The 4 Types of Community Businesses
10 min read

The 4 Types of Community Businesses

The 4 Types of Community Businesses

After working with dozens of community founders both 1:1 and inside BACB over the last few years, clear patterns emerged about the types of business models and community structures we were all building. I started to realize that all community businesses fall into 4 main types.

Each of the 4 types requires totally different skills, resources and strategy. Building one type when you should be building another is at the core of the most common business model problems in community businesses.

Misalignment on which you’re building causes issues like:

  • Not bringing in enough revenue.
  • Members having the wrong expectations.
  • Low community engagement.
  • Many other community business problems that you might be dealing with.

Taking advice about the wrong model for you can hurt your business and set you back.

For example..

You might be taking advice about membership communities, when you’re really building a group coaching program.

Or advice about a cohort-based course when an evergreen course will work better for your members.

Or advice about memberships when a cohort-based course model is a better fit for your content and life.

Whether you’re starting from scratch or already have a community business that’s not yet working quite right, identifying and committing to which type you’re building will give you clarity on what to prioritize as you design your business model and identify opportunities for growth.

The categories

I’ll describe each of the 4 types using the following categories.

Connection to Learning Ratio
Community is about growth. When people gather, they are not looking to stay the same. How we grow in online communities roughly falls into 2 buckets: connection and learning. Connection is growth via building relationships with others. Learning is growth via new information. Different types of community have different ratios of connection and learning, which makes them feel very different as a member.

IRL example
Community long outdates the internet. I find it helpful to ground these categories in real life community structures that originated in real life. These examples help you draw parallels between what you’re building and community experiences you’ve observed or been a part of.

Online Example
The online examples I share here are some of the most successful community businesses of each type. These are likely closer to what you’re looking to build towards.

Start with this one if
Depending on the resources you’re starting with, some of the types below are easier to start with.

Aim for this one long-term if
You don’t necessarily have to start with the type you’re going for long term. Even if you don’t, it makes sense to put thought into the business long term and which type fits with what you want long term. That way you can build towards it.

The pricing ranges I share here are based on the US market. It will not make sense for everyone to be at the top of the ranges right away, especially if you’re just getting started. Most communities are not charging enough and these are the ranges we can be aiming for.

All of what I share here is based on what the most successful community businesses are actually doing. The idea is for you to be inspired and excited. And as with any new information, take what makes sense to you and your business and leave the rest.

So let’s get started. Here are the 4 and everything you need to know about each…

Membership Community

A membership is an ongoing community experience for people who have an identity in common and benefit from connecting and supporting each other.

They often include perks, events, and educational content like workshops with guests.

Connection to Learning Ratio

Membership communities are a lot more about connecting people to each other than they are about traditional learning like courses. You can include courses, workshops, expert guests, that align with your member journey, but it’s important to design the member experience so that the focus is connection and a much smaller percentage of the value comes from solo learning.

IRL example
Chamber of Commerce
Before the internet, business owners were gathering with others in their cities to collaborate, make friends and grow together.

Online Example
The Upside
I’ve written more about how and why The Upside works here. It’s a community that invests a lot of their efforts in finding ways to connect members to each other.

Start with this one if…
Membership communities are likely the hardest type to start with because so much of the value you’re creating is in the members you attract. This is hard to do before you have members! Reasons to start with this one:

  • You already have an audience you know well.
  • You are clear on who your members are and why they would connect with each other.
  • The members you attract have a very specific growth journey they can help each other with, even if they are a small group at first.

Aim for this one long-term if…
Even if you don’t start with membership as your model, it can be your ultimate goal to graduate to this model. These are the reasons to aim for membership long-term:

  • Your member growth journey is helped by a larger community.
  • Your community vision includes reaching a larger group.
  • Member-led initiatives and scaled leadership sound like good goals for you.

This is the range that will allow you to build a community that doesn’t have to be huge in order to be financially sustainable. At $40/month you’d need ~200 members to make $100K from your community, which is a good start and the minimum we should be aiming for. Again these are using numbers from the US market, your goals might differ depending where your members live!

Evergreen Course + Events

A course with recorded lessons where students can set their own pace.

They then have a community platform and/or events where they can get their questions answered and meet others.

Connection to Learning Ratio
Many students joining this type of community business join because of the content being shared in the course. The community is a bonus and therefore should be designed with that in mind with a larger part of the effort put towards the learning experience, rather than the connection experiences.

IRL example
Khan Academy
Though Khan Academy is an online tool, they’ve pioneered a way of teaching where the student watches the lesson at home on their own, then comes to school to practice it and get support from the teacher. This is a good parallel to the evergreen course + events structure.

Online Example
Notion Mastery
A course that helps you learn how to use Notion. It gives you access to the community where you’re able to ask questions, co-work and meet others in a Circle community or live events.

Start with this one if…
If you’re starting from scratch and have never taught your content before, I recommend first delivering your course live before recording lessons. Still there are some reasons to go straight to this structure:

  • You already have a self-paced course and want to add a community component.
  • You’ve been teaching one-off workshops or other lessons you’d like to make evergreen.

Aim for this one long-term if…
Some cohort-based courses (the next type we’ll talk about) end up as evergreen. Here are the reasons to aim for this structure:

  • You teach students at many different levels with different needs.
  • You prefer a steady, but slower day-to-day, as opposed to shorter, intensive cohorts.
  • You prefer a quieter community.

Whenever you include community in your offer, I don’t recommend making it available forever. Both because students are likely to put off starting the course if they have lifetime access and because communities are healthier when they have natural renewal points for both sides to reevaluate and recommit.

Cohort-Based Course

CBCs are intensive, short-term community experiences that bring together a like-minded group to learn a concept, hold each other accountable and connect.

Connection to Learning Ratio
CBCs promise a transformation in a short time. That transformation happens both through the content and from the accountability and motivation that comes from doing it alongside others. Many people join CBCs for the community component so depending on the course this ratio could skew much more towards connection.

IRL example
University Semester
Again, CBCs borrow from a tried and true way of learning. They are pretty similar to a semester of a course. It’s short-term, is about a specific topic and may include group projects, study buddies and assignments.

Online Example
Write of Passage
Often cited as one of the most successful examples of CBCs, Write of Passage has made millions of dollars teaching people how to build an online writing habit.

Start with this one if…
I recommend starting with some version of a CBC if you’re building a course, even if you don’t plan on running cohorts long term, because of how much you can learn from a live teaching experience. So consider starting with this one if you fit the below.

  • You have something to teach.
  • You want to build a course and have a small audience.
  • You’re just getting started as a teacher.

Aim for this one long-term if…
CBCs are by nature a short-term community experience. Here are the reasons why this might work for you long term.

  • You like the idea of your business having intensive seasons, followed by slower periods.
  • Meaningful progress can be made on your member growth journey in 4-8 weeks.

The higher prices on this range are warranted once a CBC can start to show clear examples of the transformation and guarantee results. This being on the higher end of the range, even though it’s the one that needs the least amount of time for the member is something to consider.

Group Coaching

Group coaching programs are small group experiences that can include content and structured regular meetings to help members grow/learn from the facilitator and each other. They can be ongoing or time-bound.

Connection to Learning Ratio
Group coaching is (usually) equal parts about learning, in this case the content or guidance that comes from the coach, and connection, which is the members seeing each other as a mirror and connecting over common challenges.

IRL example
One coach gathering the same group of people over time as they move towards a common goal.

Online Example
Tanya Geisler’s Your Iconic Impact
YII helps people through their challenges with the imposter complex. It’s 12 weeks and includes weekly small group coaching sessions and a portal with content to go through each week.

Start with this one if…
I think it’s important to know whether the facilitation and presence necessary to be a coach is something that appeals to you. That usually comes from doing so 1:1 first.

  • You’re already a coach working 1:1.
  • You’ve facilitated small groups in some capacity.

Aim for this one long-term if…
This is a great option for many people! If you’re doing small group coaching in your membership, committing to this model is a great way to stay small while charging a higher price.

  • You enjoy connecting with members 1:1 and in small groups.
  • You want to go deeper with less people.
  • Your member growth journey is personal and better achieved within an intimate context.

Group coaching prices are high because they promise a deep transformation via presence, deep listening and connection.

What now?

Here’s some comments and questions I’ve heard about these types and my answers to it:

What if my business is a mix of all of these?

Although these all borrow from each other in community experiences, the positioning of what you’re selling and pricing are very different, depending on which type you’re building. Very mature community businesses can more successfully incorporate more elements from the various types, and even they will have a primary type they organize the other elements around.  In my experience, having one primary type is important.

What if I have a successful (x type) community business, but really want to build (y type)?

You can (and often should!) switch between the community business types as your business grows. Especially if you’re starting with a smaller audience, starting with one type that requires less people and then eventually graduating to the one that you ultimately want to build, makes sense. What’s important is that you’re clear on which you’re building now, and which you want to build towards long term.

How do I choose?

Reading through this guide is a start! Each of these 4 types may start like very similar businesses but they result in very different outcomes for how you spend your time, the growth journeys your members are able to achieve, how active your community is (this is not a good or bad thing) and the role you get to play in the community. Don’t be too strategic on how you choose this, pick one that feels good to you.

  • Using this guide, which of the 4 types do you want to work towards long term?
  • Which of these types should you be building now with your current expertise and resources?

Next steps

For more detailed information and support as you build towards any of the types of community businesses, I invite you to apply for Build a Community Business. We’ve built a Cohort-Based Course that over the next year will transition to Evergreen + Events.

It’s a one-year community experience where you’ll learn all you need to know to grow a community business, troubleshoot your biggest challenges and connect with a wonderful group of fellow community builders.

The application takes 5 minutes, doesn’t require pre-payment and we get back to you within 24 hours.

As soon as you’re accepted, you’ll get access to a free masterclass to help you design your community offer based on which type you’re building.

Join by October 21st to be a part of our next cohort!

Apply here →

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