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What is a business model? Components, types and examples

Small business owners look over a business plan

By Cooper Nelson

At a glance

Virtually all businesses have at least one thing in common: They depend on effective business plans. A business plan serves as a road map for your company, outlining the steps you will take to reach customers and generate profit.

But before you create a business plan, you must first determine your business model. This is the type or platform your business will engage to become profitable. Business models might include product types, financial plans, sales forecasts and other details that outline your plan for success.

Whether you’re an established CEO or an entrepreneur starting your own business , a business model and a business plan form important steps toward defining your company’s future. Partners, company executives and any other business professionals invested in a company’s future can regularly reference their business model and plan to maintain progress toward goals.

It’s never too early to begin studying, building or optimizing your business’s success plan. Even if you only recently obtained your business degree , you can advantageously influence your company’s business model and plan in several important ways.

A business model is just one step in starting your own business. Explore the complete guide to entrepreneurship on our blog!

Understanding business models

Your business model is meant to serve as a comprehensive guide — one that leads your business toward success. The best business models and plans also help companies navigate their market while identifying potential risks and avoiding setbacks.

Put simply, your company’s business model outlines the ways you plan to add value or grow and maintain a business. You’ll likely include details like employees, available resources, price points, competition, customer behaviors and potential expenses in your business model — all to help you forecast how your company might perform in the future.

If you’ve completed a business degree, you can use your business experience to help inform your company’s business model. In addition, earning an MBA can give you the tools to handle investments and high-level decisions that come with deciding on or switching up your business model. However, whether you’re a business management student or an experienced executive, it’s important to consistently evaluate your company’s progress and discover new business models that could propel that growth.

Start your business on the right track. Explore business degrees at University of Phoenix.

components of a business model example

The importance of business models

Business models also might have a direct impact on your company’s success. If you’re starting a new company, your business model should help you attract talent and generate sales. Existing companies should update business models regularly in anticipation of any changes in customer behaviors or market trends.

Among other critical points, your business model should allow your organization to offer high-quality, affordable products or services. This key component will allow your business to change, scale and evolve as necessary. Include figures like cash flow, gross sales and net income in your business plan to maintain companywide accountability as you grow.

Business models provide more than just fiscal direction for your company. Your business model should also outline short- and long-term goals and provide a foundation for corporate culture. Take the time to include details about your organization’s identity in your business model.

Types of business models

Depending on the type of business you operate, you can choose from a wide selection of business models. Some business models primarily outline costs and anticipated sales; others include processes, formulas, workflows and other details that contribute toward corporate success.

Here are a couple of the most common components of a business model:

These and other business model types can help you identify the purpose and direction of your organization.

components of a business model example

9 components of a business model

No matter the type of business model you’ve elected to create or follow, most include similar elements. A quality business model or plan often includes several unique elements, where each element helps to further define your vision and direction.

Your comprehensive business plan should contribute to your company’s business model. Ideally, your business model contains the following nine components:

These essential pieces of a business model help you define every aspect of your company’s operations. When you understand your company’s available resources, liquid capital, recurring revenue, customer demographic and related details, you’ll position the business itself for long-term success.

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What Is a Business Model?

Understanding business models, evaluating successful business models, how to create a business model.

The Bottom Line

Learn to understand a company's profit-making plan

components of a business model example

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

components of a business model example

Investopedia / Laura Porter

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

Business Model

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale


A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company


Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP


Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T


Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business models attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza


Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2021 ."

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8 Key Elements Of A Business Model that You Should Understand

There are many benefits to creating a business model, even if you’re not looking for investors. For example, setting up a business model helps you stay on target when setting up a company or revamping it. These elements can help you succeed as it enhances business growth. 

1. Value Proposition

2. revenue model, 3. market opportunity, 4.  competitive environment, 5. competitive advantage, 6. market strategy, 7. organization development, 8. management team, like this article get updates by email and get our ebook for free, recent posts, the saas company business model explained, how to fire an underperforming employee, 20 business you can start by yourself, natural talent vs. hard work: which quality should look for in an employee, 7 first-year business goals to set for yourself, related posts, popular posts, 21 different types of business models with examples, 100 best business ideas that you can start this year, 5 different ways of handling conflict within your organization, how to analyze your competition, leave a comment cancel reply.

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Business Models: Types, Examples and How to Design One

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Randa Kriss is a small-business writer who joined NerdWallet in 2020. She previously worked as a writer at Fundera, covering a wide variety of small-business topics including banking and loan products. Her work has been featured by The Washington Post, The Associated Press and Nasdaq, among others. Randa earned a bachelor's degree in English and Spanish at Iona College. Email: <a href="mailto:[email protected]">[email protected]</a>.

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1. retailer model, 2. manufacturer model, 3. fee-for-service model, 4. subscription model, 5. bundling model, 6. product-as-a-service model, 7. leasing model, 8. franchise model, 9. distribution model, 10. freemium model, 11. advertising or affiliate marketing model, 12. razor blades model, how to design a business model.

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The 10 Main Components of a Business Model

The 10 Main Components of a Business Model

I learned how to write business models in graduate school. Although, it really felt more like writing long and complicated novels. I once spent three months working on one for a hypothetical home services referral website. I even conjured up crowd-sourced reviews for my would-be business. The process revealed a depressing plot twist.

In the time I worked on this detailed plan, I could have actually built a meaningful version of the product (with technical help, of course). This is why people are often told to avoid business models altogether. But I think that advice is misguided.

When done right, a business model lays out a clear path for building something meaningful. It distills the potential for a business down to its essence. 

This is because it answers the most important questions about your business: What problem are you going to solve for whom? How will you solve it? How will customers pay for the solution? And how profitable will it be?

Your business model is the foundation for your strategy , setting the direction for success. And whether you are just starting a business or you are moving into a new market with an existing offering, you need a plan to guide you — a model for your emerging business or product.

Our team at Aha! has always taken this strategic approach. From day one, we laid out a strong vision for the business and made sure everyone on the team understood it.

But we did not write a long, comprehensive document. We focused on the specifics of the business that we needed to better understand.

Our business model has never been overly complicated, and yours does not have to be either. You can start with a single piece of paper or by using a tool like the Aha! Business Model Builder .

stack of books

There are a number of approaches you can take, but here is our approach and what we believe to be the 10 main components of a business model:

1. High-level vision: A basic description of your business model — two or three sentences that are your true north.

2. Key objectives: The top goals and how you plan to measure them.

3. Customer targets and challenges: The types of customers who will purchase your solution, along with their exact pain points.

4. Solution: The primary way that you solve your customer’s problems.

5. Value: The core elements of your solution that make it unique and differentiated (and ultimately valuable).

6. Pricing: How you will package your solution and what it will cost.

7. Messaging: A clear and compelling message that explains why your solution is worth buying.

8. Go-to-Market: The channels that you will use to market and sell to your customers.

9. Investment required: The costs required to make the solution a success.

10. Growth opportunity: The ways that you will grow the business, including key partnerships if you need them.

A good business model is simple and easy to understand. It answers the key questions about what you are trying to achieve and for whom.

Once you distill the elements down to their essence, it is important to get feedback and uncover any incorrect assumptions or biases. The hard part is understanding what feedback to listen to and what to ignore because everyone has an opinion on the viability of a new business or product extension. And often those opinions are just that or even misguided.

But a strong business model will protect against this. It forces deep analysis and removes anxiety from your work by providing a framework for progress. And this is the ultimate benefit of a business model. It requires you to make assumptions and decisions, and it encourages you to check your progress against pre-defined success metrics.

How have you approached building a business model?

Brian de Haaff

Brian de Haaff

Brian seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 product development software — and the author of the bestseller Lovability . Brian writes and speaks about product and company growth and the journey of pursuing a meaningful life.

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components of a business model example

4.1 Components of a Business Model

A company’s value proposition Consists of the full range of tangible and intangible benefits that a company provides to its customers (stakeholders). composes the core of its business model; it includes everything it offers its customers in a specific market or segment. This comprises not only the company’s bundles of products and services but also how the company differentiates itself from its competitors. A value proposition therefore consists of the full range of tangible and intangible benefits a company provides to its customers (stakeholders).

The market participation dimension Dimension of a firm’s business model that describes the markets it serves; its distribution methods; and how it promotes and advertises its value proposition to customers. of a business model has three components. It describes what specific markets or segments a company chooses to serve, domestically or abroad; what methods of distribution it uses to reach its customers; and how it promotes and advertises its value proposition to its target customers.

The value chain infrastructure dimension Dimension of a firm’s business that deals with how a firm uses its internal resources and capabilities and partner network to support the market delivery of its value proposition. of the business model deals with such questions as, what key internal resources and capabilities has the company created to support the chosen value proposition and target markets; what partner network has it assembled to support the business model; and how are these activities organized into an overall, coherent value creation and delivery model?

The global management submodel Summarizes a firm’s choices about a suitable global organizational structure and management policies. summarizes a company’s choices about a suitable global organizational structure and management policies. Global organization and management style are closely linked. In companies that are organized primarily around global product divisions, management is often highly centralized. In contrast, companies operating with a more geographic organizational structure are usually managed on a more decentralized basis.

It used to be that each industry was characterized by a single dominant business model. In such a landscape, competitive advantage was won mainly through better execution, more efficient processes, lean organizations, and product innovation. While execution and product innovation obviously still matter, they are no longer sufficient today.

Companies are now operating in industries that are characterized by multiple and coexisting business models The conceptual framework that summarizes how a firm creates, delivers, and extracts value while doing business. . Competitive advantage is increasingly achieved through focused and innovative business models. Consider the airline, music, telecommunications, or banking industries. In each one, there are different business models competing against each other. In the airline industry, for example, there are the traditional flag carriers, the low-cost airlines, the business-class-only airlines, and the fractional private-jet-ownership companies. Each business model embodies a different approach to achieving a competitive advantage.

Southwest Airlines’ business model, for example, can be described as offering customers an alternative to traveling by car, bus, or train by giving them a no-frills flight service, enhanced through complementary activities. Southwest’s business model differs from those of other major U.S. airlines along several dimensions. It is about more than low fares, point-to-point connections, and the use of a standardized fleet of aircraft. A key differentiating factor is the way Southwest treats its employees—putting them first with profit-sharing and empowerment programs. Another is the fun experience Southwest creates on board and in the terminal, with jokes, quizzes, and the relaxed behavior of the cabin crew and ground staff. Yet another is the legendary care and attention Southwest puts into its customer service. Not surprisingly, Southwest’s demonstrably successful business model has spawned numerous imitators around the world, including Ryanair, EasyJet, JetBlue, and Air Arabia.

Apple provides an example of why it is useful to focus on a company’s overall business model rather than individual components such as products, markets, or suppliers. While it is tempting to think of the iPod as a successful product, it is, in fact, much more. Less visible than redefining the size, look, and functionality of an MP3 player, Apple’s real innovation was creating a digital rights management system that could satisfy the intellectual property concerns of the music industry while simultaneously creating a legal music download service that would satisfy consumers. Thus, Apple’s real breakthrough was not good product design, it was the creation of a revolutionary business model—one that allowed people to find and legally download high-quality music files extremely easily but that would not allow the pirating of entire albums. Put differently, the iPod was the front-end of a very smart and highly differentiated platform that worked for both the music industry and the consumer. That platform, the iTunes Music Store—which now also offers digital music videos, television shows, iPod games, and feature-length movies—is at the very heart of Apple’s strategic move into consumer electronics, allowing more recent Apple products like the iPhone and Apple TV to sync with PCs as easily as the iPod. In fact, iTunes is the trojan horse with which Apple plans to capture a significant share of the home entertainment market.

Describing a company’s business strategy in terms of its business model allows explicit consideration of the logic or architecture of each component and its relationship to others as a set of designed choices that can be changed. Thus, thinking holistically about every component of the business model—and systematically challenging orthodoxies within these components—significantly extends the scope for innovation and improves the chances of building a sustainable competitive advantage.

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6 Components of a Strong Business Model

components of a business model example

In a recent survey conducted by a software company on how useful it is to write a business plan, it was concluded that of those who invested time and resources to write a business plan , 64% were able to grow their businesses, compared to 43 percent of the companies that didn’t. Additionally, entrepreneurs with a professionally written strong business model were more likely to secure the funding they needed.

We spend a lot of time talking about our business ideas but if your fundamentals are out of whack, then so is your “great” idea! This usually happens when we are not clear about the goals and visions of our business model and how it is going to impact the lives of millions. An online business plan can take ideas from the entrepreneur, but the related facts on paper and provide a roadmap to take action .

When it comes to explaining your business model to a potential investor or even to your family and friends to test the waters, it is important to connect your product story with the problems of your target audience that you are going to solve. It is important to ensure that at every level of growth planned for the next five years or so, the experience and quality that you offer to your customers is at par. Only then you will be able to not just write an impressive business plan, but also be able to establish a successful business.

Let’s discuss 6 critical elements of building a strong business model and how you can include these in your pitch deck.

1. Where will your business idea start?

This section of the business model should be a concise overview of your business idea . How did it start? What made you come up with this idea? How passionate are you about this new venture? This is where you are required to step into the shoes of a storyteller and speak about your product and your goals succinctly and accurately. The objective is to draw readers’ attention so they want to learn more about your plan.

2. How will business model progress?

This is your chance to look into your competition , showcase your industry knowledge and summarize the sales and marketing strategy. Your progress graph should place a detailed analysis of how you plan to grow your business , promote products and enter the market. An explanation of operational plans and SWOT analysis will show that you have considered opportunities and contingencies at all levels.

3. What metrics will help you track the growth?

How do you measure your company’s growth? Running a successful business requires you to develop business metrics, also known as KPIs (Key Performance Indicators) . These metrics display a measurable value that indicates the overall success of a company or its business goals. In this section, you’re required to bullet down business metrics that you will track to show how your business is performing in various departments. Since there are hundreds of KPIs to track performance, sticking to the right ones, the ones that suit your business goals , will help add value to your company’s development.

4. How will you create value for customers?

This section of the business model can be summed up in three simple words – What you’re selling?

Include a detailed description of how your product or service is designed to benefit customers. What is the life cycle of your product, how is it different from that of competitors in the market , and how will you acquire your products? Keep in mind that when it comes to writing the product section in the business plan, the focus should be on the benefits that your product or service will be providing and how it will fix a problem of your customers . Be clear and concise. Avoid being too technical while explaining the functionalities of your product. Write as if you are talking to a layman. It should be customer-oriented and service-driven.

5. What channels do you plan to use to market and sell to your customers.

Business is all about bringing a steady stream of customers through various channels that in return allow you to plan and invest better. Depending upon the size of your business, it is important to find the right channels to reach out to your potential customers and that’s exactly what you are required to cover in this section. While creating a marketing plan focus on your target market and answer questions like who your customers are? Who are your competitors? What strategies are you likely to implement to set yourself apart from your competitor? Your marketing strategies should propel a direct and dramatic impact on sales, bringing in a healthy stream of traction, as well as revenue. This is where you can win or lose your potential investors while pitching a business idea . So make sure that you highlight all the advantages of pursuing particular activities in this domain.

6. What will be the revenue stream of the business?

This particular section of your business model answers the most important questions –  how capable is your business idea to earn its mazuma? In simple terms, how will you make money? This might feel like a game of maze when you are first starting out, but with a bit of brainstorming, you can easily find alternate ways to bring some money into the system to at least keep the business bootstrapped. The revenue model will also help you make the necessary adjustments in strategies and sources of income that work best for your business and industry type.

When done right, a business model lays out clear directions for building a meaningful and profit-generating business. With the right tool, you can easily create a business plan that covers all the essential elements of an effective, investor-worthy business plan.

start writing a business plan for your next disruptive idea. It’s damn easy and fun!

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Business Model – What is it and How it works

What is a Business Model

The term business model has gained incredible popularity in the last decade as one of the most important ways of approaching business innovation and business strategy .

If you’re like most people, you probably define business model as a company’s plan for making money. And you’re not the only one. Probably 80 to 90% of people think like that. This article will show you that the business model is not just that. It is much more.

The term is still relatively new and still raises a lot of doubts about its definition and how it works. In fact, an efficient business model is much more comprehensive and deeper than how a company charges its customers. It involves identifying customer segments , delivery channels , key-partners , among other things. It is much more than simply establishing how a company makes money. It’s about explaining how it can create and deliver value to consumers .

Part of a business model includes the activities associated with production: design, supplies, raw materials, manufacturing (backstage). But there is a second part that involves other essential activities when selling a product: finding your audience, closing a sale, distributing a product, delivering a service (stage). This is known as the two sides of a Business Model .

The customer-facing part is the stage and the behind-the-curtains part is the backstage. Most of the time, we only see strategies of what’s “visible” to us, but there are many innovations that happen and we don’t notice.

Business Model - Two Sides - Backstage Stage

Check out our super guide about business models sides with 6 mental models explained to help you interpret and design business model strategies:

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Check it out by clicking here .

The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.

Any business, therefore, depends on a well-designed and thoughtful business model, which covers all these aspects, so that this company is set on a strong base. So let’s start with the basics.

What is a business model?

By definition, a business model describes the logic of how a company creates, delivers, and capture value.

Business Model Definition

There are three key components within a business model: creating value, delivering value, and capturing value. This shows that the business model doesn’t revolve around money. It revolves around value.

This Business Model definition was created by the Swiss Consultant Alexander Osterwalder as a result of his PhD thesis, entitled The Business Model Ontology, in which he researched different business model definitions to create a single one. It was this document that later gave birth to the popular Business Model Canvas tool .

Business Model Ontology by Alexander Osterwalder

How a business model works

To better understand how a business model works let’s look at an example. If we look at the news industry in the 20th century, how the three main components of a business model worked? How would the news industry, or a news company, created value? They would have journalists write articles and produce newspapers. How would they deliver this value? They would have paperboys that would go around delivering newspapers around neighborhoods. And how would they capture value? They would have companies that would advertise, place ads in these newspapers

Business Model Press Industry in the Past

Now, what about in the 21st century? How does the industry news look like today? It’s the exact same three pillars, creating, delivering, and capturing value. But it’s done in a different way. so, rather than having journalists create value today, we create value, we the people who use platforms like Google and Facebook. We are the ones creating content. It’s being delivered on these social platforms, like Google, Facebook, Twitter, Instagram, or Youtube. These are all platforms that are delivering the content that we create. And is the value of that delivered content being captured? It’s being captured through advertisements, Google Ads, Facebook Ads, Youtube Ads. So, the process still the same, but obviously has been updated and innovated in a different way to fit in with the technology of the 21st century.

Business Model Press Industry Actual Days

Again, if we look at an example of a grocery store from the 20th century, they would create value by accumulating all the goods and products from farmers, from butchers into one location. They would deliver value by basically allowing people to come into that location and buy whatever they would want in the quantity they needed. And they would capture that value in the cash register.

Business Model Groceries in the Past

Today, in the 21st century, again, still the same process, but done in a different way. So companies like HelloFresh and Deliveroo are pretty much revolutionizing the way we get groceries and the way we eat. So, for example, HelloFresh, the way they create value by creating recipes, and they deliver those recipes to you so you don’t have to actually go to a store or physical location. How do they capture that value? You subscribe online for a monthly fee on their website with your credit card.

Business Model Groceries Actual Days

So again, the process still the same, creating, delivering, and capturing value, but we can innovate the way it’s being done. That’s how business model innovation works. So again, to really emphasize, it’s all about value. It’s not about money, it’s about value.

Business Model is All About Value

Check out our super guide about business models in the 20th vs 21st centuries with 13 differents industries business models and how they have evolved through time:

Business Models in 20th vs 21st centuries - cover

Business Model Objectives

A business model is a high-level plan of how your company sells and operates. In practice, it includes baseline aspects of each and every business, such as value proposition, processes, target audience, offers, strategies, organizational structure, operational and political processes.

The objective is to identify the product and/or service to be sold, as well as the public to whom it will be offered, while anticipating the expenses involved in the entire production and sale process, in pursuit of the established goals. According to management guru Peter Drucker, “a business model is supposed to answer who your customer is, what value you can create/add for the customer and how you can do that at reasonable costs”.

In general, in addition to offering a direction for the enterprise, the business model also serves to attract investors, recruit talent, and motivate the team. A business model is an important tool in today’s corporate world.

Is Business Model the same as Revenue Model?

The vast majority think that a business model is the same thing as a revenue model. A revenue model describes how a company makes money through its various revenue streams and that’s not the business model. A revenue model is part of the business model, but it’s not the entire thing. There’s much more to the business model and that’s what we are going to cover next.

Business Model Different Revenue Model

Check out our super guide about revenue models with 21 models explained to help you choose the best revenue model for your company:

Revenue Models - Super Guide

Check it out by clicking here

When is a business model sustainable?

When it comes to business modeling, the following equation is extremely important: Created Value > Captured Value > Cost of Delivery

Business Model Equation

We have to create more value than we capture and we have to capture more value than it costs to deliver that value. A business model will only be sustainable if this equation holds true.

In order to create a sustainable business model you need to ask yourself the following questions:

What’s interesting is that when we look at business model innovation, we can innovate in each of these aspects.

What are business model components?

The business model has components related to marketing/sales (create value), operations (deliver value), and finance (capture value). Although the Business Model conceptually has three main components, the business model canvas , which is the most popular tool for business modeling , has a more detailed approach based on 9 construction blocks .

Business Model - 9 Blocks Components

The 9 blocks of construction are:

To better understand each of these blocks you can click on the links above to read more in-depth.

What is the business model process?

The process is known as business modeling or business model design has essentially two parts:

The business model development can be better achieved by using the business model canvas. There’s a specific order to develop a business model using the canvas.

Business Model Canvas Order

The order considers that a business model must approach first the desirability of the business. Does the customer want it? Can we create this? Second, you must approach the feasibility of the business. Can we operationalize this? Can we deliver this? And last, you need to prove the economic viability of the business. Can we capture profits?

Business Model Desirability Feasibility Viability

This is already part of the validation process, which is the second part of the business model development process. You need to assume that every part of your business model is a hypothesis that needs to be validated. The only way to validate your business model is by testing your assumptions. A more detailed approach to the business model testing cycle can be seen below.

Business Model Testing Cycle

Only after you have tested every single strategy for every single construction block you can have a better chance of a successful business model.

Check out our super guide about business testing with different tools and approaches to test your business model hypothesis and help its development.

Business Model Testing - Super Guide

How to develop a business model

The best way to put in practice the business model development process is by gathering people of different expertise into a visual workshop. The development of a business model involves the use of visual tools, such as the business model canvas, which works as a common language between participants.

Business Model Group Discussion

What is business model transformation?

New business models emerge or transform base on shifts in technology and consequently in customer behavior. New technologies force us to experience things in a completely new way. From car ownership to mobility apps, from in-class education to online education, from commercial hours malls to 24/7 online shopping.

Customers’ needs are still the same, but their behavior has changed. So the question you need to make is How does my business adds value in the new consumption era?

You can read more about Transitional Business Models in our Super Guide below:

Transitional Business Models

What is a business model example ?

A good example of a business model can be seen in the business model canvas of the Netflix

Netflix Business Model Canvas

What is business model analysis?

There are different ways of analyzing and assessing a business model. A very common approach is using the SWOT Analysis to understand the strengths, weaknesses, opportunities, and threats.

Business Model Analysis - SWOT

You Can do the SWOT Analysis of your Business Model using our Business Model Assessment Spreadsheet

Business Model Canvas SWOT Analysis Assessment Excel Spreadsheet

Types of business models

In fact, there are as many business models as there are types of business developed. Some of the most common are:

Which business model is best?

There’s no such thing as the best business model. There are plenty of successful company cases in many different business model types. But business models that use recurring revenue models such as subscription or SaaS or that uses network effects such as marketplaces and platforms are powering the most successful businesses.

Can you copy a business mod el?

Yes, you can. The essence of creating, delivering, and captures can be

Business Model Rationale

Can you protect a business model?

Business models can’t be patented but the technology that supports them can. This has been increasingly more difficult as technology becomes more and more accessible and diversified.

Just ask yourself: Can Google’s business model be patented? Can Netflix’s business model be patented? Can Facebook’s business model be patented? Can Amazon’s business model be patented? No, it can’t. But the reason you just don’t create another Facebook by creating another company with the same business model is because of how hard it is to create similar technologies or execute similar strategies.

Can you license a business model?

You can’t license business models, but you can license brands, processes, and other business model parts. This is usually done in the form of franchises. Companies like McDonald’s, Subway, and Pizza Hut all use the franchise business model.

Business model advantages

As a general rule, business models often include everything related to the creation, production, and sale of the product or service, information about the target audience and distribution of the product, as well as what the company’s revenue source will be, that is, how the consumer will pay for that good.

It is, after all, a “recipe” to be followed by the project team. This recipe usually starts with the value proposition – a description of the products and/or services that will be offered, by demonstrating what differentiates them from other competitors in the market.

Besides, it contains the costs involved, sources of financing, a definition of the target audience and the marketing strategy to reach it, projections of revenues and expenses, an analysis, even if brief, of the competitors, and a description of possible partnership opportunities.

The main purpose of a business model, therefore, is to allow the company to deliver value to the customer at a sustainable cost. As the business model is able to analyze all the details of the enterprise even before it is put into practice, the chance that this objective doesn’t get reached is very remote.

business model canvas template

You can download a business model template in PDF here

You can download a business model template in Powerpoint (PPT) here

Why Business Model Maters

Business model matters because they allow you to create business strategy and innovations in a more holistic way, going beyond revenue models or technology innovation.

Bottom line

Surely, there are many more business models other than those above. And, as market demands change, new models are created. Besides, it is worth remembering that most companies today don’t operate under a single business model. It is quite common to see a combination of several.

The business model you choose depends on your company’s needs and the value you want to create for the stakeholders involved, especially for your target customer.

Finally, don’t forget that any business, no matter how successful and established it may be on the market, need to revisit and update its business model and strategies in order to understand and get prepared for changes and trends. Any failure in this assessment can threaten the future of the company and its investors.

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What Are The Key Components Of Any Business Model?

The key components of any business model are: 

A glance at the business model tools available

With FourWeekMBA I’ve been researching into over a hundred  business models at the time of this writing. From tech to luxury, from innovative to more traditional.

I’ve been in search of a framework, recipe or something that could help me dissect any company. As I came from a financial background the most logical thing for me was to look at these companies by analyzing their numbers.

However, I soon realized that approach was too reductive. So I started to look at other frameworks that could be used to find the simplest parts of a business model and its key components.

In this article, I’ll show you a few approaches and how they come down to similar vital components.

A recap of key components according to several business model tools and frameworks

A business model is a representation of a company in the real world (this is a definition that works for practitioners, not necessarily for academics).

Business modeling for entrepreneurs might be a useful tool to gain insights about competitors, better understand your organization or design toolbox to grow your business.

From that standpoint, over the years a few tools came handy . Some of them have been discussed at great length on this blog:

Each of those frameworks assumes a business model has several key components. For instance, the business model canvas tells you that a business model has nine key components:

While a lean startup canvas tells you there are still nine key elements, but it substitutes key partners, key activities, key resources, and customer relationships, with a problem, solution, key metrics, and unfair advantage. Therefore, the lean startup canvas will look like that :

The lean startup canvas as an adaptation from the business model canvas might be better suited for startup organizations, which need to scale quickly while gathering feedback from customers.

The blitzscaling business model innovation canvas instead, looks at a business model as primarily skewed toward massive growth .

In that instance, what identifies a business model is its ability to leverage on growth , or to limit its growth .

Thus it is comprised of four growth levers and two growth limiters:

Another framework from BMI Lab put together in the sales navigator assumes that a business model key components are three:

Those elements come together when a business owner answers to a few key questions, such as, “what do you offer to the customer?” or “how is the value proposition created?” or yet “why is it profitable?”

Another tool called four box business model framework by Innosight  breaks down the business model in four key components:

Each of those elements feeds into each other to create a feedback loop of business model innovation. Those tools are quite useful, and it tackles how you can assess your business at each stage.

The FourWeekMBA business model framework

After looking at the key components of a business model based on a few toolboxes; based on the analyses performed over the years, for the business model boils down to three key elements, those are tied up by another ingredient.

This framework by FourWeekMBA has three aims:

In short, I believe that a great business model toolbox has to have a super simple set up. It has to be based on very few elements. And it needs to focus on its long term financial sustainability.

However, what the toolboxes I’ve been looking at mostly miss is the branding of each business model success .

In short, for me there are two dimensions of a business:

These two dimensions walk hand in hand. Yet the people side is what also makes the business thick from the economic standpoint.

The people side comprises the following elements:

This people dimension will help you build a solid brand . A solid brand builds up a tribe, a group of people that can follow you anywhere. Once you have a solid brand , you can focus on the second dimension: the financial dimension.

The three elements of the financial dimensions are:

Key takeaway

To recap an effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand .

The financial dimension will help you build proper distribution channels by identifying the people that are willing to pay for your product or service.

Other resources for your business:

Handpicked business models:

FourWeekMBA Business Toolbox

Business Engineering


Tech Business Model Template


Web3 Business Model Template


Asymmetric Business Models


Business Competition


Technological Modeling


Transitional Business Models


Minimum Viable Audience


Business Scaling


Market Expansion Theory




Asymmetric Betting


Growth Matrix


Revenue Streams Matrix


Revenue Modeling


Pricing Strategies


Connected Business Model Types


Attention Merchant Business Model


Marketplace Business Models


Wholesale Business Model


Retail Business Model


Crowdsourcing Business Model


Open-Core Business Model


Open Source vs. Freemium


Freemium Business Model


Freeterprise Business Model


Franchising Business Model


More Resources

Business Analysis: How To Analyze Any Business

About The Author

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Gennaro Cuofano

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Business Model Innovations: Components and Types with Examples

Business Model Innovations: Components and Types with Examples

When reading the success story of any business, the core is the business model. Let us break the term and understand, business model and innovation. A business model is a framework for making money, creating, and capturing value. Innovation is performing tasks differently from the norms. Combined together, a business model innovation is a framework to capture or create value by doing something differently.

Business model innovation does not mean the business has to leapfrog the competition by the product characteristics compared to competitors. A winner in business model innovation is the firm that moved first to change the rules of the game or the firm that came later and pursued a better business model.

To understand business model innovation, it is important to understand the five building blocks of any business model and the type of business model innovation. For better understanding, we have supported each point with relevant examples.

Components of Business Model

Entrepreneurs are well-rehearsed with the components of the business model but do not understand the relevance of the business model analysis . Before we explore each of these components, let us first understand the rationale of each component and the linkage between each of them. To drive customers to the firm, they must provide something worthy to their customer or address the pain points of the customer. The business must provide the customer with a unique value proposition to earn revenue. However, the right value proposition to the wrong customer will not be beneficial, which is why the market segment should be clear.

A revenue model is a structured way to monetize the value proposition. So for the firm to earn high revenue the firm needs to provide the right value proposition to the right market segment. This will intimate the competitors, to prevail during this stage, the firm needs a growth model. The growth model outnumbers competitors and grows profitability. Finally, to deliver the right value proposition, a firm requires the right capabilities i.e. resources, assets, property, human resources, etc.

Customer Value Proposition

A firm’s customer value proposition is the value it can provide the customer through the product/service. It also depends on which aspect solves a problem and/or satisfies the needs of the customer better than the competitors. A value proposition must answer the most asked questions of the target customers: What is so compelling, engaging, rewarding or delightful in a product which will make customers shift from the competitors?

Customers do not always know what they need in a product/service.

For example – customers didn’t know they needed a touch screen and internet connectivity in their mobile phones until the iPhone was launched. The value proposition will also introduce customers to their own latent needs from the product/ service.

The value proposition depends on the reputation, image, assets the firm control, and the relationship with customers.

For Example – A car enthusiast would buy a car not only because of its features and engine capacity but also because it is a BMW or a Ferrari. A brand-focused customer may buy a product because it is sold in a particular store rather than any other store.

Market Segment

The primary source of revenue is through customers and the firm needs to know their customers properly to be able to serve them. Some details which are needed of the customers are:

The market segment is the section of people to whom the value proposition is being offered or will be offered. The market segment of a business model is about the quality and quantity of the competitors i.e. suppliers, competitors, customers, complementors and others who have to cooperate to create or capture value.

Segmentation can be the type of customers and their preferences, types of products being offered, willingness to pay, demography, geography, distribution channel, types of relationships with customers. Segmentation creates market segments such as a niche market, mass-market, and multi-sided market.

The multi-sided market is when two or more types of market segments are interrelated and the firm makes money by facilitating the interaction.

For example – a credit card market is a multi-sided market as cardholders are on one side and the merchants on the other. The more the cardholder owns a particular card, the better off will be the merchants who accept that particular card and better off will be the credit card company.

Revenue Model

The revenue model component is to get the maximum number of market segment who like the value proposition to pay for the product as close to their reservation price without driving them away. A customer’s reservation price is the highest price a customer is ready to pay for the product. These are some of the types of revenue model:

For example – traditionally Kodak used this technique to sell its film-based camera. They kept the camera cost low whereas the cost of each film was high. This made Kodak popular and they reached record-breaking profits. However, the firm failed miserably when it applied the same model in digital photography.

The price is such an important factor for the revenue model, the entrepreneurs must keep in mind to set the price right. Too high a price will drive the customers away to the competitors or too low a price (without any strategic motive) will lave unnecessary money on the table.

Growth Model

The growth component of a business model is to analyze the following questions and plan them to create the best strategy to grow profitably:

As the firms start providing value for money and making revenue, the competitors increase the prices. The supplier will charge extra money for the commodity or the delivery logistics will increase the charges. This forces the firms to decrease the quality of the product to increase the number of delivery.

Even the competitors will want to go ahead of the firm by imitating or will leapfrog the firm for their benefits, forcing the firm to lower the price or raise its costs.

For example, The internet disrupted the business model of many newspapers and other traditional media, killing their revenue model. Similarly, in today’s world, several unique online business ideas are disrupting the offline business models. An important part of the growth model is to find new UVP and revenue models to relative competitors.


Capabilities are the central point for any business model analysis. The biggest entrepreneurial challenge is to build the capability to take advantage of any opportunity by offering the maximum value proposition. Find the market segment whose needs it can satisfy, increase the number of high-willingness to pay customers in the already existing market or move to the new market. Looking for a better revenue model or improve the existing, work on better pricing model or work towards profitable growth.

Capabilities in a business model consist of resources and activities. Resources are the assets that a firm owns or has access to, whereas activities are what it does. Activities transform resources into values created and/or captured. The quality of the resource determines the amount of value created and/or captured.

For example: At the core of Google’s business model are search capabilities that enable it to deliver searches that are perceived as very dependable by many customers, software that enables it to serve the needs of the long tail searches, tools that it offers to app developers, and so on and so forth.

Conceptualize or Evaluate Your Business Model Framework

Business model innovation and its types .

Types of Business Model Analysis

In a regular business model innovation, the new firms use the same/existing capabilities i.e. value chain activities and underpinning resources. The business model is such that the existing firms in the market still remain competitive. Products of the old firm still take up enough market share to be competitive enough.

Example: The strategy pursued by Dell in the 90s when it introduced the built-to-order direct model. Rather than passing their product through distributors, Dell directly sold their products to the customers. The customers could order from Dell, informing them about their specification needed by them. Dell brought something new in the market but the capabilities that it used for this strategy was not radically different from the ones existing in the market. The business model was such that the other computer makers like HP, Compaq who sold through distributors were still in the market and earned profitability.

Capabilities Building

In capabilities building innovation, the capabilities needed in the new business model is radically different from the old business model. The old business is still competitive along with the new one. The capability needed in the new business model has to be created from scratch or acquired in some other way.

Example: A firm that produces renewable resources is an example of capability building innovation. The capabilities of this firm will be highly different from the petroleum-based business model. Creating ethanol from sugar cane, sugar beet, corn and sweet potato which is completely from drills, pump out, refine petrol. Both the fuels co-exist in the market. 

The popular example of capabilities building is of brick and mortar vs online store. The capabilities needed for both are completely different yet they co-exist in the market share.

Position Building

In Position building business model, the product/service rooted in the new business model overpowers the product/service in the old business model leaving the latter non-competitive. However, the capabilities of both business models are the same.

Example: When Walmart came to a small town in the US, it was a position building business model. The capabilities of Walmart were almost the same as retailers’ business models. Walmart rendered many small businesses out of competition as the old business model could not offer the customer the cost-saving offered by Walmart.


In the revolutionary business model, the core capabilities that underpin the new and old businesses are completely different. The capabilities used by the old business model is completely useless for the new business. The revolutionary business model redefines the creation and capturing of value by overturning the way value chain activities were performed earlier. The rule of the game is changed both market-wise and capability-wise.

Example: eBay was launched on a revolutionary business model. The online auction required radically different capabilities as compared to an offline auction. For many products, the offline business model is not competitive.

Dynamic and Application

While dividing the business model into different types, we have assumed that the business model is static- that is when a business model is regular it will remain regular always. Nullifying the assumption, many business models may start off as regular but as time goes by many change into position building, capability-building, revolutionary, etc.

Example: Usually, disruptive technologies start off as regular and move on to become revolutionary or position building. Google was neither the first to introduce a search engine nor the first to launch sponsored ads. However, due to its business model innovation, it became revolutionary and monetized more by being a search engine.

To what extent is the game changed by business model innovation? This one question’s answer must be clear in the mind of entrepreneurs after this post. Understand the two variables in the two by two matrix figure(1.1), after deep analysis of your business and the market in which you are entering. Devising a business model must be done after close consideration of all the points mentioned above. Have other queries related to business model Analysis? Talk to our experts.

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  6. business model


  1. The 10 Key Components of a Business Model

    This component of your business model involves searching for ways to help your company grow. Common examples of opportunities for growth include mergers and acquisitions with other companies and partnerships with nonprofit organizations for charity campaigns.

  2. What is a Business Model? Components, Types and Examples

    Here are a couple of the most common components of a business model: Advertising — The use of advertising channels like social media, email and TV commercials to reach a specific customer segment. Companies can use this business model to remain familiar with customers who may be potentially interested in their products.

  3. Business Models

    A business model is a company's fundamental identity while engaging with customers and other stakeholders. It works like a charter on which a business thrives and provides its goods and services to the end consumers. Examples of business models include retailers, manufacturers, e-commerce platforms, brokers, franchises, etc.

  4. What is a Business Model with Types and Examples

    For instance, direct sales, franchising, advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that...

  5. Components of a Business Model

    The components of a business model include details on all operations, as well as short- and long-term visions for the business' growth. Without a business model, investors and owners will...

  6. 17 Business Model Examples

    Companies that use the Freemium Business Model: Spotify Linkedin Skype Mailchimp Dropbox Evernote Slack Grammarly Zoom Canva Trello Subscription Business Model A business with a subscription business model provides consumers with certain services for a fixed monthly, quarterly, or annual fee.

  7. 8 Key Elements Of A Business Model that You Should Understand

    For example, if you're looking for investors or a bank loan, putting together a business model will help you to articulate clearly what your product or service is about and how it will succeed. 1. Value Proposition It is the description of what your product or service does to fulfill the customers' needs.

  8. What Is a Business Model? Definition, 17 Types and Examples

    Here are 17 business models and examples of each: 1. One-for-one business model In a one-for-one business model, a company donates an item to charity for every item purchased. This model typically appeals to customers who appreciate businesses with a charitable nature.

  9. Business Models: Types, Examples and How to Design One

    Examples: This business model is most common among companies that sell physical products. Printers that require a specific type of ink or water pitchers that require a specific type of filter...

  10. Business Models

    The key components of a business model should include relating to your target customers, the market, organization strengths and challenges, essential elements of the product, and how it will be sold. Establishing this foundation guides the next planning tool — your product roadmap.

  11. What Is a Business Model? Definition and Examples

    Related: The 10 Key Components of a Business Model. Importance of using a business model. A business model is a key component of building a successful business. It can allow you to explore different ideas for selling services and products, implementing effective operations and developing strategies for future growth.

  12. Example Business Model Canvas: Definition and Components

    The business model canvas is a visual representation of a company's main business components and strategies. It provides an overview of operations and can give insight into areas such as revenue sources and customer relationships. The business model canvas is the preferred tool of many organisations due to its capability to summarise complex ...

  13. The 10 Main Components of a Business Model

    There are a number of approaches you can take, but here is our approach and what we believe to be the 10 main components of a business model: 1. High-level vision: A basic description of your business model — two or three sentences that are your true north. 2. Key objectives: The top goals and how you plan to measure them. 3.

  14. Components of a Business Model

    4.1. Components of a Business Model. A company's value proposition composes the core of its business model; it includes everything it offers its customers in a specific market or segment. This comprises not only the company's bundles of products and services but also how the company differentiates itself from its competitors.

  15. 6 Components of a Strong Business Model

    Let's discuss 6 critical elements of building a strong business model and how you can include these in your pitch deck. 1. Where will your business idea start? This section of the business model should be a concise overview of your business idea. How did it start? What made you come up with this idea? How passionate are you about this new venture?

  16. Business Model

    The business model has components related to marketing/sales (create value), operations (deliver value), and finance (capture value). Although the Business Model conceptually has three main components, the business model canvas, which is the most popular tool for business modeling, has a more detailed approach based on 9 construction blocks.

  17. 10 Important Components of an Effective Business Plan

    Effective business plans contain several key components that cover various aspects of a company's goals. The most important parts of a business plan include: 1. Executive summary. The executive summary is the first and one of the most critical parts of a business plan. This summary provides an overview of the business plan as a whole and ...

  18. What Are The Key Components Of Any Business Model?

    A tech business model is made of four main components: value model (value propositions, mission , vision ), technological model (R&D management), distribution model (sales and marketing organizational structure ), and financial model (revenue modeling, cost structure, profitability and cash generation/management).

  19. Business Model Innovations: Components and Types with Examples

    The business model is such that the existing firms in the market still remain competitive. Products of the old firm still take up enough market share to be competitive enough. Example: The strategy pursued by Dell in the 90s when it introduced the built-to-order direct model.

  20. 9 Components of a Business Model

    Key Resources - there are four types of resources we consider here: intangible (IP, copyrights, patents etc.), tangible (facilities, vehicles, machines, IT infrastructure etc.), Human (sales,...