What Are the Major Components of a Business Model?
A business model provides the framework in which a business will operate. It represents how the company will make a profit by serving its customers. The business model should be flexible so that it allows for future growth and changes.
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Product Value
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This section describes how the product or service will meet the needs of the customer by addressing what problem it will fulfill, how it will solve the problem and how valuable it will be to potential consumers.
Target Market
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The target market is a description of the group of customers that the business plans on marketing to. This should include the demographics, age, income level, education level and other characteristics unique to this group.
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Value Chain
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The value chain of a typical business includes receiving and warehousing inventory, converting the inventory to a final product, order fulfillment, marketing activities, sales activities and service. Analyze each segment of your business's value chain to search for ways to reduce costs and create a competitive advantage.
Revenue Generation
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The revenue generation section is devoted to how the business plans on generating revenue. For instance, by product sales, website subscriptions and affiliate advertising.
Strategic Advantage
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This component is devoted to providing an overview on how you plan on differentiating the company or products from competitors. This could mean by offering lower prices, higher quality or targeting a specific niche. This strategy should be sustainable, so if you are not able to offer lower prices in the long run then consider switching to a different strategy.
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