to plan for….

Producing or procuring the products/services
  • Based on a strict recipe, usually with strong franchise requirements
  • Often with direct access to suppliers/suppliers
The logistics and point of sales
  • Where and how should the new franchise shop open?
  • Is there sufficient local demand for it?
Marketing and promotion
  • Done on the franchise level in general
  • Yet a local marketing (at least regarding the launch) needs to be conducted
In return, …
  • There is no need to invent a whole business from scratch
  • Franchise fees are paid to the franchise owner
MSMEs in a domestic economyClick to read  

When an MSME operates in a specific local environment  - in its city, county, region, or country – it has to meet specific requirements:

  • Meet the requirements of local and national regulation – in terms of taxation, accounting, and administration, but also work safety, labor laws, environmental hazard management, and so on. These conditions may differ across countries, and although they are mostly (though not fully) harmonized across the European Union (under the concept of the European Single Market).
  • When setting up your business model, make sure that the competition from another country - that has to meet fewer requirements - is not endangering your economic success. This is especially important in cross-border areas.

Operating only on or below a domestic market also has advantages, compared to being an international/global economic player:

  • To be innovative in the global market is a serious challenge. But on the local/national level, you can be innovative by imitation/adaptation – that is, taking a good business idea and adapting it to the local conditions. (Make sure that you are not violating any intellectual property rights (IPRs).
  • It is a key advantage for a company in reaching its customers to speak the local languages, and understand the local culture and society. Yet, especially due to a global business culture more and more uniform (trends set by global social media and global services) and due to the availability of high-level translation and chatbots by AI solutions, expect this “protective” nature of being only a national player to diminish in the close future.
Business models of the 21st century

Business models of the 21st centuryClick to read  

As said in the previous chapters, the emergence of technology – especially information and communication, digital technologieschanged the economy during the 2nd half of the 20th century, opening opportunities for the globalization of production and services, and today’s technological developments allow for an even wider set of new business models to emerge. The European Union has a digitalization strategy that sets targets for the future and allocates resources to reach those.  
European and global marketsClick to read  

The globalization of media and business in the 2nd half of the 20th century paved the way for the global production and innovation chains that surfaced at the end of the 20th century. This global economic model was built on optimizing cost-effectiveness (often neglecting the negative human, democratic and environmental aspects also associated with low-cost production).

While several events in the 21st century have slowed down or even turned back globalization trends (such as geopolitical events, the rise of China’s independent research, development, and innovation (R&D&I) capacities, the COVID-19 crisis, the realization of the effect of global transport on climate change, the current energy crisis and oil/gas dependency, etc.) several other factors further enhanced global production and distribution of products and services (such as wider and wider availability of broadband internet connections, the development of remote working and global, virtual teamwork (RESTART Training Module 1), overcoming several language barriers via machine learning technologies, etc.).

The European Union has made it a key priority to increase European economic competitiveness by creating the Single European Market, which is built on a common set of regulations and standards that allow European companies to relatively easily operate across borders, offer products and services, use banking, legal, taxing and consultancy services without the necessity of opening up daughter companies in each of the other countries.

To operate on the European market, familiarize yourself with the respective regulations, require an EU VAT number, and make a detailed market analysis of whether it is worth it for your company to invest in internationalization.

Not all new companies must directly compete on the global market, but the economic milieu, the availability of options, and general trends must make each new company aware of their position not only in the domestic but in the European and global markets as well.

Start-upsClick to read  

Most businesses start as micro- and small businesses (though there are examples of the opposite as well, large companies created by mergers, acquisitions, or larger holdings breaking up). Yet, at a very early point, they can be set on one of two significantly different tracks: they either become a small business or a start-up.

What is the difference?

Small businesses aim to conduct their business for a profit, make a living, serve their customer but are not a dominant player in their economy. 

Start-ups have the potential for sudden and significant growth by “scaling up” – usually by using technology – they can grow to be an international player within a small period of time


Start-ups build their business model on technology that allows them not only to duplicate or triple their economic performance but to multiply by tens, hundreds, or thousands in just under a short period of a couple of months/years. 

Successful start-ups are often “born-global” – even from the start, they offer products – but much more often, services – that are demanded across the globe, maybe with minor localization efforts.

Start-ups are always very innovative and include a high-risk factor. Just a small share of start-ups succeed on the international, and an even smaller share on the global scale.

Start-up funding must include risk-friendly capital involvement at the early stages. A typical cycle:

Other new business modelsClick to read  

The new business models described below are sometimes working independently, but sometimes as a combination of the models below. In each case, a unique decision must be made about the ideal combination of these elements.

Sharing economy:

The sharing economy as a business model is built on sharing resources, existing goods, and services among potential users. It is almost always built on the use of technology as a tool for sharing. Sharing may include the creation, production, distribution, sale, or use of the given products and services. The sharing economy can also be B2C (for example Airbnb) or B2B (e.g. coworking offices).

Promoters of the sharing economy often claim that it is a resource-efficient and environment-friendly solution. Others point out that the sharing economy often allows tax evasion and neglects otherwise existing industrial regulations.

Platform economy:

Platform economy is similar to the sharing economy but emphasizes the role of the technological platform that connects the different small economic agents operating under the platform. Let it be Amazon or Uber, the platform economy allows individuals otherwise not capable of reaching a wide circle of customers to reach out and offer their products/services. The business model is also characterized by serious imbalances of power (between the platform and the individual players).

On-demand model

The on-demand model is also connected to technological developments. It offers a unique chance for the client to time the consummation of the product/service exactly to their preference. Modern food delivery services (foodpanda, Wolt) and streaming media (Spotify, Netflix, etc.) are built on this model.

Servitization and subscription model:

The servitization is built on the concept of re-interpreting traditional products and one-time services as a continuously provided series of services, usually by supporting ongoing improvements, updates, upgrades, maintenance, and customer service. They can be charged monthly, bi-annual, or annual subscription fees. Learn more about servitization in RESTART Training Module 6.

Freemium model:

The freemium model offers a simplified construction of the services for a free subscription, but more advanced – premium – features are priced. This helps the branding, marketing, and communication of the service by getting it to a large set of customers while generating income from professional clients. Such examples are Spotify, LinkedIn or Evernote and many others.

Localization model: 

Localization is built on the idea of a general product/service being adapted to the local environment, to the given specific societal-economic conditions (language, preferences, cultural values, purchasing power, etc.) In this case, you have to make sure that you have the legal rights to adapt the original product/service.

Setting up your own business model

Setting up your own business modelClick to read  

In this last chapter we point you toward the most important elements of setting up your business model. This will include drawing up the strengths, weaknesses, opportunities, and threats of your business idea (the SWOT Analysis), based on the preliminary market research you conduct. Then elaborate on the model and find mentors and partners to work with!