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Business Model

A business model is simply how you plan to make money. It is the basis for the plan you choose for your company to make it successful. The business model describes how the company is positioned within its industry’s value chain, and how it organises its relations with its suppliers, clients, and partners in order to generate profits.

If the business plan is a road map that describes how much profit the business intends to make in a given period of time, the business model is the skeleton that explains how that money will be made.

At its simplest a business model is simply how you plan to make money. It is the basis for the plan you choose for your company to make it successful. The business model describes how the company is positioned within its industry’s value chain, and how it organises its relations with its suppliers, clients, and partners in order to generate profits.

A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture.

How this section fits into your business plan:

Your Solution
A description of your products/services.

How do you solve your customer’s problem? What products and services are you offering? Describe your product or service and why it’s better than the alternatives.

Tip
Have a look at your businesses value chain, this will give you an idea of the various business models available and how you can improve upon it.

Your business model will influence the Sales Channel(s) you use as well as your Marketing, Advertising & Sales.


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