What is a Business Model?

plan business plan

Many times here on Entrepreneurship in a Box I emphasize the meaning, importance, and usefulness of the business model. Yes, it is really important for the success of you as an entrepreneur and your small business. It is true because the business model will give you a simple but clear path you will need to walk.

In the past, there was not a systematic approach to build one that will enable you systematically to follow and improve it through practice. There are many scientific papers that talk about it, but still, there is no step-by-step solution when it comes to designing one, and use it for building and running your own business.

So, you read about modeling of your business, but you were alone and left on yourself how you will design one and use it in the future. Before several years this was changed. Now, we already have systemized approach that will be easy to use. Not only in designing, but also in the improvement of every important aspect of your small business design.

The best approach to build a business model in a very descriptive way where you will obtain the most important aspects of your business is described throughout the book titled Business Model Generation – A Handbook for Visionaries, Game Changers, and Challengers from Alexander Osterwalder and Yves Pigneur.

In the book, they define a business model as:

rationale of how an organization creates, delivers and captures value.

Here is a two minutes explanation video of the model that will help you to systemize your efforts when it comes to your small business. Everything important for your company will be designed and included in this business. What is more important, it will be a one-page sketch you will use to test and improve as you go.