What Is a Business Model?

The term business model refers to 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. Business plans help investors evaluate companies that interest them.

Key Takeaways

  • A business model is a company’s core strategy for profitably doing business.
  • Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
  • The two levers of a business model are pricing and costs.
  • When evaluating a business model as an…

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