What is a Business Model?

“What is a business model?” It’s a simple question, and one that most business owners have asked themselves.

Ask ten entrepreneurs what a business model is, and you’ll probably get ten different answers. For most business owners, the concept of a business model is abstract and difficult to explain.

Fortunately, amidst all the confusion around what a business model is, a group of super smart businesspeople and innovators gathered together to create the book titled Business Model Generation.

We highly recommend this book for any business owner, entrepreneur or individual considering starting a business. Here’s how they define a business model — a business model is:

“the rationale of how an organization creates, delivers and captures value.”

Beyond that, the premise of the book is simple: there are nine basic categories to focus on, and these fit together to form your business model. The nine categories are:

  • Customer segments
  • Value propositions
  • Channels
  • Customer relationships
  • Revenue streams
  • Key resources
  • Key activities
  • Key partnerships
  • Cost structure

To download a great PDF summary of the book, click here. Or, to buy your own copy on Amazon, click here.

Also, here’s a link to download the free PDF Business Model Canvas so you can get started right away.

Have some other ideas about how to organize and visualize a business model? Let us know!!