Business Model

About business models

Business models originated in the past century as publicly traded companies emerged, as the availability of public information about these companies emerged and as the study of efficient use of capital moved to the forefront in both business and economics. A business model reflects the structure of the business and how it is currently built. A flawed business model creates much difficulty for the business owner even with the greatest of efforts, while a superior business model can produce profits with negligible efforts.

“The Business models do not offer solutions; rather, how each business is run, determines its success.”

A business model which describes the rationale of how an organization creates, delivers, and captures value in the business strategy (economic, social, or other forms of value). The model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

Business components to be considered when developing the model are:

Product of Service: Describe what the business is selling and focus on customer benefit.

Executive Summary: The executive summary section highlights the future plans of the business. This summary is the introduction to the rest of the plan.

Company Description: Legal establishment, history, start-up plans, etc.

Product or Service: Describe what the business is selling and focus on customer benefits.

Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.

Strategy and Implementation: Specific management responsibilities with dates and budget.

Management Team: Include backgrounds of key members of the team, personnel strategy, and details.

Financial Plan: Include profit and loss, cash flow, balance sheet, break-even analysis, assumptions, business ratios, etc.