What is a business model?

The key aspect of a business plan is the business model. The latter determines how a company can generate income. Therefore, in order to choose the right business model for the company's activities, it is important to understand this principle.

What exactly is a business model?

The business model is the essence of a company's strategy. It is the beginning of the action, the initial premise that gives a company the ability to differentiate itself from the market and hope to make a profit. First, the entrepreneur conducts a method of contemplation, diagnosis, and integration in order to develop his own business model. He converts his definition into a business strategy based on this model, which will contain different elements: treasury plan, projected income statement, projected balance sheet, cash flow statement.

Business style: an integral feature in the process

In simple terms, a business model details how a company works to achieve its objectives. It explains how the company produces value (product), how it provides value to the consumer, and how it generates profits. To position oneself to add creativity to the business plan, it is important to take stock of the market. With this added advantage, the entrepreneur is able to anticipate the financial benefits and success of his or her business activities. The chances of success are lower if the business model is not clearly established, or if it is not sufficiently different from the idea of competitive companies. This does not mean that a business model should be set in stone. If the original concept does not seem to be or is no longer suitable for the market, an entrepreneurial approach will adapt to apply its business model. 

The usefulness of the business model

A well-established business model does not guarantee the success of a business project, but it does offer the businessperson all the possibilities to reach this goal. It clarifies everything about the business clear to the entrepreneur and its partners (influencers, investors, suppliers, etc.). The business segment and the target group for attendance are established, which prevents distribution. With regard to competitiveness, the creative aspect is highlighted by the expected viability. A business model also encourages the businessperson to present his business idea and project to banks and other investors in a synthetic and productive way, which will give a quick read, a global perspective to everyone involved and the added value proposed by the entrepreneur.