What's what in finances: Business model

A high-level plan for profitably operating a business in a specific marketplace.

Business model is a company's plan for making a profit. It identifies the products or services the business plans to sell, its identified target market, and any anticipated expenses.

Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff. Established businesses should regularly update their business plans or they'll fail to anticipate trends and challenges ahead. 

A primary component of the business model is the value proposition. This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

See also: Become an expert: All you need to know about saving and budgeting

Related Articles

More News

More News