Business Model

 

BUSINESS MODEL: 

Business model refers to as a company mechanism for generating profit. It identifies the products or services the business wants to sell, it identifies target market and any anticipated expenses.

In Business model, one plans the appropriate mechanism to generate profit. Picture this scenario; A Business wants to sell  products and services for older people, then a business decides to use Instagram platform simply because it mostly used now days. But according to statistics, Instagram platform is mostly used by young generations. Instead of using Instagram platform, then a business should use TV shows to sell its products and services because older people love TV shows.

When you have a business model, mistakes like this is noticed at a very starting moment.

Also Business model is company’s or business core strategy for profitably doing business. Business models have the major levels which are pricing and costs. As Business model states itself, it shows the target market, customers and channels. Therefore, it will be easy for a company to design price and costs in a business which will be fair and profitably for both a company and customers.

Business model has different components, but the primary component of business model is Value proposition which means that, a description of the products or services that a company offers and why they are desirable to customers or clients. This ideally means; differentiating the products or services a company or business offers from its competitors.

Business model will help a company to get investors simply because investors always wants to see how business makes money. And from the Business model, investors can make a better sense of financial data.

Things to consider in Business model

When prepare a business model, do not underestimate the costs of funding the business until it becomes profitably. Many companies believe in counting cost to the introduction of the products, but it is not enough; instead of; costs plan has to keep the business running until its revenue exceed its expenses.

The best way to understand Business Model is by using a Business Model Canvas.

Note: Good business model needs the help of Business analyst.