What is it?
A business model is a company's core profit-making plan. It describes the products or services the company is going to sell, its target market, and expected costs. In simple terms, your business model defines the way your project will bring income to you.
The process of building and refining a business model refers to business model innovation and forms a part of business strategy.
The term of a business model was widely publicized as the PC and spreadsheets emerged. These tools help entrepreneurs experiment, test, and at the same time plan expenses and income flows.
With the help of spreadsheets, you can easily make changes in your business model and see how these changes are going to influence your business further.
A business model consists of the following parts.
Things you need to make up a product: design, commodities, manufacture, labor, etc.
Things you need to sell a product: marketing, providing services, promotion, sales.
How much and what way customers pay: a pricing strategy, payment options, deadlines, etc.
Evidently, a business model is a research of what costs you bear and how much money you can charge for your product or service. The point of an efficient business model is to earn more money than it’s needed for creating a product.
Different business models can refine any of these three components. Probably, you are able to minimize the costs at the stage of projecting and manufacturing. Or you possess resources for more effective marketing methods. Maybe you are ready to offer an innovative payment solution?
Whatever you could do, remember one thing. An effective business strategy doesn’t require a new business model. It’s enough to look up to an existing one in the market. For instance, most of restaurants operate on a standard business model. However, each of them focuses their strategy on a certain customer segment.
Have you already created your business model? Text in the comments 💬