What is a Business Model?

A Business Model is the strategic blueprint a company uses to create, deliver, and capture value. It outlines how a business operates, earns revenue, serves customers, and sustains profitability over time.

Key Components

• Value Proposition: What problem the business solves for its customers

• Target Customer Segments: Who the business serves

• Revenue Streams: How the business makes money

• Cost Structure: Primary operational expenses

• Distribution Channels: How products/services reach customers

• Key Partnerships: Collaborations and alliances that support operations

Example

A SaaS business model typically offers subscription-based pricing, cloud-hosted software, and tiered service plans.

Importance

• Defines how a business achieves profitability

• Guides decision-making and strategy development

• Provides a framework for investors and stakeholders to evaluate viability