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What is a business model? (Plus, how to define yours)

Last updated: September 2023

Business models distill the potential of a business down to its essence. Companies across every industry and at all stages of maturity need business models. Some rely on lengthy processes to build complicated models, while others move quickly to articulate the basics and take action. Either way, having the discipline to work through this planning tool forces internal alignment.

You must build something that real people with real needs will find value in and pay for — otherwise you do not have a lasting business. Brian de Haaff Aha! co-founder and CEO

For established enterprises, a business model is often a living document that is reviewed and adapted over the years. For companies launching products and services or entering new markets, a business model helps ensure that decisions are tied back to the overall business strategy . And for early-stage startups, a simple one-page business model enables founders to explore the mechanics of a business and how you anticipate it will be successful.

Defining and documenting a business model is an essential exercise. Whether you are starting a new venture, expanding into a new market, or shifting your go-to-market strategy , you can use a business model to capture fundamental assumptions about the opportunity ahead and tactics to addressing challenges.

Unfortunately, many companies fail to integrate their business model into all aspects of the organization — from recruiting talent to motivating employees. Part of the issue is accessibility. That is why forward-thinking companies choose tools that make it possible to quickly build and share your business model. The Aha! business model canvas, for example, gives you a collaborative space to explore concepts and connect your model to everyday work.

Build a business model in Aha! Notebooks. Sign up for a free trial .

Business model large

Start using this template now

You can access the business model template shown above using Aha! Notebooks . You can also try a similar template that is built into the product strategy section of Aha! Roadmaps . Or you can download these free Excel and PowerPoint business model templates .

This guide covers the basics of business models, from core concepts to best practices. Jump ahead to any section:

Definition of a business model

Business model components

Business model vs. business plan.

Different types of business models

Pros and cons of different models

Analyzing competitor business models

Business model templates

How to build a business model

What is the definition of a business model?

A business model defines how a company will create, deliver, and capture value.

A business model answers questions that are crucial for strategic decision-making and business operations. Creating a business model for your startup or product means identifying the problem you are going to solve, the market that you will serve, the level of investment required, what products you will offer, and how you will generate revenue. Pricing and costs are the two levers that affect profitability within a given business model.

A business model is part of your overall business strategy. Some business models extend beyond economic context and include value exchange in social or cultural terms — such as the intangible impact the company will have on a community or industry. The process of constructing and changing a business model is often referred to as “business model innovation.”

15 elements of a brilliant business strategy

This is why innovation programs fail

There are three main areas of focus in a business model: value proposition, value delivery, and value capture. The proposition outlines who your customers are and what you will offer. The delivery details how you will organize the business to deliver on the proposition. And the capture is a hypothesis for how the proposition and delivery will align to return value back to the business.

how to write business model example

Below are some components to include when you create a business model:

Vision and mission : Overview of what you want to achieve and how you will do it.

Objectives: High-level goals that will support your vision and mission, along with how you will measure success.

Customer targets and challenges: Description of target customers (written as archetypes or personas ) and their pain points.

Solution: How your offering will solve customer pain points.

Differentiators: Characteristics that differentiate your product or service.

Pricing: What your solution will cost and how it will be sold.

Positioning and messaging: How you will communicate the value of your offering to customers.

Go-to-market: Proposed approach for launching new offerings and services.

Investment: Resources required to introduce your offering.

Growth opportunity: Ways that you will grow the business over time.

Positioning vs. messaging

  • What is value-based product development?
  • What is a go-to-market roadmap?

Business models and business plans are both elements of your overall business strategy. But there are key differences between a business model and a business plan.

A business model is seen as foundational and will not usually be reworked in reaction to shorter-term shifts — whereas a business plan is more likely to be updated based on changes in the economy or market.

Related: Business plan templates

What is the benefit of building a business model?

Innovation is about more than the products or technologies that you build. The way that you operate your business is a critical factor in how you stand apart in a crowded marketplace. The benefit of building a business model is that you can use the exercise to expose and exploit what makes your company unique — why choosing your offering is better for customers than any alternatives and how you will grow the business over time.

Many people associate business models with lengthy documents that describe a company’s problem, opportunity, and solution in the context of a two-to-five-year forecast. But business models do not need to be a long treatise.

A one-pager is just as effective for distilling and communicating the most important elements of your business strategy. The concise format is useful for sharing with broader teams so that everyone understands the high-level approach. Done right, a business model can become a touchstone for the team by outlining core differentiators to promote and defend in the market.

Related: A more comprehensive business model builder

What are the different types of business models?

There are many different types of business models. Below are some of the most common business models with example companies for reference (take note of the companies that appear in several categories):

Did you keep track of the companies that appeared in several of the business model examples? Good. You now have a grasp of how complex enterprises with vast portfolios of products and services often employ many business models within the same organization.

Consider a company like Apple, which manufactures and sells hardware products as well as offering cloud-storage, streaming subscriptions, and a marketplace for other applications. Amazon, whose offerings range from retail (with the acquisition of Whole Foods) to marketplace (Amazon.com) to subscription services (Amazon Prime and Amazon Music) to affiliate, also features in different categories. Each division or vertical will have a distinct business model that reflects the nuances of how it operates while also supporting the corporate business model.

Related: The product manager vs. the portfolio product manager

Pros and cons of different business models

Some types of business models work better for certain industries than others. For example, software-as-a-service (SaaS) companies often rely on freemium business models. This makes it easy for potential users to experience the value of the product and incentivizes paid conversions via access to additional features.

Many social media platforms make money through advertising. By providing full access to the platform for free, these companies attract more users. In turn, this creates a more valuable audience for advertisers and increases revenue for the business.

How do you analyze a competitor’s business model?

Business analysts and investors will often evaluate a company’s business model as part of due diligence for funding or market research . You can apply the same tactics to analyze a competitor’s business model — with a few caveats.

Public companies are subject to reporting requirements. This means that the business must regularly disclose financial and performance data to the public — these disclosures occur quarterly and annually. The data includes everything from gross revenue, operating costs and losses, cash flow and reserves, and leadership discussions of business results. Designed to protect and inform investors, these reports can provide you with the information you need to understand the basics of the company’s business model and how well it is performing against the model.

Private companies are not required to reveal business data publicly. Investors or partners may be privy to certain aspects of the company’s performance, but it can be difficult to understand exactly what is happening from the outside. Some analysts or business websites will attempt to “size” a business or market by looking at a variety of factors — including the number of employees, volume of search terms related to the core offering, estimated customer base, pricing structure, partnerships, advertising spend, and media coverage.

Once you have identified relevant alternatives to your offering and gathered all of the information that you can find, a good way to analyze a competitor’s business model is to conduct a competitive analysis.

Related: Competitor analysis templates

You do not want to spend too much time thinking about other companies when you could be focused on your own. A simple SWOT analysis is a helpful way to map out strengths, weaknesses, opportunities, and threats that were revealed during your research.

Below are three types of business model example layouts you can use to succinctly and objectively assess what is possible and what challenges could arise for your business.

Aha! Notebooks business model template

Articulate the foundation of your product or service in a flexible whiteboard-style format with the Aha! Notebooks business model template.

The focus is on capturing key elements like why the solution is worth buying (messaging), pain points of the buyers (customer challenges), and ways you will grow the business (growth opportunities).

Aha! Roadmaps business model canvas

The Aha! Roadmaps business model is the most complete template in this guide — based on our team's decades of experience building breakthrough products and software companies.

You can drag and drop each component within a custom layout. And once you have completed your business model, it is easy to share with your team via a live webpage or exported PDF. This business model builder is included with the free 30-day trial of Aha! Roadmaps.

Business model in Aha!

Aha! Roadmaps lean canvas

Similar to the business model canvas, this model in Aha! Roadmaps takes a problem-focused approach to create an actionable business plan. It is most commonly used by startups and entrepreneurs to document business assumptions. The focus is on quickly creating a concise and effective single-page business model. It documents nine elements, including customer segments, channels used to reach customers, and the ways you plan to make money.

Lean canvas example in Aha!

How to build a business model in 10 steps

Crafting a business model is part of establishing a meaningful business strategy. But a business model is essentially a hypothesis — you need to test yours to prove that it will actually provide value. Many startup founders especially underestimate the costs and timeline for reaching profitability.

1. Identify your target market Who will benefit from your offering? What characteristics do prospective customers share?

2. Define the problem you will solve What is the problem that you are solving? What are the pain points of your potential customers?

3. Detail your unique selling proposition (USP) What will you build and how will you support it?

4. Create a pricing strategy How much will you charge for your offering? What factors will go into choosing your price point?

5. Develop a marketing approach How will you market your product and reach target customers? What channels will you choose for go-to-market?

6. Establish operational practices How will you streamline processes and procedures to reduce overhead and fixed costs?

7. Capture path to profitability How will your business generate revenue? What level of investment will be required and what fixed costs exist?

8. Anticipate challenges Who are your competitors? What opportunities and threats exist for your business?

9. Validate your business model Was your hypothesis correct? Does your business model solve a problem the way you thought it would?

10. Update to reflect learnings What can you do differently in the future to ensure greater success?

Your business model will ultimately guide your organization and influence your product roadmap. Give it the deep thought it deserves — questioning your core assumptions about how you will generate value and how your team will work towards achieving shared goals.

Deliver more with Aha! — try it free for 30 days .

Additional strategy resources

Using Aha! software

Aha! Roadmaps — Strategy overview

Aha! Roadmaps — Strategic models

Strategic blogs and guides

  • How to price your product
  • How to position your product

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20 Business Model Examples (And How To Pick The Right One)

Disclosure: Our content is reader-supported, which means we earn commissions from links on Digital. Commissions do not affect our editorial evaluations or opinions.

If you’ve heard the term “business model,” but don’t know exactly what it means,  you’re not alone .

It’s used all the time by business analysts, and even they disagree on the exact definition of a business model.

But you know  a business model is important.

And it is. Your model  sets your business on the path to success or failure , so you need to get it right.

How Does This Article Serve You?

This is a practical guide to:

  • What a business model is
  • Why it’s important
  • How to create one.

It doesn’t require any previous experience or knowledge and will leave you with everything you need to know to  pick the right business model  for your next venture or reevaluate your current model.

What is a Business Model?

As mentioned, there’s no single definition of a “business model,” so let’s look at the  most common interpretations .

Long ago, the concept of a business model was simple –  how will your business make money .

It wasn’t until the 1990s or so where people started realizing that  your business model can make or break your company.

So it evolved from that basic definition.

While he didn’t specifically mention business models, Peter F. Drucker’s  theory of business  is often cited as the start of a shift. Instead of  just  focusing on monetization, he proposed that businesses should also consider customers, goals, and strategy.

Verifying Your Business Model

A modern business model should at the very least answer Drucker’s famous  five questions :

  • What is your mission?
  • Who is your customer?
  • What does your customer value?
  • What results do you seek?
  • What is your plan?

Still, that’s a bit open-ended.

Finally, Alex Osterwalder developed a  comprehensive system to define a business model .

His view of a business model was that a business model is a combination of assumptions and guesses.

The Business Model Canvas

He developed the Business Model Canvas, which we’ll be looking at in more detail later.

It  divides a model into 9 main sections  that provide an organized way to break down all the important assumptions you have about a business.

Video: Alex Osterwalder provides a brief overview of the Business Model Canvas

What’s the Difference Between Business Models and Business Strategy

They both seem similar at first but have  different scopes .

Business Model

A business model covers  how a business will operate , but a business strategy defines  how that business will carve out a position in its market.

In other words, a business model gives you a  set of limitations . It might tell you how much you’ll charge, and what customers you’ll target.

Business Strategy

However, your business strategy will focus on  how you actually reach those customers  and distinguish yourself from competitors.

You’ll see both terms used interchangeably (incorrectly), but it’s good to know the difference.

Why Do Business Models Matter in the Modern Economy?

The right business model can catapult you to glory or collapse, and that’s not an exaggeration.

Business model innovation is  arguably the biggest form of competition  that exists in modern business.

Clay Christensen, a professor of business administration at Harvard sums it up well:

Most managers think the key to growth is developing new technologies and products. But often this is not so. To unlock the next wave of growth, companies must embed these innovations in disruptive new business models.

IBM’s Institute for Business Value conducted a study in 2009 and found that  70% of companies are actively engaging in business-model innovation.

They also found that 98% of businesses were continually modifying their model to some extent.

Core Values and Competitive Advantage

You’ve seen examples of this, perhaps without realizing it.

Consider taxis and Uber, which both have essentially  the same core value  to customers of providing flexible, on-call transportation.

Uber has a drastically different business model. When they started up, their business model was their  main competitive advantage .

Fast forward to today, and Uber and other similar businesses have  overtaken taxis .

3 Traits of a Good Business Model

Before we look at specific models you may want to consider using, let’s briefly go over the  attributes of a solid business model .

1. They Match Up With Company Goals and Values

Your business model comes after you define what your company is trying to do.

Certain models will  match up with your goals and values , and some won’t. If you start a diamond shop but try to implement a freemium model, there’s essentially no way you’ll succeed.

Pick a model that complements your  mission  and the  way you want to accomplish it .

2. A Business Model Should be Robust

You don’t want to base your entire business off a model that might not be effective after a year or two.

Your business model needs to consider:

  • Resources available –  If your business model requires an upfront investment, but you have limited access to funding, you’re in trouble.
  • Imitators –  Can competitors easily copy or improve upon your business model?
  • Consumer trends –  Will customers still want your solution in the future? Can they substitute it for another?

Taking time to think of these when picking a business model may save you from a big mistake.

3. They Leave Opportunity for Innovation

You’re likely not going to get everything in your business model right the first time.

As Osterwalder noted, business models are based on assumptions. Things rarely go as planned.

If your business model depends heavily on all your assumptions being correct, it’s too rigid. Create a  business model that you can re-evaluate and improve upon  over time.

The 20 Types of Business Models (with Examples)

Mark W. Johnson has a great book called  How to Seize the White Space for Transformation .

In it, he covers 20 types of potential business models that you can choose from and their primary method of monetization.

I’ll summarize them here and provide examples of each, but if you’d like more detail, it’s a good book to pick up.

Affinity Club

An affinity club model is based on  partnerships with other organizations.  By buying or using your products, customers also get special access to other perks, giving them extra incentive.

Of course, you’ll need to provide an incentive to those partners to get them on board.

This is best used in competitive fields where products are all similar.

A great example of this is MBNA, who uses this model with their credit cards.  Different cards come with different perks , so they can target a wide audience.

MBNA screenshot of the affinity mastercard program.

For example, one card is targeted towards football (soccer) fans. If you sign up for a Manchester United card, you get points that can be exchanged for their merchandise.

There are also  monthly draws and other perks .

Automation-Enabled Services

This model relies on technological advancement and is tough to use unless you have a good deal of specific technical knowledge yourself.

The goal is to  automate services that typically use human labor , so your operating costs are reduced.

For example, instead of going to a financial advisor, you can go to  Betterment . It’s an automated online financial advisor that gives you a similar quality of advice as most financial advisors would.

A broker  connects buyers to sellers  and  gets a small fee  for each transaction.

There are many examples of this:

  • Kickstarter.

Any marketplace that allows others to sell on it, and focuses on bringing in customers for those sellers is using a brokerage model.

A bundling business model  packages related products  together to make a more convenient and enjoyable experience for customers.

A classic example of this is the fast-food value meal, but that can be replicated fairly easily.

A better example is the combination of iPod and iTunes. You can’t use an iPod without iTunes, so each new iPod customer results in a new iTunes user (and potential customer).

Screenshot of iTunes landing page.

Bundling is very effective when a company is launching a new business and can  leverage existing success  as Apple has done.

Crowdsourcing

Don’t confuse a crowdsourcing business model with crowdsourcing funding from sites like Kickstarter.

A crowdsourcing business model relies on  user-generated content . The business focuses on making contributions easy and providing an incentive for users to contribute (usually money or a charitable goal).

YouTube is one example of a crowdsourcing model, where users upload videos, and most hope to generate revenue from those videos.

Wikipedia is another great example, where all the content on the site has been  created for free by willing users  who want to spread knowledge.

Data-Into-Assets

The idea behind a data-into-assets is to obtain valuable data that can be sold to willing buyers.

This is one of the few that can run into real ethical dilemmas.

For example, this is the business model that Facebook uses. The site is free for users, but in return, Facebook collects massive amounts of data about users and uses that to generate revenue through advertisers.

The Dangers of Data

They are facing  large privacy lawsuits  that could set a precedent for other businesses.

It’s hard to know where to draw the line, as Google is another data-into-assets business that most have no big issues with. They scrape data from just about all sites and transform that into search results that users desire.

Then they  sell ads to advertisers  on the search results.

Digital Platforms

Since the beginning of the Internet, creating a digital platform has been a viable business model for some companies.

For example, OpenTable started in 1998, which is a site that provides an online restaurant-reservation service.

OpenTable homepage.

There are still opportunities to be innovative in an industry simply by providing a useful product online.

To use this, you can  apply modern technology to outdated industries , or apply new technology to any industries ready for it.

We’re also seeing new digital platforms innovate upon old ones by leveraging new technology like machine learning and blockchain technology. These could almost be considered business models of their own.

Disintermediation

This mouthful simply means directly  delivering a service or product instead  of through a middleman.

Tesla is a great modern example of this. Instead of selling cars through a dealership, you buy online and skip the salesman. Not only is it more convenient, but it  reduces costs for consumers .

Fractionalization

Fractionalization consists of letting customers buy a portion of a product or service.

A good example of this is a time-sharing condo. People buy  part  of the condo and can use it during a certain time of the year that they purchased it from.

It’s a great model when your target  customers only want your product or service part of the time . They get the full benefits but don’t have to pay full price.

Freemium is a modern business model that is often used by software companies.

Because there’s very little overhead in serving data, businesses can choose to provide a portion of their service or product for free, but  requiring payment for full access .

Spotify and Dropbox

Dropbox gives you a small amount of free cloud storage and asks you to upgrade to a paid plan if you need more space.

DropBox plan choices.

Spotify offers free music but has ads. If a user buys a paid plan, they get rid of the ads.

Freemium lets you reach a wider audience, and often get more referrals, which can lead to a steady stream of customers.

Leasing is nothing new and has been used by car dealerships for many years. It works best for expensive products.

When a customer often can’t afford to pay cash or only needs a product one time, you offer them use of the product for a  rental fee .

A low-touch model takes a  high-end offering and reduces the cost  (and quality) of that product or service.

Competing on cost is a difficult business model to succeed with, but can work if you get enough customer volume.

Walmart is a great example of this, who sell lower-quality products than most competitors, but at a better price.

Negative Operating Cycle

This is a business model popularized by Amazon.

It’s especially popular with online retail businesses and allows businesses to  sell products at a low-profit-margin  (or even at cost), and still be highly profitable.

How Does It Work?

By maintaining a low inventory and getting payment upfront. Of course, you need a reliable and fast fulfillment process for this to work effectively.

The profits then come from the volume of sales that are attracted through low prices, or by utilizing the money sitting around before having to pay suppliers.

That  money generates interest  or can be used to fund long-term investments or research and development.

Pay-As-You-Go

This business model is exactly what it sounds like, customers pay as they use your service.

This can only be used in certain industries where customers regularly consume varying amounts.

For example, car2go lets you pay for car rentals by the minute, hour, or day.

Some web hosts, like  Cloudways , let’s you  pay only for the resources  your websites  actually use .

Cloudways homepage.

Razors and Blades

Razors and blades can be interpreted literally or symbolically.

This business model consists of bundling 2 products together that require each other. Then, you sell the main component (razor) at no profit or even a loss but recoup that because the  complementary product has high margins  (blades).

Another good example of this is the personal printer. They’re cheap to buy, but the ink is very expensive and high margin.

Reverse Razors and Blades

This is the same as above, but the two products are split.

You offer the “blades” at a very low cost in order to get people to buy the expensive and high margin “razor.”

One example of this is Amazon Kindle books, which are very cheap, and may tempt consumers into purchasing an expensive Kindle to read the books on.

Kindle Books landing page.

Product-To-Service

There are many times that people want to use a product, without buying it. A product-to-service model lets people pay a service fee to have access to a product.

It’s  similar to leasing and fractionalization .

A good example of this is Zipcar, which is a car-sharing company. Members pay a monthly or annual fee to have access to car reservations as needed.

Standardization

If you can take something that has a lot of variabilities and create a consistent, standardized product, you stand out from competitors.

Dominos did this with their “30 minutes or it’s free” offer for pizza delivery, which at the time was unheard of.

Subscription Club

A subscription club lets customers buy a product on a regular basis.

This is a popular model for software businesses that most SAAS (Software As A Service) platforms fall under.

Netflix and Dollar Shave Club also would be subscription clubs.

User Communities

Finally, some businesses create paid user communities that generate revenue from fees and possibly advertising.

The most famous example of this is Angie’s List, a home services review community that required payment until a little while ago.

It’s a tough model because  most people prefer free forums  and other types of communities, but good if people will pay for higher quality information.

How to Design Your Business Model

We can finally get to some practical work on your business model.

As mentioned before, monetization methods are not enough on their own.

There are 2 main approaches that you can take if you would like to create a new business model or refine an existing one.

Business Model Canvas

The Business Model Canvas comes from Alexander Osterwalder.

It’s a chart that includes the  9 important elements  of a business model.

Business Model Canvas.

You can download a  business model canvas pdf here , or see it  as an image here .

9 Sections of The Business Model Canvas

Let’s go through the 9 sections, each one includes questions to prompt you if you get stuck:

  • What value do we deliver to the customer?
  • Which one of our customer’s problems are we helping to solve?
  • What bundles of products and services are we offering to each Customer Segment?
  • Which customer needs are we satisfying?
  • For whom are we creating value?
  • Who are our most important customers?
  • Through which channels do our Customer Segments want to be reached?
  • How are we reaching them now?
  • How are our Channels integrated?
  • Which ones work best?
  • Which ones are most cost-efficient?
  • How are we integrating them with customer routines?
  • What type of relationship does each of our Customer Segments expect us to establish and maintain with them?
  • Which ones have we established?
  • How are they integrated with the rest of our business model?
  • How costly are they?
  • What are the most important costs inherent in our business model?
  • Which Key Resources are most expensive?
  • Which Key Activities are most expensive?
  • What Key Activities do our Value Propositions require?
  • Our Distribution Channels?
  • Customer Relationships?
  • Revenue streams?
  • What Key Resources do our Value Propositions require?
  • Who are our Key Partners?
  • Who are our key suppliers?
  • Which Key Resources are we acquiring from partners?
  • Which Key Activities do partners perform?
  • For what value are our customers really willing to pay?
  • For what do they currently pay?
  • How are they currently paying?
  • How would they prefer to pay?
  • How much does each Revenue Stream contribute to overall revenue?

Lean Business Model Canvas

The Business Model Canvas is a general model that works well in most cases.

However, the Lean Canvas has been  created by Ash Maurya  as an adaption that’s more suited to startups and small businesses with lots of uncertainty. You can find an  image file to print out here .

Lean Canvas Sections Explained

Again, there are 9 sections, but it’s “easier” to fill out for these types of businesses.

Here’s a brief description of each section:

  • Problem (P) –  What are the main 3 problems that your business solves?
  • Solution (S) –  What are the essential features of your product(s)?
  • Unique Value Proposition (UVP) –  What’s your business’ differentiating factor from competitors that make you better for your customers?
  • Unfair Advantage (UA) –  What part of your business can’t easily be copied by competitors?
  • Customer Segments (CS) –  Who are your target customers? Be as specific and niche as possible.
  • Key Activity (KA) –  What are the key interactions that lead to revenue? For example, creating their first blog post on a blogging platform.
  • Channels (CH) –  What channels will you be using to acquire customers?
  • Cost Structure (C$) –  List both your fixed and variable costs, estimate if needed.
  • Revenue Streams (R$) –  Specify your revenue model (refer to the previous section of this guide).

If you got this far, you understand business models more than most entrepreneurs.

I’d highly recommend spending just another ten minutes or so and quickly  work through either the Business Model Canvas or Lean Canvas .

Even if you can’t fill it out completely, you’ll quickly realize which areas of your business models need more attention and strengthening.

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How to Create a Business Model Canvas (With Template)

May 19, 2021 - 10 min read

Yuvika Iyer

Do you want to create a simple business plan? Something comprehensive, flexible, and easy to scribble on a napkin? You can do that with a business model canvas.

Every business has ever-changing, diverse interests. Illustrating all of this on a single sheet of paper may sound challenging — but by using a business model canvas template, your team can focus on the key elements of your business to ensure nothing slips through the cracks.

Business model canvas explained

"Lengthy business plans often increase the risk of failure," wrote Alex Osterwalder in his 2008 book “Business Model Generation.”

The business model canvas offers a way to avoid this, providing a simplified version of a business plan. A business model canvas is a simple, visual framework that helps teams outline the most fundamental elements of a business.

As a handy business tool, teams can use a business model canvas to map the nine core areas of a business, such as customer needs, value proposition, and platforms for customer acquisition.

This article will explain the business model canvas, its benefits, and how it can help your team develop a successful high-level business strategy and actionable roadmap .

How can a business model canvas help your business?

Many teams are so overwhelmed with operational issues that they don’t have time to focus on the core business strategy .

Utilizing the business model canvas helps create a unified framework that depicts this strategy alongside an action plan that teams can follow.

But how do you know if you need a business model canvas? If you are starting a business or even toying with an idea, a BMC can create a powerful visual representation of your concept. A business model canvas can also be a handy reference for your team as they move towards successful business outcomes. Here are five more ways in which a business model canvas can help your company.

It’s simple and easy to follow

Whether you have a business idea or are managing a large enterprise, having an easy-to-follow business plan can be immensely helpful. As a precise one-page document, teams can modify specific business model canvas elements as they go along without completely redoing a 50- or 100-page document.

Focused on being actionable 

Every business plan needs to be actionable. Using a business model canvas helps you accurately define your organization’s core value proposition and keep it aligned to your business strategy.

Your focus could be to achieve profitability in the first year or gain a large market share. Stay competitive by defining actionable steps for your team within the business model canvas.

Flexible and scalable as the business evolves 

No business stays the same forever but evolves as it interacts with diverse market dynamics, competitors, product innovations, and changing consumer needs.

To take your idea to market, you need a tool that connects the dots between what your customers want, your business's unique offering, and the desired profitability streams.

By creating a business model canvas template, you instantly get an edge over other market players engrossed in lengthy business plan documents.

How to Create a Business Model Canvas (With Template) 2

Puts the customer first

Ignoring customers sets businesses up for failure . Companies flounder if they direct their energies solely towards making a great product or service. With a business model canvas template, your focus stays on the ultimate end-users of your product. 

Having a business blueprint will force team members to think about what customers want, the primary issues they need help with, and how your product or service can do that. 

Helps get team and executive buy-in

23% of businesses fail without the right team on their side. Every company needs team members with a diverse mix of skills, experiences, and talents.

Companies require a solid business blueprint for hiring team members or bringing in investors. Having a business model canvas can help get everyone on board with your organization’s core vision. Potential employees and investors can visualize how the different organizational parts interact and see how they can become an integral part of the company.

Promotes focus on the unique value proposition of your business

19% of companies fail due to being outperformed by their competitors. If there's no difference between your product and one from another firm, why should customers come to your company? Every business needs a clear value proposition that helps them stand out — that's where a business model canvas template comes in.

When you look at the nine core elements of a business model canvas (explained below), you'll quickly notice some factors are controllable to a certain extent, while others are more fractious.

Your company's core value proposition sits right in the middle. It acts as the central pillar around which all other elements exist, defining the fundamental nature of the business.

What goes into each segment?

To fill out a business model canvas, you should know what goes into each of the nine fundamental segments.

Have a business model canvas template ready before you and your team start brainstorming on each of these elements (you'll find one below) and then add the research and data into the relevant sections. 

Customer segments In this fundamental business area, teams identify the core individuals they will help with their product or service. To do this, they create two to three buyer personas — potential customers that a business seeks to serve.

A buyer persona is a simple but detailed description of a prospective business customer. It assists with capturing the customer’s real-life problems and motivations, helping the business deliver what they want.

Value proposition The value proposition is the ultimate value that a customer will get from your product or service. It seeks to answer the question, “Why will a customer buy?” Here are a few popular value propositions for any organization:

  • Customization ability
  • Unique product design
  • Innovation in product or service
  • Exceptional service or product status
  • Affordable pricing and clear pricing model definition

Channels In a business model canvas, channels are the platforms through which a company sells its product or service to end-users. To identify the best channel for your business, look at how you plan to connect with your customers.

A few possible channels can be:

  • A self-owned retail store
  • Direct sales staff
  • Affiliate marketing platforms
  • Google Adsense

A business can either own its channels or partner with other companies that have their own channels.

Customer relationships Customer relationships in a business model canvas define how the company will obtain, retain, and increase new customers. Let's take a look at how customer relationships are built:

  • Identify how to obtain customers and from which platforms (e.g., Google, Facebook ads)
  • Gain clarity on how to retain existing customers using different techniques (e.g., exceptional customer service)
  • Discover how to increase the customer base of the business (e.g., sending text or email notifications to prompt website visits)

Revenue streams Revenue streams help the business owner decide how to generate revenue and achieve their predefined organizational goals . Key decisions with revenue streams include:

  • Choosing from a one-time payment model or monthly subscriptions
  • Keeping a free plus paid model or a wholly paid product or service with a free trial
  • How payment from customers will be received — website payments, PayPal, or in-store

Key resources Key resources in your business model canvas represent the assets that are vital to your company’s operation. Business assets can include anything from the below categories:

  • Physical assets , including machines, buildings, IT hardware, and vehicles
  • Intellectual assets , including patents, copyrights, partnerships, brands, and employee skills
  • Human assets , including talented employees in knowledge industries such as IT, law, and content marketing
  • Financial assets , like cash balances in the bank or lines of credit

Key activities Want to make your business canvas model work? Make sure to list the key activities that will help expand the business's core value proposition. Key activities can come from any of the below categories:

  • Production: How you will deliver your end product to the customers. You may need to order more stock or upgrade materials
  • Platform: For example, the software used to sell your product, which may require upgrades or maintenance
  • Problem-solving: For example, designing innovative solutions for issues that your customers face

Key partners Every business has some non-core activities that should preferably be outsourced. Key partners are the companies or individuals that complete these non-core activities.

Take a company like Facebook, for example — its key activity is to upgrade and maintain its platform. It doesn't create its own ads, so it also needs to strike deals with companies that wish to advertise on its platform. 

Similarly, it doesn’t create its content — the users do. The primary reasons for choosing key partners can be:

  • Achieving economies of scale
  • Mitigating risk and unpredictability in business
  • Acquiring resources and advertisements for its business (e.g., ads for Facebook)

Cost structure Once the key activities are outlined on the business model canvas, it's time to assign cost structures. Be clear and precise with the estimated business costs of the planned activities to ensure you reach your profitability goal.

Business model canvas example and template

How to Create a Business Model Canvas (With Template) 3

  • Customer segments: Facebook's customers can be divided into two distinct categories — advertisers and platform users
  • Value proposition: The primary reasons platform users come to Facebook. Users feel connected to friends and families, while companies get more leads through advertising on the platform
  • Channels: The website where all data is stored
  • Customer relationships: Facebook incentivizes users to stay on the platform through notifications and new features, leading more companies to advertise on it
  • Revenue streams: Facebook earns money through advertising, while companies gain new customers from Facebook ads
  • Key resources: Facebook's key resources are its platforms — Facebook.com, the Messenger application, and Facebook Ads Manager for advertisers
  • Key activities: Maintaining the website and its infrastructure are two of Facebook’s key strategic activities
  • Key partnerships: Facebook's key partners are its users and advertisers
  • Cost structures: Major costs incurred by Facebook include managing the software, backend engineering operations, product development, regular operations, and staff salaries

How to create a business model canvas (with template)

Ready to create your business model canvas? Before you begin, take some time to brainstorm answers to these questions related to the nine core fundamental areas of the canvas. Here's a simple business model canvas template exercise that can help your team get started.

  • Customer segments: Can you identify your potential customers?
  • Channels: Once the product or service is ready, how will customers discover it?
  • Key partnerships: Can any non-core business activities be outsourced?
  • Customer relationships: How will your business generate leads and retain and increase your customer base?
  • Cost structures: Can the business classify its main costs and expenses into fixed and variable? Is there a way to align costs with the core value proposition and planned revenues?
  • Revenue streams: Has the business decided on a profit margin? How will it make money?
  • Key resources: Which core resources are critical for the business to succeed?
  • Value proposition: Why will customers choose your business? Does the company satisfy any particular need with its product or service?
  • Key activities: Are there any activities that help your business deliver its unique value proposition to customers?

Do I need a lean model canvas? 

If your business is still an idea or in its infancy, choosing a lean model canvas makes more sense.

Inspired by the business model canvas, the lean model canvas was created by Ash Maurya . It is a one-page business plan template that distills the lean startup methodology into the original business model canvas. 

Lean model canvas assimilates multiple essential data points to develop a simpler, start-up optimized version of a business model canvas. It adds four more building blocks to the business model canvas, namely:

  • Problem: Identify the problem faced by the customer and focus on solving it
  • Solution: Start with a minimum viable product that helps solve the customer problem effectively
  • Unfair advantage: List the barriers to entry in a specific sector and your company’s competitive advantages
  • Key metrics: Focus on one goal at one time to ensure you’re doing a good job

Lean model canvas drops four elements from the original business model canvas — key partners, key activities, key resources, and customer relationships. 

While the original illustrates a more comprehensive business approach, the lean model canvas has a sharper customer orientation. Many start-ups prefer the lean model canvas to a traditional business plan for building an actionable roadmap.

The lean model canvas is a great fit for younger companies or those working with a tight time frame or budget to market with a more targeted problem resolution approach.

Why you should use Wrike to build a business model canvas 

The business model canvas’ nine building blocks clearly illustrate the core business areas and their interrelationships. Whether you're trying to figure out the model for a company with three employees or 50,000, a business model canvas can be very useful.

Begin by mapping out the most crucial information about your business, then link the blocks to ensure every value proposition is linked to a revenue stream and a specific customer segment.

Using Wrike to build your business model canvas template, you can iterate faster, communicate with ease, and enable organization-wide success . With a centralized hub, your teams can configure custom dashboards easily and produce better quality work using premade templates . Implement what you've learned about the business model canvas by trying out a free two-week trial of Wrike today.

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Yuvika Iyer

Yuvika is a freelance writer who specializes in recruitment and résumé writing.

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What Is Business Process Outsourcing? A Guide

As businesses scale and grow, they often have requirements that cannot be addressed internally — whether because of resource or budgetary constraints. Business process outsourcing (BPO) can be a solution that enables organizations to grow and scale effectively. But exactly what is business process outsourcing? What are the risks associated with the practice, and how can corporate leaders use business process as a service (BPaaS) to their advantage?  BPO meaning: What is business process outsourcing? Business process outsourcing describes a practice where specific tasks, functions, or processes within a company are contracted out to third-party organizations and vendors. These outside organizations have expertise in their specified area, which allows them to manage tasks and processes on behalf of other businesses.  For example, a marketing agency, during their resource planning process, may choose to outsource their payroll and accounting functions in order to focus on the core competencies of their organization.  There are three types of business process outsourcing: offshore, nearshore, and onshore outsourcing.  Offshore outsourcing: The function is managed by an operator or vendor in a different country (often far away and in another time zone) Nearshore outsourcing: The function is managed by an operator or vendor in a neighboring/closeby country Onshore outsourcing: The function is managed by an operator or vendor within the same country — but could be in another state or region  Business functions ideal for outsourcing may include admin, customer service, PR, data entry, HR, content moderation, and more.  Business process outsourcing can improve efficiency and present significant cost savings for companies that may not have the resources to hire a team of in-house customer service specialists or payroll professionals, for example.  In fact, Deloitte research indicates that 59% of companies who outsource say they do so with cost savings as a primary motivator. What is business process as service (BPaaS)? Business process as a service enables BPO by managing specific functions through cloud-based delivery systems. The global BPaaS market is extensive and expected to reach a value of $77.8 billion by 2023. Some well-known names in BPaaS include Accenture and IBM.  BPaaS can help manage:  Finance and accounting  IT services  eCommerce Customer service processes BPaaS leverages the capabilities of infrastructure as a service (IaaS), software as a service (SaaS), and platform as a service (PaaS) solutions in order to help companies manage and address their business objectives.  Business process as a service also relies on automation in many cases, reducing the need for manual intervention. Who needs business process as a service (BPaaS)? Business process as a service can be beneficial for organizations across sizes and industries. For example, instead of hiring an outside firm to manage their finance and accounting needs, a company might instead execute this function via a cloud-based platform licensed through a monthly subscription model.  This naturally brings costs down and offers a more flexible and scalable way of managing operations.  Any company looking to manage processes without the costs associated with hiring, training, and managing an internal team or department may find that BPaaS is an effective solution.  What are the benefits of outsourcing business processes? There are many benefits associated with outsourcing business processes. These benefits include cost and time savings, efficiency gains, the ability to focus on core business competencies, and more. Be sure to keep these in mind when contemplating outsourcing professional services key success factors, and which professional services agency is right for you.Cost savingsHigh costs associated with labor, training, management, and infrastructure can be a barrier as an organization scales and grows its operations. Outsourcing non-core processes can enable businesses to meet their objectives and operational needs while minimizing these internal costs and time commitments. Access to expertise and improved efficiencyBPO gives businesses access to vendors that have the necessary expertise, equipment, and personnel needed to execute a project or function on their behalf. This expertise means they are better equipped to provide cutting-edge, compliant, and effective services.  Ability to focus on key business competencies As a company grows and scales, there is often a need for growth or expansion in other areas of the business.  For example, a high-growth eCommerce company may need increased customer support capabilities to provide quality assistance to customer queries and issues. In this instance, outsourcing customer support staff to an agency or outside vendor allows the business to focus on its main competencies while also addressing customer challenges that can impact the bottom line.  As is the case with most things, business process outsourcing can have its set of challenges and risks. Are there risks to business process outsourcing? Risks in business process outsourcing can include lower than expected or inconsistent quality of service, lack of visibility and collaboration with the vendor, and security considerations. Inconsistent delivery We’ve all been there. A service looks good on paper, but the results turn out to be inconsistent or of a lower standard than expected. This is always a risk, especially when outside vendors are involved.  Lack of visibility and collaboration When handing over the keys to a business function, visibility and communication allow those within the organization to accurately track progress, success, and any challenges. Lack of visibility is a huge risk and could mean that a lower standard of service is inadvertently being passed on to customers.  Privacy and security concerns Privacy and security are a top concern in business process outsourcing. In most cases, BPO will involve some degree of handling sensitive or confidential internal data. Engaging a vendor with lax digital security policies may make an organization vulnerable to breaches or attacks.  As Deloitte notes, the tax implications of business process outsourcing should also be a consideration and factored into any business case. How to choose the right BPO vendor Choosing the right vendor can help avoid headaches, losses, and disputes. Here are some tips for choosing the right BPO partner for your business.  Due diligenceDue diligence will involve researching the vendor and their reputation to determine if they have success and experience with your industry, project type, or company size. Understand costsWhile cost-saving is a major factor when establishing a BPO partnership, unexpected fees may make outsourcing pricier than initially thought. Evaluate security infrastructureWhen determining the suitability of a vendor, be sure to assess their ability to manage and protect sensitive information.  Communicate clear objectives and KPIsClearly communicate objectives, expected outcomes, and KPIs and ensure they have the capacity to deliver.  Ensure stabilityOutsourcing a business function can be risky if the third party is in a financially, legally, or otherwise unstable position. Overreliance on unstable vendors can be a unique challenge to overcome.  How to organize your BPO with Wrike Streamline and simplify your business process outsourcing with Wrike. With Wrike, you can:  Create and manage a risk register for your vendor and the outsourced function Invite vendors as external collaborators to share reports and status updates Share and store vendor meeting minutes using our actional meeting notes template Integrate data from 400+ applications like Salesforce, Marketo, and more  Take advantage of the cost savings, time savings, and expertise that BPO and BPaaS can afford your business. Be sure to track and manage progress, communication, and risk using Wrike.  Sign up for a free two-week trial and discover why 2 million+ people trust Wrike to manage and execute their tasks and projects.  

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What Is a Business Model?

  • Andrea Ovans

how to write business model example

A history, from Drucker to Christensen.

A look through HBR’s archives shows that business thinkers use the concept of a “business model” in many different ways, potentially skewing the definition. Many people believe Peter Drucker defined the term in a 1994 article as “assumptions about what a company gets paid for,” but that article never mentions the term business model. Instead, Drucker’s theory of the business was a set of assumptions about what a business will and won’t do, closer to Michael Porter’s definition of strategy. Businesses make assumptions about who their customers and competitors are, as well as about technology and their own strengths and weaknesses. Joan Magretta carries the idea of assumptions into her focus on business modeling, which encompasses the activities associated with both making and selling something. Alex Osterwalder also builds on Drucker’s concept of assumptions in his “business model canvas,” a way of organizing assumptions so that you can compare business models. Introducing a better business model into an existing market is the definition of a disruptive innovation, as written about by Clay Christensen. Rita McGrath offers that your business model is failing when innovations yield smaller and smaller improvements. You can innovate a new model by altering the mix of products and services, postponing decisions, changing the people who make the decisions, or changing incentives in the value chain. Finally, Mark Johnson provides a list of 19 types of business models and the organizations that use them.

In The New, New Thing , Michael Lewis refers to the phrase business model as “a term of art.” And like art itself, it’s one of those things many people feel they can recognize when they see it (especially a particularly clever or terrible one) but can’t quite define.

how to write business model example

  • AO Andrea Ovans is a former senior editor at Harvard Business Review.

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Best Business Model Examples to Succeed as an Entrepreneur

Running a business without planning can pose numerous challenges in your company’s operation and growth. Because of this, you should be aware of what a business model is and business model examples to help you achieve your short-term and long-term goals.

Below is the definition of a business model and numerous examples of business models to help you drive success in your organization. Whether you are just starting to design your marketing strategy or are an experienced entrepreneur, these models will provide you with a wide range of key elements to succeed in your journey.

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What is a business model.

A business model is a framework that shows how a business will make money. It influences a client’s purchase decision by showing the problem your business will solve for them. Whether you’re investing in a new business or expanding your business, an exceptional business model is necessary to succeed as an entrepreneur.

A solid business model can help you improve the shopping experience for customers and improve customer relationships, get clear on your core values and business objectives, or help you keep track of key metrics.

Where Is a Business Model Used?

  • Revenue projections
  • Designing marketing strategies
  • Developing pricing strategies
  • Business evaluation
  • Making investment decisions

Why Is a Business Model Important?

In order for a company to achieve its goals, its business model is imperative. It guides an organization in creating and obtaining value in different contexts. You get to create strategies for hiring, customer acquisition, business development, and partnership alliances. It is also fundamental to implementing a business plan’s concepts or ideas. Below are some key components you should consider.

  • Key objectives
  • Customer targets
  • Vision and mission statement
  • Go-to-market
  • Growth opportunity

Real-World Examples of Business Models

Learning how to write a business model is important. However, it can be challenging to create one without real-world business model examples . Examples of successful business models include the following.

  • Advertising business model
  • Affiliate marketing business model
  • Aggregator business model
  • Crowdsourcing business model
  • Conceptual business model
  • Freemium business model
  • One-for-one business model
  • Open-source business model
  • Razor Blade model
  • Subscription model

10 Great Examples of Business Models

Business model example 1: advertising business model.

The advertising business model entails the incorporation of adverts in the content that your audience wants. Although this successful business model has been around for a long time, it continues to evolve with emerging trends. For instance, YouTube implements this efficiently with its entertainment and educational videos.

Business Model Example 2: Affiliate Marketing Business Model

The affiliate marketing business model is connected to the advertising business model, but it performs its duties uniquely. Usually, this business model leverages links embedded in content rather than visual adverts that viewers can identify effortlessly. This is guided by current industry trends.

For example, if you own a website covering electronic appliances (fridges, washing machines, and vacuum cleaners) product reviews, you can link to Amazon products, allowing people to purchase these products. Consequently, Amazon will pay you a certain commission depending on every sale you make.

Business Model Example 3: Aggregator Business Model

An intermediary in an aggregator model facilitates interaction between involved parties. As a result, the company can connect with numerous product or service providers and sell the products under their brand.

Google, for instance, shows search results and controls the ads displayed to users. Hence, the users and advertisers can’t connect to set prices. Google is an aggregator that works towards building its rankings.

Business Model Example 4: Crowdsourcing Business Model

Typically, a crowdsourcing model is combined with an advertising model to give optimum results to a company. If you gather many people to contribute content to your site, then you’re operating under the crowdsourcing business model.

This model has several iterations. Threadless, for example, allows designers to submit t-shirt designs and then sell them. Most companies looking for solutions to difficult problems usually post them to the public for experts in the field to offer solutions. To succeed with this model, you need to provide an enticing reward to the target group.

Business Model Example 5: Conceptual Business Model

A conceptual business model refers to a diagram that demonstrates how a business or industry works. It presents the different elements of a business and how they relate. If your business relies on ideas or concepts, you need to create successful conceptual models.

For instance, Maruti Suzuki operates with this model as it allows the company to create different car models before building a car. To develop a successful conceptual business model, you need to do consumer research.

Business Model Example 6: Freemium Business Model

The freemium business model offers clients free and paid services. The word free stands for free services while ‘mium (premium) stands for premium services. To grow your brand or business rapidly, you should use this model’s concepts. It helps you meet your business goals as it provides proof to customers of your service’s quality without paying for it.

Besides experiencing your service without any risk, they enjoy free stuff, attracting more prospective buyers. For example, MailChimp launched as a paid service but later introduced this model in 2009. As a MailChimp user , you can get email list subscribers, send email updates, and automate your marketing.

Nevertheless, the free plan limits you to 12,000 emails monthly and 2,000 subscribers, unlike the premium service, which offers you more advanced features. Once a regular user hits 2,000 users, it’s challenging for them to shift to a different platform. Hence, they turn into paid subscribers.

Business Model Example 7: One-for-One Business Model

With the one-for-one business model, a business gives an item to charity for every product sold. This model attracts those consumers who value businesses with charitable initiative. TOMS and Warby Parker are great examples of companies that run on this model.

For instance, Warby Parker gives away a pair of eyeglasses for every pair they sell. Hence, prospective buyers buy from them to contribute to the donation initiative.

Business Model Example 8: Open Source Business Model

The open-source business model offers two products or services, namely a free and a paid version. Unlike the freemium model, the open-source business model develops a product and then allows the open community of developers to maintain it partially. The freemium business model builds and maintains the service independently.

A company that wants to create superior products with a competitive advantage and generate numerous revenue streams should utilize this model.

Business Model Example 9: Razor Blade Model

Razor blade companies offer a basic product for free or low cost and sell a complimentary product for a higher price. Initially, razor blades were offered at low prices, so the model was named after them. After that, however, their replacement costs are usually very high.

This model is suitable for companies offering a basic and complementary product. The goal of such companies is to tie their clients into a system where they will make repeat purchases. For instance, companies like Xbox, Apple, and Amazon’s Kindle will offer a basic product (hook) for a complimentary item, or a bait, at a high price.

Business Model Example 10: Subscription Model

The subscription business model provides clients with services while paying subscription fees for specific intervals. Nevertheless, this model poses the challenge of customer acquisition. Due to its payment structure, businesses receive recurring fees for their services or products.

Magazines and newspapers often use subscription services as part of their business models. It is now common in software and online services like Salesforce, Comcast, and Netflix.

Pro Tips to Boost Your Business Model Skills

  • Convert your model into achievable goals . Creating a business model is essential. However, making it effective is a key component to driving a successful business. That’s why you need to convert your business model into measurable goals. This will help you evaluate your progress and prove to investors or partners that your business venture is profitable.
  • Get feedback . To ensure a successful business model, you need to get feedback from stakeholders and your customer base. Leverage crowdsource feedback, conduct interviews, and share surveys. This will help you identify whether your hypothesis is correct and whether you’re solving a problem.
  • Develop strategic models . To create a successful model, borrow from different business models. Consider how you will deliver the product to customers and deal with the competition, as well as business opportunities and threats.

What Should Be the Next Step in My Business Model Learning Journey?

Select the type of business model that works best for your company. A business model should take into account the types of products and services offered. Assuming you have complimentary and basic products, you can apply the razor blade business model to accomplish your business goals.

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In addition, you need to get feedback from your customers, partners, and stakeholders before implementing the model. This will help you enjoy great benefits in the long run, including large profit margins and growth from your target market.

Business Model Examples FAQ

The four types of ecommerce business models include business to consumer, business to business, consumer to business, and consumer to consumer models.

A successful business model should have four elements, which include profit formula, customer value proposition, core processes, and essential resources.

A business model canvas is a 1-page business plan that shows whether a business is sustainable.

You should review your business model when significant technological and environmental changes occur.

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  • What is a business model? Types and examples

how to write business model example

Few things are as important to a company as its business model. Your business model serves as a template and guide for just about every part of your business. It's essential to not only create a business model that reflects how you will make money, but also adapt it over time as the needs of your market change.

How does a business model work? What are some common types of business models? This guide will introduce you to business models and provide a helpful guide so you can create your own.

Business model definition

A business model explains an organization's core strategy for running a profitable operation. It describes what will be sold, how revenue will be generated and how the customers will pay.

Business models capture the rationale and the plan for creating and delivering value. Business models also reflect the company's unique value proposition, which is the essential way in which the company meets the market’s needs.

Key components of a business model

While every company's business model will look different, a successful business model will contain the following key components:

  • A description of the products or services (including the cost of manufacturing)
  • A strategy for distributing that product (marketing, delivery, merchandising)
  • How the customer pays (pricing structure, payment methods)

Your business model integrates all of the components of your business and organizes them into a cohesive structure.

Business model vs. business plan

The term "business model" is sometimes used synonymously with "business plan." However, the two documents serve slightly different purposes.

A business model is a holistic portrait of how the company operates. Think of a business model as an aerial photograph of your organization, giving you a comprehensive view of your current and future operations.

A business plan refers to the specific strategy for accomplishing a particular goal. A business plan is more like the turn-by-turn directions you receive on your GPS device.

The business model and business plan must be in alignment, but the business model explains how you will succeed while the business plan shows how you’ll get there.

Why choosing the right business model is important

Writing for the Harvard Business Review, Joan Magretta explains that business models matter because they tell a specific story about your company. Your company's "story" explains how all the pieces come together and connects this narrative to your raw financial numbers.

Business modeling is, therefore, important for at least three groups of people:

1. Your company's employees

Your business model determines the scope and strategy of your business processes. It's important for you and your employees to understand your existing business model, as well as how it translates into your day-to-day activities.

But more than that, a successful business model will also provide a vision for the future, which empowers established businesses to improve their cash flow and make expansion plans.

2. Your target customer groups

Successful business models also create value for your business and help you communicate this value to your target customer segments. While your key customers will likely never read your business model, it should help you strategize ways to communicate your unique value proposition to your customers.

3. Investors

Investors will also need to understand your business model. Ideally, your business model describes a clear strategy for meeting a market need, establishing your goals, and setting a long-term vision. A clear business model will help you gain the confidence of investors and secure funding.

What are common types of business models?

There are many different types of business models, with new models emerging as entire industries adapt and grow. The following list is not exhaustive but represents some of the more common business models in use today, along with some business model examples to illustrate how they work in the real world:

Manufacturing business model

A manufacturing business model focuses on the production of goods by sourcing raw materials and using a standardized production process. Manufacturers typically sell their finished products to retailers and other distributors, though some manufacturers also sell directly to consumers.

Examples include Ford Motor Company, Frito-Lay, and Whirlpool.

Retail business model

Retail is likely the most familiar business model for most American consumers. A retailer purchases finished goods from a manufacturer or distributor, then sells these products directly to customers.

This setup usually takes place inside brick-and-mortar stores, though many companies are adapting their business framework to offer online options.

Some of the most common retail business model examples include stores such as Target or Wal-Mart.

Franchise business model

A franchise business model might overlap with other business models, though the key difference is how the business is structured. In the franchise business model, a franchisee purchases the rights to a business from the franchisor or parent company.

The franchisee then operates under the established brand, which gives them more stability than if they'd launched their own business from scratch.

Common franchise business model examples include McDonald's, Ace Hardware, and Planet Fitness.

eCommerce business model

An eCommerce business model functions similarly to a retailer, though it relies on online platforms to advertise products and conduct transactions. eCommerce companies also utilize delivery companies to transport products to their customers.

The most common eCommerce business model example is Amazon.com, though retailers like Target and Wal-Mart have also launched eCommerce segments.

Freemium business model

The freemium business model is popular among technology companies. Freemium business models blend free and paid features on the same platform. The idea is simple: customers who enjoy the free service can be encouraged to sign up and pay for access to premium features.

Flickr, the online photo app, is a good example freemium business model, though many companies offer introductory services before promoting their premium features.

Advertising business model

Advertising companies are third-party organizations that help connect other businesses to their core customer segments. Essentially, the business’s users and customers are two different groups. Strategies can vary widely, especially when digital companies offer print ads, internet marketing, and content for social media platforms to help their clients expand their advertising reach.

Facebook, Instagram, and TikTok all fit into this business model.

Affiliate business model

An affiliate business model is similar to an advertising model, though an affiliate business strategy is more subtle. Instead of clear, overt advertisements, an affiliate business will embed links into other content to drive sales.

For instance, an affiliate business might link to Hulu when writing a review of popular streaming platforms.

How to create a new business model

Creating a new business model is important when launching a startup, but many companies create entirely new business models to adapt as they grow. Here's how to create a new business model that works for your unique industry:

1. Define the problem

First, determine the problem or need that your company can uniquely address. Identifying the problem can ensure that there is a demand out there for your products or services.

Every business idea should start with the question, "Why?" Why does your business exist? What need does it fill? Why will customers want to purchase your product? Keeping this understanding center of mind will help you stay focused throughout the process.

2. Identify your target market

A good business model will focus on specific customer segments. Who are you trying to reach? This insight will help you refine your marketing efforts and product features based on the demographic groups you seek to build relationships with.

3. List your products or services

The next step is crucial. You want to list and describe your products and services and explain clearly how these satisfy the need you defined in step 1. It's important to ensure that your team’s expertise matches the products and services that solve these needs.

For example, if you have a background in personal finance, you might consider how a new accounting software system might assist certain types of established businesses. This stage tends to be iterative, meaning you'll come back and redefine your product offerings based on feedback and adapt them to new market needs.

4. Determine your business needs

Once you zero in on your products, you'll want to determine what you'll need to connect them to your customer base. This calculation can include costs incurred from

manufacturing/product development, as well as the need for personnel, marketing, and other expenses.

5. Build a network of key partners

Depending on the nature of your business, you may want to network with other professionals. For example, if you're relying on a retail business model, you may want to start networking with distributors, manufacturers, and other industry players.

You may want to consider if there's an eCommerce platform you'd like to use in conjunction with retail sales or if there are business tools that can help you run your business more efficiently.

6. Create a financial strategy

Successful businesses use their business model as a financial model to calculate their overall profitability. You'll need to determine how you intend to make money, including things like cost structure, profit formula, pricing, and other core considerations.

A successful business model will ensure that you satisfy the need you identified in step 1 while generating profits that help maintain and grow your operations.

7. Test and refine your model

The most successful companies will test their existing business models to determine how well they're performing. This work might reflect things like customer feedback, financial performance, or the need to adapt to new market conditions.

Here's a tip: conduct a "soft launch" of your business for a select group of customers. Offer discounts in exchange for honest feedback. Incorporate their feedback into your business model design, then proceed to a full-scale launch once you've refined your model.

How to improve your business model

If you've had the same business model for years, it may be time for a review. Improving your current business model can help you adapt to new technology, changing costs, and new customer demands. For example, if an advertising firm's business model doesn't take into account new social media platforms, the company may miss out on opportunities to connect with its audience.

Here are some strategies for business model innovation and improvement:

Listen to customer feedback

Turn your existing customers into coaches. Product and company reviews can be a gold mine for information about current client needs and how well your company meets those needs. You may discover new ways to innovate and adapt.

Lower your overhead

If your company struggles to make a profit, you may want to rethink some of your overhead costs. For example, automating some of your core business processes through technology can help your employees work more efficiently, reducing the number of hours you spend on back-office tasks.

Introduce a new product or service

When your company has been offering the same products and services for years, it might be time to shake things up. Introduce a new product or service to demonstrate your value to your customers, or use this as an opportunity to gain a whole new set of customers.

Reconsider your revenue model

Your current revenue model may be based on an outdated price structure. It may be that the cost of manufacturing or rising inflation warrants an increase in the price of your core products and services.

If you operate a subscription-based service (or a freemium model), you may offer discounts to existing customers while raising the price of a product or service for new customers.

Change your marketing message

Your marketing campaign is how you tell your story. If your story changes, so should your marketing message. Refine your marketing strategy by adapting to new digital channels, or consider developing content that directly impacts your target audience.

How BILL can help improve your business model

Creating and refining your business model is just one way to run a successful business. BILL can help small and mid-size businesses save 50% of the time they spend on accounts payable. Learn more about how to pay smarter.

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The Leading Source of Insights On Business Model Strategy & Tech Business Models

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How To Create A Business Model In Seven Steps

Define the problem you’re going to solve, then define the customers for which the problem will be solved. Next, identify the customer and the problem. After that, define a set of possible solutions. After, define a set of possible monetization strategies for that solution, test, and choose your business model .

Table of Contents

A business model design in seven steps

Time needed:  1 day

How to create a business model in one day and seven simple steps

product-market-fit

The most valuable asset any organization has is its business model .

Indeed, that is the way all the moving parts of the organization fit together to create a value chain.

The aim of the value chain is value creation for several players in that industry, market, and so on.

The business model is not static, it changes and evolves along with the scale of the organization.

The type of  business model you designed for your company will not work if your company scales. You’ll need to rethink and redefine it.

This is even more evident in companies that are trying to innovate.

When those organizations create a new technology or an innovative approach to existing industries, it is critical to understand who are the players involved in that industry and how you’re creating value for them.

In this blog, we covered the business models  of many organizations.

For instance, Google’s massive success is strictly connected to its business model .

The company managed to create a balance between several players in the publishing and information industry where each of those players gets back some value (economic and not) from having a relationship with Google .

Where do you start when it comes to creating a business model ?

Related : Successful Types of Business Models You Need to Know

It’s all about business model design

The primary aim of a business model is to create a sustainable chain, able to unlock value for several players in a market, industry, or niche .

Therefore, this value chain will start from a value proposition , a promise you make to the key players and partners in that market, industry, or niche depending on where you start.

For instance, when PayPal started out it didn’t look to dominate the whole market. It started from a niche .

As Pether Thiel put it in his book, Zero to One:

The most successful companies make the core progression—to first dominate a specific niche and then scale to adjacent markets—a part of their founding narrative.

Indeed, PayPal began by identifying its most valuable partner, what at the time they called “power user.”

That was a choice driven by its business model design .

Therefore, instead of focusing on generically offering a service for everyone, PayPal focused on acquiring and attracting as many power users as possible.

Those power users were mostly on another platform that had already scaled up: eBay.

Thus, PayPal focused all its effort on acquiring those power users from eBay , fast!

Only after PayPal had drafted, tested, and validated a clear value proposition for a small , yet critical group of power users, it could move on to take larger and larger segments of that market.

What is a value proposition?

At its most basic level, a value proposition is a promise you make as an organization to deliver something (either monetary or advantage) to a critical player you have in our industry.

For instance, when Google started it showed right away it was capable of offering 10x of search results, at a faster speed and more relevant to users.

However, had Google kept its search engine primarily focused on providing paid results, it would not have taken off.

Instead, Google focused on offering relevant paid results but also a bunch of organic results.

In short, Google managed to index and rank the web pages from blogs, journals, news sites and any other website that made those pages available to Google for its index.

In exchange for that content, Google offered back visibility as qualified traffic toward those sites.

Indeed, search engines back then (at the end of the 1990s) were not focused on offering quality traffic.

Thus, most of the audience you got back to your site might have been quite relevant to your business.

Google instead, with its dominant search engine allowed publishers, and businesses (small and large) to gain customers.

That sealed an implicit deal “Me (Google) will send you qualified traffic that helps you grow your business if you (publisher, business, or whoever publishes on the web) offer me your content to be indexed.”

We might call that an implicit contract, which is the beginning of a value chain.

In fact, from this sort of contract part of the Google business model has been built. Imagine the scenario where Google was not attractive enough to provide qualified traffic to content producers.

They would have stopped offering their content for free by blocking access to the search engine.

Instead, they allowed Google to index their pages because the visibility they got was too attractive.

A business model is also about how you make money but how you make money isn’t your business model

One of the biggest misconceptions of the business model is to confuse it with the monetization strategy or the revenue model of the company.

While this is an essential piece of the puzzle, it is just one of the components of a successful business model .

In this blog, we’ve discussed at great length how companies make money  as a way to start the discussion of a business model .

However, a business model implies the understanding of

operations, customer acquisition and retention, supply chain management, and the cost above and revenue aspects

According to the business model you designed over the years for your organization there will be a piece that plays a more critical role compared to others.

For instance, a vital component of the Coca-Cola business model is its distribution strategy .

For other companies like McDonald’s, the key to its business model success is the heavily franchised restaurants that helped the company scale up all over the world.

Each company will develop a unique  model  among the many types of business models which is what makes it thick in the long run!

What principles should I follow to create and design a business model?

Developing a deep understanding of your business model implies asking a few critical questions. For instance, some of those questions might be:

  • What value do I offer my potential customers? Or what problem do I solve with my product/service?
  • How do I charge my customers?
  • What does my acquisition cost look like?
  • What channels can I tap into to find my ideal customer?
  • Did I create a predictable revenue stream ? If not what can I do to generate that?

Your business model will be based on a few critical assumptions about who your customers are, how your product or service should look like, what are the favorite channels to reach them, and a few others.

Those assumptions will be tested as soon as you start kicking off your operations.

Your main concern should be just that. You need to check those assumptions as quickly as possible. 

Steve Blank has identified 17 principles in his  Customer Development Manifesto :

  • There Are No Facts Inside Your Building, So Get Outside
  • Pair Customer Development with Agile Development
  • Failure is an Integral Part of the   Search for the Business Model
  • If You’re Afraid to Fail You’re Destined to Do So
  • Iterations and Pivots are Driven by Insight
  • Validate Your Hypotheses with Experiments
  • Success Begins with Buy-In from Investors and Co-Founders
  • No Business Plan Survives First Contact with Customers
  • Not All Startups Are Alike
  • Startup Metrics are Different from Existing Companies
  • Agree on Market Type – It Changes Everything
  • Fast, Fearless Decision-Making, Cycle Time, Speed and Tempo
  • If it’s not About Passion, You’re Dead the Day You Opened your Doors
  • Startup Titles and Functions Are Very Different from a Company’s
  • Preserve Cash While Searching. After It’s Found, Spend
  • Communicate and Share Learning
  • Startups Demand Comfort with Chaos and Uncertainty

I suggest you read this manifesto over and over again. This should be the first step!

What tools can you use to design and create your business model?

One of the most used tools to design and create a business model has revolved around the customer development manifesto above.

However, it is essential to keep in mind that this manifesto was the fruit of an era where venture capital had become scarce compared to the dot-com bubble at the end of the 1990s.

Those tools for business modeling have been developed in that context. Thus, those are not a one-size-fits-all toolbox but rather work better in a context where capital is scarce, and you need to test your business model assumptions as quickly as possible. In that context three primary tools are:

  • Business model canvas.
  • Lean startup canvas.
  • Customer development canvas.

Those tools can be used by entrepreneurs in the phases of the business model generation:

  • Map the business model hypotheses.
  • Test these hypotheses with customer feedback.
  • Iterative this process.

The result will be an incremental development of a product that will reach a minimally viable version .

The better the product, based on customer feedback, the larger the audience it will reach.

Lean makes sense when capital is scarce and when you need to keep burn rates low.

Lean was designed to   inform the founders’ vision  while they operated frugally at speed. It was not built as a focus group for consensus for those without deep convictions .

Is the lean startup still a valuable model?

As Steve Blank has pointed out in an HBR article entitled “ Is the Lean Startup Dead? “

I realized it was time for a new startup heuristic: the amount of customer discovery and product-market fit you need to find is inversely proportional to the amount and availability of risk capital.

In other words, the more risk capital that is available on the market the least the lean startup model might work.

The reason is, that if you have massive risk capital, you won’t need to test all your assumptions.

Quite the opposite, you’ll need to execute them fast.

Also, one of the primary logic of the lean startup is to burn cash at the slowest rate possible, while evolving (so-called pivoting) your business model .

If money is not an issue, then why go for the lean startup?

Steve Blank went further:

Rather than the “first mover advantage” of the last bubble ,  today’s theory is that  “massive capital infusion owns the entire market.”

Therefore, if you secured a massive injection of money, then your aim might be primarily toward growth , rather than profits.

In that context, the lean startup might not work!

Are capital moats sustainable?

blitzscaling-business-model-innovation-canvas

When a company or startup has a substantial capital allocate for growth , that is when this injection can become a short-term competitive advantage.

However, as companies finance growth through artificial injection of capital, those also become extremely risky, because many of the assumptions underlying the business model can’t be tested organically, thus leaving the company’s foundations weak.

An example of this excess of use of capital as a competitive moat has been WeWork , which has proved one of the most disastrous business endeavors of the last decade.

Thus, capital moats and technological moats need to be balanced with careful business model testing and organic validation in the marketplace!

Key Highlights

  • This step is the foundation of your business model . It involves identifying a specific problem that your product or service aims to solve.
  • Problems can be functional (solving a practical need) or emotional (addressing a psychological desire or pain point).
  • Defining the problem clearly helps you focus on delivering value to your target audience.
  • Once the problem is defined, it’s important to identify the individuals or groups who are facing this problem. These are your potential customers.
  • Group your potential customers into categories, keeping it to a maximum of three types. Each type may have distinct characteristics and needs.
  • From the categories of potential customers and the identified problems, narrow your focus to one key customer type and one specific problem.
  • This step helps prevent spreading your resources too thin and allows you to concentrate on understanding your primary audience and addressing their primary need.
  • Brainstorm a range of solutions that could address the key problem for your chosen customer type.
  • List up to ten solutions. Then, evaluate these solutions based on feasibility, cost, time, and resources required.
  • Narrow down the list to three solutions that are viable given your constraints.
  • For the solution you’ve chosen, consider how you’ll monetize it. Determine how your business will generate revenue from providing the solution to your target customers.
  • Brainstorm up to five potential monetization strategies. These could include subscription models, one-time purchases, freemium offerings, etc.
  • Focus on the two strategies that can be tested quickly and efficiently.
  • This step involves practical validation of your selected solution and monetization strategies.
  • Test your product or service with real customers to gather feedback. Evaluate how well your monetization strategies perform in real-world scenarios.
  • Based on the feedback and data collected, choose the most effective solution and monetization strategy combination.
  • With a validated solution, monetization strategy , and a clear understanding of your target audience, you have the foundation of your business model .
  • Your business model is the blueprint that outlines how your company will create, deliver, and capture value in the market.
  • Continuously monitor and refine your business model as you gather more insights from customers and adapt to changing market conditions.

Create Your Business Model Idea In Less Than A Minute!

With our Business Model Idea generator, you can craft the perfect business model idea, in less than a minute, by leveraging AI, to help you find the first version of the building blocks needed to build a successful business model !

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Business Model

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In today’s rapidly evolving business landscape, having a well-defined and adaptable business model is crucial for success. A business model serves as the blueprint for how an organization creates, delivers, and captures value. It outlines the fundamental framework and strategy that drives a company’s operations, revenue generation, and overall sustainability. In this article, we will delve into the concept of business models, provide a step-by-step guide on creating one, address some common FAQs, and explore various examples and strategies to inspire your own entrepreneurial journey.

1. Business Model Example

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2. Business Model Template

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3. Business Model Canvas Example

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4. Business Model Strategy Example

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5. Startup Business Model Example

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6. Sample Business Model Example

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7. Business Model Plan Example

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8. Business Model Cost Structure Example

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9. Business Model Innovation Example

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10. Business Model Powerpoint Example

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11. Business Model Design Example

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12. Ecommerce Business Model Example

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13. Lean Canvas Business Model Example

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14. Restaurant Business Model Example

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15. Business Model Diagram Example

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16. Business Model Pitch Deck Example

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17. Product Business Model Example

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18. Entrepreneurship Business Model Example

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19. Business Model Value Proposition Example

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20. Marketing Business Model Example

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21. Business Model Framework Example

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22. Business Model Service Example

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23. Business Model High Resolution Example

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24. Business Growth Model Example

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25. Business Model Analysis Example

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26. Social Business Model Example

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27. Food Business Model Example

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28. Crafting Business Model Example

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29. Higher Education Business Model Example

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30. Retailer Business Model Example

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31. General Business Model Example

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What is a Business Model?

A business model refers to the conceptual framework that describes how an organization operates, creates value, and generates revenue. It encompasses the various elements that define the core aspects of a business, such as its target audience, value proposition, distribution channels, revenue streams, and cost structure. A well-designed business model aligns an organization’s resources, activities, and partners to effectively address market needs and deliver a compelling offering. It serves as a strategic tool to guide decision-making and optimize the overall performance and profitability of a company.

How to Create a Business Model

Creating a business model is a systematic process that requires careful analysis, strategic thinking, and a deep understanding of your target market and industry. By following these steps, you can develop a comprehensive business model that sets the stage for long-term success.

Step 1: Identify Your Target Market and Value Proposition:

Before diving into the intricacies of your business model, it is crucial to identify your target market and define the unique value proposition your business will offer. Determine the specific needs and pain points of your target audience, and craft a value proposition that effectively addresses these concerns.

Step 2: Analyze the Competitive Landscape:

Conduct a thorough analysis of your industry and competitors. Identify the key players, their business models, and their strengths and weaknesses. This analysis will help you identify opportunities for differentiation and potential areas for innovation within your business model.

Step 3: Design Revenue Streams and Pricing Strategies:

Consider different revenue streams that align with your value proposition. Explore various pricing models, such as one-time purchases, subscriptions, or freemium offerings, and determine the most suitable approach to monetize your product or service.

Step 4: Define Key Activities and Resources:

Outline the key activities and resources required to deliver your value proposition. This includes determining your core competencies, identifying strategic partnerships, and assessing any external resources needed to support your business operations.

Step 5: Establish Distribution Channels:

Evaluate the most effective distribution channels to reach your target market. Consider both traditional and digital channels, and determine the optimal mix to maximize your reach and accessibility.

Step 6: Evaluate Cost Structure and Profitability:

Analyze the cost structure of your business, including fixed and variable costs, overhead expenses, and potential economies of scale. Ensure that your revenue streams are aligned with your cost structure to achieve sustainable profitability.

What are some examples of business models?

There are various business models, including subscription-based models (e.g., Netflix), marketplace models (e.g., Airbnb), freemium models (e.g., Dropbox), and direct sales models (e.g., Apple).

Where can I find examples of business plans and strategies?

You can find a variety of business plans and strategy examples online. Check out resources such as “ 5+ Remodeling Business Plan Examples ” or “ 10+ Brand Marketing Strategy Examples in PDF | MS Word for your inspiration.”

How can a business model help my company succeed?

A well-designed business model provides a clear roadmap for success by aligning your activities, resources, and revenue streams. It helps you understand your market, differentiate your offering, and maximize profitability.

In conclusion , developing a robust business model is a vital step for any aspiring entrepreneur or existing business owner. By carefully crafting a well-defined value proposition, analyzing the competitive landscape, and designing effective revenue streams and distribution channels, you can create a blueprint that guides your organization toward sustainable growth and success. Remember, a strong business model adapts to changing market dynamics and enables you to seize emerging opportunities. With the right foundation in place, your business can thrive in today’s dynamic business environment.

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24 of My Favorite Sample Business Plans & Examples For Your Inspiration

Clifford Chi

Published: February 06, 2024

Free Business Plan Template

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I believe that reading sample business plans is essential when writing your own.

sample business plans and examples

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As you explore business plan examples from real companies and brands, it’s easier for you to learn how to write a good one.

But what does a good business plan look like? And how do you write one that’s both viable and convincing. I’ll walk you through the ideal business plan format along with some examples to help you get started.

Table of Contents

Business Plan Format

Business plan types, sample business plan templates, top business plan examples.

Ask any successful sports coach how they win so many games, and they’ll tell you they have a unique plan for every single game. To me, the same logic applies to business.

If you want to build a thriving company that can pull ahead of the competition, you need to prepare for battle before breaking into a market.

Business plans guide you along the rocky journey of growing a company. And if your business plan is compelling enough, it can also convince investors to give you funding.

With so much at stake, I’m sure you’re wondering where to begin.

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First, you’ll want to nail down your formatting. Most business plans include the following sections.

1. Executive Summary

I’d say the executive summary is the most important section of the entire business plan. 

Why? Essentially, it's the overview or introduction, written in a way to grab readers' attention and guide them through the rest of the business plan. This is important, because a business plan can be dozens or hundreds of pages long.

There are two main elements I’d recommend including in your executive summary:

Company Description

This is the perfect space to highlight your company’s mission statement and goals, a brief overview of your history and leadership, and your top accomplishments as a business.

Tell potential investors who you are and why what you do matters. Naturally, they’re going to want to know who they’re getting into business with up front, and this is a great opportunity to showcase your impact.

Need some extra help firming up those business goals? Check out HubSpot Academy’s free course to help you set goals that matter — I’d highly recommend it

Products and Services

To piggyback off of the company description, be sure to incorporate an overview of your offerings. This doesn’t have to be extensive — just another chance to introduce your industry and overall purpose as a business.

In addition to the items above, I recommend including some information about your financial projections and competitive advantage here too.:

Keep in mind you'll cover many of these topics in more detail later on in the business plan. So, keep the executive summary clear and brief, and only include the most important takeaways.

Executive Summary Business Plan Examples

This example was created with HubSpot’s business plan template:

business plan sample: Executive Summary Example

This executive summary is so good to me because it tells potential investors a short story while still covering all of the most important details.

Business plans examples: Executive Summary

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Tips for Writing Your Executive Summary

  • Start with a strong introduction of your company, showcase your mission and impact, and outline the products and services you provide.
  • Clearly define a problem, and explain how your product solves that problem, and show why the market needs your business.
  • Be sure to highlight your value proposition, market opportunity, and growth potential.
  • Keep it concise and support ideas with data.
  • Customize your summary to your audience. For example, emphasize finances and return on investment for venture capitalists.

Check out our tips for writing an effective executive summary for more guidance.

2. Market Opportunity

This is where you'll detail the opportunity in the market.

The main question I’d ask myself here is this: Where is the gap in the current industry, and how will my product fill that gap?

More specifically, here’s what I’d include in this section:

  • The size of the market
  • Current or potential market share
  • Trends in the industry and consumer behavior
  • Where the gap is
  • What caused the gap
  • How you intend to fill it

To get a thorough understanding of the market opportunity, you'll want to conduct a TAM, SAM, and SOM analysis and perform market research on your industry.

You may also benefit from creating a SWOT analysis to get some of the insights for this section.

Market Opportunity Business Plan Example

I like this example because it uses critical data to underline the size of the potential market and what part of that market this service hopes to capture.

Business plans examples: Market Opportunity

Tips for Writing Your Market Opportunity Section

  • Focus on demand and potential for growth.
  • Use market research, surveys, and industry trend data to support your market forecast and projections.
  • Add a review of regulation shifts, tech advances, and consumer behavior changes.
  • Refer to reliable sources.
  • Showcase how your business can make the most of this opportunity.

3. Competitive Landscape

Since we’re already speaking of market share, you'll also need to create a section that shares details on who the top competitors are.

After all, your customers likely have more than one brand to choose from, and you'll want to understand exactly why they might choose one over another.

My favorite part of performing a competitive analysis is that it can help you uncover:

  • Industry trends that other brands may not be utilizing
  • Strengths in your competition that may be obstacles to handle
  • Weaknesses in your competition that may help you develop selling points
  • The unique proposition you bring to the market that may resonate with customers

Competitive Landscape Business Plan Example

I like how the competitive landscape section of this business plan below shows a clear outline of who the top competitors are.

Business plans examples: Competitive Landscape

It also highlights specific industry knowledge and the importance of location, which shows useful experience in this specific industry. 

This can help build trust in your ability to execute your business plan.

Tips for Writing Your Competitive Landscape

  • Complete in-depth research, then emphasize your most important findings.
  • Compare your unique selling proposition (USP) to your direct and indirect competitors.
  • Show a clear and realistic plan for product and brand differentiation.
  • Look for specific advantages and barriers in the competitive landscape. Then, highlight how that information could impact your business.
  • Outline growth opportunities from a competitive perspective.
  • Add customer feedback and insights to support your competitive analysis.

4. Target Audience

Use this section to describe who your customer segments are in detail. What is the demographic and psychographic information of your audience?

If your immediate answer is "everyone," you'll need to dig deeper. Here are some questions I’d ask myself here:

  • What demographics will most likely need/buy your product or service?
  • What are the psychographics of this audience? (Desires, triggering events, etc.)
  • Why are your offerings valuable to them?

I’d also recommend building a buyer persona to get in the mindset of your ideal customers and be clear on why you're targeting them.

Target Audience Business Plan Example

I like the example below because it uses in-depth research to draw conclusions about audience priorities. It also analyzes how to create the right content for this audience.

Business plans examples: Target Audience

Tips for Writing Your Target Audience Section

  • Include details on the size and growth potential of your target audience.
  • Figure out and refine the pain points for your target audience , then show why your product is a useful solution.
  • Describe your targeted customer acquisition strategy in detail.
  • Share anticipated challenges your business may face in acquiring customers and how you plan to address them.
  • Add case studies, testimonials, and other data to support your target audience ideas.
  • Remember to consider niche audiences and segments of your target audience in your business plan.

5. Marketing Strategy

Here, you'll discuss how you'll acquire new customers with your marketing strategy. I’d suggest including information:

  • Your brand positioning vision and how you'll cultivate it
  • The goal targets you aim to achieve
  • The metrics you'll use to measure success
  • The channels and distribution tactics you'll use

I think it’s helpful to have a marketing plan built out in advance to make this part of your business plan easier.

Marketing Strategy Business Plan Example

This business plan example includes the marketing strategy for the town of Gawler.

In my opinion, it really works because it offers a comprehensive picture of how they plan to use digital marketing to promote the community.

Business plans examples: Marketing Strategy

Tips for Writing Your Marketing Strategy

  • Include a section about how you believe your brand vision will appeal to customers.
  • Add the budget and resources you'll need to put your plan in place.
  • Outline strategies for specific marketing segments.
  • Connect strategies to earlier sections like target audience and competitive analysis.
  • Review how your marketing strategy will scale with the growth of your business.
  • Cover a range of channels and tactics to highlight your ability to adapt your plan in the face of change.

6. Key Features and Benefits

At some point in your business plan, you'll need to review the key features and benefits of your products and/or services.

Laying these out can give readers an idea of how you're positioning yourself in the market and the messaging you're likely to use. It can even help them gain better insight into your business model.

Key Features and Benefits Business Plan Example

In my opinion, the example below does a great job outlining products and services for this business, along with why these qualities will attract the audience.

Business plans examples: Key Features and Benefits

Tips for Writing Your Key Features and Benefits

  • Emphasize why and how your product or service offers value to customers.
  • Use metrics and testimonials to support the ideas in this section.
  • Talk about how your products and services have the potential to scale.
  • Think about including a product roadmap.
  • Focus on customer needs, and how the features and benefits you are sharing meet those needs.
  • Offer proof of concept for your ideas, like case studies or pilot program feedback.
  • Proofread this section carefully, and remove any jargon or complex language.

7. Pricing and Revenue

This is where you'll discuss your cost structure and various revenue streams. Your pricing strategy must be solid enough to turn a profit while staying competitive in the industry. 

For this reason, here’s what I’d might outline in this section:

  • The specific pricing breakdowns per product or service
  • Why your pricing is higher or lower than your competition's
  • (If higher) Why customers would be willing to pay more
  • (If lower) How you're able to offer your products or services at a lower cost
  • When you expect to break even, what margins do you expect, etc?

Pricing and Revenue Business Plan Example

I like how this business plan example begins with an overview of the business revenue model, then shows proposed pricing for key products.

Business plans examples: Pricing and Revenue

Tips for Writing Your Pricing and Revenue Section

  • Get specific about your pricing strategy. Specifically, how you connect that strategy to customer needs and product value.
  • If you are asking a premium price, share unique features or innovations that justify that price point.
  • Show how you plan to communicate pricing to customers.
  • Create an overview of every revenue stream for your business and how each stream adds to your business model as a whole.
  • Share plans to develop new revenue streams in the future.
  • Show how and whether pricing will vary by customer segment and how pricing aligns with marketing strategies.
  • Restate your value proposition and explain how it aligns with your revenue model.

8. Financials

To me, this section is particularly informative for investors and leadership teams to figure out funding strategies, investment opportunities, and more.

 According to Forbes , you'll want to include three main things:

  • Profit/Loss Statement - This answers the question of whether your business is currently profitable.
  • Cash Flow Statement - This details exactly how much cash is incoming and outgoing to give insight into how much cash a business has on hand.
  • Balance Sheet - This outlines assets, liabilities, and equity, which gives insight into how much a business is worth.

While some business plans might include more or less information, these are the key details I’d include in this section.

Financials Business Plan Example

This balance sheet is a great example of level of detail you’ll need to include in the financials section of your business plan.

Business plans examples: Financials

Tips for Writing Your Financials Section

  • Growth potential is important in this section too. Using your data, create a forecast of financial performance in the next three to five years.
  • Include any data that supports your projections to assure investors of the credibility of your proposal.
  • Add a break-even analysis to show that your business plan is financially practical. This information can also help you pivot quickly as your business grows.
  • Consider adding a section that reviews potential risks and how sensitive your plan is to changes in the market.
  • Triple-check all financial information in your plan for accuracy.
  • Show how any proposed funding needs align with your plans for growth.

As you create your business plan, keep in mind that each of these sections will be formatted differently. Some may be in paragraph format, while others could be charts or graphs.

The formats above apply to most types of business plans. That said, the format and structure of your plan will vary by your goals for that plan. 

So, I’ve added a quick review of different business plan types. For a more detailed overview, check out this post .

1. Startups

Startup business plans are for proposing new business ideas.

If you’re planning to start a small business, preparing a business plan is crucial. The plan should include all the major factors of your business.

You can check out this guide for more detailed business plan inspiration .

2. Feasibility Studies

Feasibility business plans focus on that business's product or service. Feasibility plans are sometimes added to startup business plans. They can also be a new business plan for an already thriving organization.

3. Internal Use

You can use internal business plans to share goals, strategies, or performance updates with stakeholders. In my opinion, internal business plans are useful for alignment and building support for ambitious goals.

4. Strategic Initiatives

Another business plan that's often for sharing internally is a strategic business plan. This plan covers long-term business objectives that might not have been included in the startup business plan.

5. Business Acquisition or Repositioning

When a business is moving forward with an acquisition or repositioning, it may need extra structure and support. These types of business plans expand on a company's acquisition or repositioning strategy.

Growth sometimes just happens as a business continues operations. But more often, a business needs to create a structure with specific targets to meet set goals for expansion. This business plan type can help a business focus on short-term growth goals and align resources with those goals.

Now that you know what's included and how to format a business plan, let's review some of my favorite templates.

1. HubSpot's One-Page Business Plan

Download a free, editable one-page business plan template..

The business plan linked above was created here at HubSpot and is perfect for businesses of any size — no matter how many strategies we still have to develop.

Fields such as Company Description, Required Funding, and Implementation Timeline give this one-page business plan a framework for how to build your brand and what tasks to keep track of as you grow.

Then, as the business matures, you can expand on your original business plan with a new iteration of the above document.

Why I Like It

This one-page business plan is a fantastic choice for the new business owner who doesn’t have the time or resources to draft a full-blown business plan. It includes all the essential sections in an accessible, bullet-point-friendly format. That way, you can get the broad strokes down before honing in on the details.

2. HubSpot's Downloadable Business Plan Template

Sample business plan: hubspot free editable pdf

We also created a business plan template for entrepreneurs.

The template is designed as a guide and checklist for starting your own business. You’ll learn what to include in each section of your business plan and how to do it.

There’s also a list for you to check off when you finish each section of your business plan.

Strong game plans help coaches win games and help businesses rocket to the top of their industries. So if you dedicate the time and effort required to write a workable and convincing business plan, you’ll boost your chances of success and even dominance in your market.

This business plan kit is essential for the budding entrepreneur who needs a more extensive document to share with investors and other stakeholders.

It not only includes sections for your executive summary, product line, market analysis, marketing plan, and sales plan, but it also offers hands-on guidance for filling out those sections.

3. LiveFlow’s Financial Planning Template with built-in automation

Sample Business Plan: LiveFLow

This free template from LiveFlow aims to make it easy for businesses to create a financial plan and track their progress on a monthly basis.

The P&L Budget versus Actual format allows users to track their revenue, cost of sales, operating expenses, operating profit margin, net profit, and more.

The summary dashboard aggregates all of the data put into the financial plan sheet and will automatically update when changes are made.

Instead of wasting hours manually importing your data to your spreadsheet, LiveFlow can also help you to automatically connect your accounting and banking data directly to your spreadsheet, so your numbers are always up-to-date.

With the dashboard, you can view your runway, cash balance, burn rate, gross margins, and other metrics. Having a simple way to track everything in one place will make it easier to complete the financials section of your business plan.

This is a fantastic template to track performance and alignment internally and to create a dependable process for documenting financial information across the business. It’s highly versatile and beginner-friendly.

It’s especially useful if you don’t have an accountant on the team. (I always recommend you do, but for new businesses, having one might not be possible.)

4. ThoughtCo’s Sample Business Plan

sample business plan: ThoughtCo.

One of the more financially oriented sample business plans in this list, BPlan’s free business plan template dedicates many of its pages to your business’s financial plan and financial statements.

After filling this business plan out, your company will truly understand its financial health and the steps you need to take to maintain or improve it.

I absolutely love this business plan template because of its ease-of-use and hands-on instructions (in addition to its finance-centric components). If you feel overwhelmed by the thought of writing an entire business plan, consider using this template to help you with the process.

6. Harvard Business Review’s "How to Write a Winning Business Plan"

Most sample business plans teach you what to include in your business plan, but this Harvard Business Review article will take your business plan to the next level — it teaches you the why and how behind writing a business plan.

With the guidance of Stanley Rich and Richard Gumpert, co-authors of " Business Plans That Win: Lessons From the MIT Enterprise Forum ", you'll learn how to write a convincing business plan that emphasizes the market demand for your product or service.

You’ll also learn the financial benefits investors can reap from putting money into your venture rather than trying to sell them on how great your product or service is.

This business plan guide focuses less on the individual parts of a business plan, and more on the overarching goal of writing one. For that reason, it’s one of my favorites to supplement any template you choose to use. Harvard Business Review’s guide is instrumental for both new and seasoned business owners.

7. HubSpot’s Complete Guide to Starting a Business

If you’re an entrepreneur, you know writing a business plan is one of the most challenging first steps to starting a business.

Fortunately, with HubSpot's comprehensive guide to starting a business, you'll learn how to map out all the details by understanding what to include in your business plan and why it’s important to include them. The guide also fleshes out an entire sample business plan for you.

If you need further guidance on starting a business, HubSpot's guide can teach you how to make your business legal, choose and register your business name, and fund your business. It will also give small business tax information and includes marketing, sales, and service tips.

This comprehensive guide will walk you through the process of starting a business, in addition to writing your business plan, with a high level of exactitude and detail. So if you’re in the midst of starting your business, this is an excellent guide for you.

It also offers other resources you might need, such as market analysis templates.

8. Panda Doc’s Free Business Plan Template

sample business plan: Panda Doc

PandaDoc’s free business plan template is one of the more detailed and fleshed-out sample business plans on this list. It describes what you should include in each section, so you don't have to come up with everything from scratch.

Once you fill it out, you’ll fully understand your business’ nitty-gritty details and how all of its moving parts should work together to contribute to its success.

This template has two things I love: comprehensiveness and in-depth instructions. Plus, it’s synced with PandaDoc’s e-signature software so that you and other stakeholders can sign it with ease. For that reason, I especially love it for those starting a business with a partner or with a board of directors.

9. Small Business Administration Free Business Plan Template

sample business plan: Small Business Administration

The Small Business Administration (SBA) offers several free business plan templates that can be used to inspire your own plan.

Before you get started, you can decide what type of business plan you need — a traditional or lean start-up plan.

Then, you can review the format for both of those plans and view examples of what they might look like.

We love both of the SBA’s templates because of their versatility. You can choose between two options and use the existing content in the templates to flesh out your own plan. Plus, if needed, you can get a free business counselor to help you along the way.

I’ve compiled some completed business plan samples to help you get an idea of how to customize a plan for your business.

I chose different types of business plan ideas to expand your imagination. Some are extensive, while others are fairly simple.

Let’s take a look.

1. LiveFlow

business plan example: liveflow

One of the major business expenses is marketing. How you handle your marketing reflects your company’s revenue.

I included this business plan to show you how you can ensure your marketing team is aligned with your overall business plan to get results. The plan also shows you how to track even the smallest metrics of your campaigns, like ROI and payback periods instead of just focusing on big metrics like gross and revenue.

Fintech startup, LiveFlow, allows users to sync real-time data from its accounting services, payment platforms, and banks into custom reports. This eliminates the task of pulling reports together manually, saving teams time and helping automate workflows.

"Using this framework over a traditional marketing plan will help you set a profitable marketing strategy taking things like CAC, LTV, Payback period, and P&L into consideration," explains LiveFlow co-founder, Lasse Kalkar .

When it came to including marketing strategy in its business plan, LiveFlow created a separate marketing profit and loss statement (P&L) to track how well the company was doing with its marketing initiatives.

This is a great approach, allowing businesses to focus on where their marketing dollars are making the most impact. Having this information handy will enable you to build out your business plan’s marketing section with confidence. LiveFlow has shared the template here . You can test it for yourself.

2. Lula Body

Business plan example: Lula body

Sometimes all you need is a solid mission statement and core values to guide you on how to go about everything. You do this by creating a business plan revolving around how to fulfill your statement best.

For example, Patagonia is an eco-friendly company, so their plan discusses how to make the best environmentally friendly products without causing harm.

A good mission statement  should not only resonate with consumers but should also serve as a core value compass for employees as well.

Patagonia has one of the most compelling mission statements I’ve seen:

"Together, let’s prioritise purpose over profit and protect this wondrous planet, our only home."

It reels you in from the start, and the environmentally friendly theme continues throughout the rest of the statement.

This mission goes on to explain that they are out to "Build the best product, cause no unnecessary harm, and use business to protect nature."

Their mission statement is compelling and detailed, with each section outlining how they will accomplish their goal.

4. Vesta Home Automation

business plan example: Vesta executive summary

This executive summary for a smart home device startup is part of a business plan created by students at Mount Royal University .

While it lacks some of the sleek visuals of the templates above, its executive summary does a great job of demonstrating how invested they are in the business.

Right away, they mention they’ve invested $200,000 into the company already, which shows investors they have skin in the game and aren’t just looking for someone else to foot the bill.

This is the kind of business plan you need when applying for business funds. It clearly illustrates the expected future of the company and how the business has been coming along over the years.

5. NALB Creative Center

business plan examples: nalb creative center

This fictional business plan for an art supply store includes everything one might need in a business plan: an executive summary, a company summary, a list of services, a market analysis summary, and more.

One of its most notable sections is its market analysis summary, which includes an overview of the population growth in the business’ target geographical area, as well as a breakdown of the types of potential customers they expect to welcome at the store. 

This sort of granular insight is essential for understanding and communicating your business’s growth potential. Plus, it lays a strong foundation for creating relevant and useful buyer personas .

It’s essential to keep this information up-to-date as your market and target buyer changes. For that reason, you should carry out market research as often as possible to ensure that you’re targeting the correct audience and sharing accurate information with your investors.

Due to its comprehensiveness, it’s an excellent example to follow if you’re opening a brick-and-mortar store and need to get external funding to start your business .

6. Curriculum Companion Suites (CSS)

business plan examples: curriculum companion suites

If you’re looking for a SaaS business plan example, look no further than this business plan for a fictional educational software company called Curriculum Companion Suites. 

Like the business plan for the NALB Creative Center, it includes plenty of information for prospective investors and other key stakeholders in the business.

One of the most notable features of this business plan is the executive summary, which includes an overview of the product, market, and mission.

The first two are essential for software companies because the product offering is so often at the forefront of the company’s strategy. Without that information being immediately available to investors and executives, then you risk writing an unfocused business plan.

It’s essential to front-load your company’s mission if it explains your "Why?" and this example does just that. In other words, why do you do what you do, and why should stakeholders care? This is an important section to include if you feel that your mission will drive interest in the business and its offerings.

7. Culina Sample Business Plan

sample business plan: Culina

Culina's sample business plan is an excellent example of how to lay out your business plan so that it flows naturally, engages readers, and provides the critical information investors and stakeholders need. 

You can use this template as a guide while you're gathering important information for your own business plan. You'll have a better understanding of the data and research you need to do since Culina’s plan outlines these details so flawlessly for inspiration.

8. Plum Sample Business Plan

Sample business plan: Plum

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TODAY FOUNDER

How To Describe Your Business Model (Facts You Should Know)

Clearly describing your business model to others, such as partners, investors, consulters, employees, etc., enables you to share your knowledge and effort completely. This article will show you how to describe your business model clearly and easily.

How should you describe your business model? 

The best way to describe your business model is by using these two tools: The Business Model Canvas, and The Business Model Metrics. By combining these two tools, you will create a clear and concise description of your business model.

A clear and sufficient description of your business model is a difficult yet easy task at the same time. I experienced this problem at the beginning of my business journey, and I learned a lesson difficultly. In this article, I’ll show you how you can easily describe your business model. Let’s begin!

Table of Contents

Why is the description of your business model important?

If you can’t describe your business model clearly and efficiently, you will have many problems that result in losing effort, time, and money. This section shows you the importance of this task.

What is the business model?

A business model describes how a company works to achieve its goals. It describes how the company creates value (product), provides value to the customer, and generates profit.

The business model was a confusing term

In the 1990s, the term ‘business model’ became a common term in business.

Usually, when a company works in teams to improve the business, create new products, describe their company during a meeting with an investor, etc., they discuss their business model.

In fact, at that time, there was no standard framework for the business model, and much confusion and ambiguity were surrounding the term. In this case, there was a lack of understanding among all parties.

There is a book written by Dan Roa that called this lack of understanding the BLAH BLAH BLAH phenomenon. This phenomenon happens when people talk, but they don’t understand each other. Not because they’re not smart but because they don’t speak the same language. They spend effort, time, and money, but this session will not produce perfect results.

Finally, if you do not clearly describe your business model, you will lose a lot of effort, time, and money on useless discussions.

The appearance of the business model canvas

In 2010, when  Alexander Osterwalder  published his book “Business Model Generation “, he provided a visual tool called the business model canvas, which was sorely needed. This tool consists of 9 blocks used to describe the business model. This tool provides a standard framework for a business model that can be used in discussions.

The business model canvas

The business model canvas consists of 9 blocks, as shown in the image below. These blocks are used to describe any company’s business model.

Download the Business Model Canvas template.

The 9 blocks of the business model canvas are:

  • Customer segment
  • Value proposition
  • Customer relationship
  • Revenue stream
  • Key activity
  • Key resource
  • Key partnerships
  • Cost structure

Fill the nine blocks of the business model canvas with detailed, clear information. This is the first step in the process of describing your business model. Now, let’s take these blocks one by one in a few lines.

1. Customer segments

In the customer segments block, you should describe the most important customers and create value.

The customer segment is the niche market you selected to serve, solving their specific problem or satisfying their particular needs.

2. Value proposition

In the value propositions block, you will describe the group of products and services that create value for your Customer Segment.

The value proposition is a group or collection of things. This collection describes what you offer to customer segments. Maybe your product has extra services, like free shipping, a warranty, customer support after purchase… etc.

The customer may sometimes select your offer, not because of your unique product but because of other services coupled with it.

Also, you need to describe how important the value proposition is to your customers. Is it a priority need or a luxury need that can be easily discarded?

Explain what your offer is and why the customer will choose it.

3. Channels

In this block, you will describe how your company communicates with customer segments. How does the company reach its customers, deliver a value proposition, receive customer feedback?

The company typically uses multiple channels for different functions. For example, specific media are used for advertising. In contrast, another channel is used by customers to communicate with your company, and others are used to deliver the value proposition to customers and so on.

4- Customer Relationships

Most relationships with customers belong to one of these three categories:

  • How to get the customer?
  • How to keep the customer?
  • How to Grow customer?

Therefore, the customer relationships block describes the strategies and tactics used to get, keep, and grow customers.

5- Revenue Streams

In the revenue streams block, you will describe the cash a company generates from the customer segment.

If your company serves more than one customer segment, each customer segment’s revenue must be declared. Also, if your company provides more than one product/service, the revenue generated from each product/service should be described separately.

6- Key Resources

The key resources block describes the most important assets required to make a business model work.

These resources can be physical, financial, intellectual, or human. Also, the resources can be owned or leased by the company, or they may be acquired.

7- Key Activities

Key activities block describes the main activities required to make your business model work. Extra to the most important actions your company must take to operate successfully.

8- Key Partnerships

The key partnerships block describes the network of suppliers and partners that support you in running the rest of your business model blocks.

9- Cost Structure

The cost structure block describes all costs incurred to operate the business model, such as the primary operating costs of the business, the cost to build and make the product, the costs of using different channels, the cost to get, keep, and grow customers …etc.

During your description of your cost structure, make sure not to mix or count these costs twice, as this will affect all your business models.

Additional description is required

When describing a business model, try not to describe each block as being isolated from the rest of your business model. While describing each block, try to describe the impact of the blocks on each other and how they work together to form a business model as a whole.

Visualization tools have a significant impact. So try to make your description as visible as possible and support your description with shapes and graphics. ِFor example, you can use the value proposition canvas to illustrate how the value affects the customer segment.

Hidden sides of the business model canvas

The Business Model canvas illustrates the business model quickly and easily by presenting the most critical aspects that affect the success of companies.

However, other considerations of business success are implicit but not explicitly covered by the business model board, such as the level and nature of competition and the determination of measurable goals.

Is it enough to use the business model canvas alone?

A business model canvas has been a well-known tool for describing a business model since 2010. But the way people use it makes the difference.

Here are examples of some description mistakes: Describing each block in the business model canvas separately, having no description or incomplete description of how these blocks work together to generate a complete business model.

Therefore, we coupled the business model canvas tool with the business model metrics tool as an additional description tool to supplement any lack in your description.

This additional tool will force you to describe how the business model blocks work together to achieve your company’s goals. Also, this other tool will help remind you if something is missing in your description.

This method makes describing your business model easy, even if you’re not an expert at this point.

The Busines model metrics as description tool

The business model metrics are used to evaluate the business model. But we also found it helpful as a description tool with some modifications. For more detail about the original business model metrics, refer to this article: “ What Are The Business Model Metrics? How Do You Evaluate Any Business Model ”

The business model metrics consist of 4 main factors. You need to describe the strategies and tactics your business model uses in these four factors.

In addition to strategies and tactics, you need to give current factor values or expected future values as much as possible.

The following paragraphs show these factors. Some questions have been added under each element as illustrative examples to identify easily what is required.

1- Profitability

  • Is your business model profitable?
  • How does your business model create profit?
  • What is the balance point of your business model?

2- Competition

  • Who are your main competitors now?
  • What is your competitive advantage?
  • Why does the customer choose your offer and ignore other competitors’ products?
  • How easy or difficult is it for new companies to enter the market?

3- Repatriable

  • Is your business model repeatable? Repeatable means your business model will always produce the same result if you repeat the same steps in different processes, such as production, sale, etc.
  • Can you build a system around your business model?

4- Scalability

  • Is your business model scalable and how?
  • If you would spend an extra $ 1 on your business model, how many dollars would that return as a profit?
  • What is the size of your customer segment?
  • Is your competitive advantage enough to grow?
  • What are the main risks you expect in your business model?
  • Will these risks affect other business model components and other factors such as profitability, replicability, scalability?
  • What are the strategies and tactics that you have prepared to face these risks?

Finally , by pairing these tools, describing your business model will be easy, and the outcome of this process will be a clear and sufficient description of your business model.

Having a poor description of your business model can be a fatal mistake. It will reduce your ability to improve and grow your business. Therefore, a clear and sufficient description is necessary. This is not an option.

Describing your business model is difficult yet easy at the same time. It’s easy for those who have the right tools to begin the process.

The business model canvas has been a well-known tool for describing a business model since 2010. But it is not an excellent tool to describe a business model independently, especially for the non-expert.

Examples of description mistakes include: Describing each block in the business model canvas separately, having no description or incomplete description of how these blocks work together to generate a complete business model.

This article coupled the business model canvas tool with an additional tool to make it easy for a non-expert to get a clear and concise description of their business model.

The business model canvas description blocks

The business model metrics  5 factors.

  • Profitability
  • Competitions
  • Repatriable
  • Scalability

These two tools will force you to describe how your business model blocks work together to achieve your company’s goals. Also, these tools will help you remember if something is missing in your description.

Using the above mothed, the process of describing the business model will be straightforward. The outcome of this process will be a clear and sufficient description of your business model, even if you’re a non-expert at this point.

We suggest attending the Free Training course How to Build a Startup for more details on this subject and related topics.

Related Articles:

  • What Are The Business Model Metrics? How Do You Evaluate Any Business Model?
  • What Is The Business Model Life Cycle?
  • Customer Development Vs. Marketing
  • 5 Reasons Why Customer Development Must Be Done By Founders?
  • How Startup Works and How to Run Startup?
  • When To Use the Business Model Canvas?
  • Why Do You Need The Product Market Fit?

Related Posts:

  • When To Use the Business Model Canvas (Helpful Tips)
  • How Startup Works (Here Are The Facts!)
  • What Is The Business Model Life Cycle? (Things You…
  • What Are The Business Model Metrics? How Do You…
  • 3 Main Stages For Creating a Successful Company
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IMAGES

  1. Business Model Examples : 50+ Awesome Models To Inspire You

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  2. Quick Guide to the Business Model Canvas

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  3. A complete Guide on Business Model vs Business Plan

    how to write business model example

  4. What is a Business Model & Top Examples

    how to write business model example

  5. 50 Amazing Business Model Canvas Templates ᐅ TemplateLab

    how to write business model example

  6. How to Write a Business Plan: The Ultimate Guide in 2023

    how to write business model example

VIDEO

  1. Types Of Business Model Discussion in this Video // Business Model Discussion

  2. CHOOSE THE RIGHT BUSINESS MODEL #shorts #business

  3. Business Model

  4. TYPES OF BUSINESS MODELS WITH EXPLANATION AND EXAMPLE

  5. Types Of Business Model Discussion in this Video // Business Model Discussion

  6. Types Of Business Model Discussion in this Video // Business Model Discussion

COMMENTS

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

    1. Retailer model A retailer is the last link in the supply chain. These businesses purchase goods from manufacturers or distributors and then sell them to customers for a price that will both...

  2. What Is a Business Model? Best Practices and Examples

    The Aha! business model canvas, for example, gives you a collaborative space to explore concepts and connect your model to everyday work. Build a business model in Aha! Notebooks. Sign up for a free trial. Start using this template now You can access the business model template shown above using Aha! Notebooks.

  3. How to Create an Expert Business Model: A Detailed Guide

    Chloe West Dec 02, 2022 If you're looking to create your own business, there are two things you need: a business plan and a business model. Your business plan helps you explore your overall business idea; your business model determines how your business will make money.

  4. Business Model Canvas: Explained with Examples

    Updated on: 12 December 2022 | 15 min read Exploring Business Model Canvas? Create one using a template Learn how to create a business model Key building blocks of the business model canvas Got a new business idea, but don't know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan?

  5. 20 Business Model Examples (And How To Pick The Right One)

    1. They Match Up With Company Goals and Values. Your business model comes after you define what your company is trying to do. Certain models will match up with your goals and values, and some won't. If you start a diamond shop but try to implement a freemium model, there's essentially no way you'll succeed.

  6. Business Model Canvas: The Definitive Guide and Examples

    1. Customer Segment 2. Value Proposition 3. Distribution Channels 4. Customer Relationship 5. Revenue Streams 6. Key Resources 7. Key Activities 8. Key Partners 9. Cost Structure Applications and Analysis What to Do After? Some Tips for Beginners Software for Business Model Canvas What Are the Benefits of the BMC?

  7. 17 Business Model Examples

    Business Model Examples Check out 17 different business model types with examples of companies for further insights. Try to adopt these business models in your company or startup. Multi-Sided Platform Model The model implies a company provides service to both business parties. To get a better understanding, let's look at an example - LinkedIn.

  8. How to Design a Winning Business Model

    How to Design a Winning Business Model by Ramon Casadesus-Masanell and Joan E. Ricart From the Magazine (January-February 2011) Summary. Most executives believe that competing through...

  9. How to Create a Business Model Canvas (With Template)

    Inspired by the business model canvas, the lean model canvas was created by Ash Maurya. It is a one-page business plan template that distills the lean startup methodology into the original business model canvas. Lean model canvas assimilates multiple essential data points to develop a simpler, start-up optimized version of a business model canvas.

  10. What Is a Business Model?

    Summary. A look through HBR's archives shows that business thinkers use the concept of a "business model" in many different ways, potentially skewing the definition. Many people believe Peter...

  11. Write your business plan

    Executive summary Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company's leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.

  12. Business Model Examples

    Learning how to write a business model is important. However, it can be challenging to create one without real-world business model examples. Examples of successful business models include the following. ... Business Model Example 4: Crowdsourcing Business Model. Typically, a crowdsourcing model is combined with an advertising model to give ...

  13. What is a business model? Types and examples

    A business model is a holistic portrait of how the company operates. Think of a business model as an aerial photograph of your organization, giving you a comprehensive view of your current and future operations. A business plan refers to the specific strategy for accomplishing a particular goal. A business plan is more like the turn-by-turn ...

  14. How To Create A Business Model In Seven Steps

    Define a set of three types of customers maximum for the problems you defined in step one. Ideally, each problem will be matched to a customer type. At the same time, the same customer type might experience multiple problems. Or one problem can be experienced by different customer types. Define the key customer and the key problem

  15. How to Write a Good Business Model

    List potential revenue streams. Describe how you manage resources, procedures, partners and costs. Add statistical information to your business model from the U.S. Department of Commerce to...

  16. Make a Business Model Canvas (How-tos, Examples, Tips)

    A business model outlines how you intend to create value or make a profit out of your product and services. When building your business model, you need to: Define your product or service. Identify strategies to promote your product or service. Anticipate the costs involved in running the business.

  17. 30 Examples of Business Models

    30 Examples of Business Models. John Spacey, updated on August 15, 2023. A business model is a framework for capturing value. The term is most often applied to organizations who seek to capture economic and social value. However, value can include any goals an organization has such as environmental protection, artistic achievements or knowledge ...

  18. 30+ Business Model Examples, How to Create, Format, PDF

    Step 2: Analyze the Competitive Landscape: Conduct a thorough analysis of your industry and competitors. Identify the key players, their business models, and their strengths and weaknesses. This analysis will help you identify opportunities for differentiation and potential areas for innovation within your business model.

  19. Business Model Examples (With Definition and Uses)

    Here are eight 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.

  20. 24 of My Favorite Sample Business Plans & Examples For Your Inspiration

    Pricing and Revenue Business Plan Example. I like how this business plan example begins with an overview of the business revenue model, then shows proposed pricing for key products. Image Source. Tips for Writing Your Pricing and Revenue Section. Get specific about your pricing strategy.

  21. Ecommerce Business Models: Types and Examples (2024)

    The business-to-consumer ( B2C) business model refers to commerce between a business and an individual consumer, like buying a shirt from a brand's website. B2C business includes ecommerce and brick-and-mortar. 2. Business to business (B2B) Business to business ( B2B) refers to any commerce between two businesses.

  22. How To Describe Your Business Model (Facts You Should Know)

    Now, let's take these blocks one by one in a few lines. 1. Customer segments. In the customer segments block, you should describe the most important customers and create value. The customer segment is the niche market you selected to serve, solving their specific problem or satisfying their particular needs. 2.

  23. Create a Business Model Canvas Online

    Finalize your business model canvas online and easily download it as a high-resolution JPG, PNG, GIF, or PDF. Share it digitally through email or social accounts, or publish it as a poster for your office using Canva Print. You can also embed it to your website, your business presentation, or visual Docs in Canva. Create a business model canvas.

  24. Cover Letter Samples and Templates

    A cover letter should include the following parts: Header. Salutation. Introduction. Body paragraph. Closing paragraph. Letter ending and signature. The following cover letter samples and examples will show you how to write a cover letter for many employment circumstances. Browse cover letters by job title for inspiration.