Business models are a bit of a buzzword these days. No, that doesn’t mean models who do business. Business models are a type of plan that can be important in developing business strategy. Most importantly, business models explain how a company plans to earn money. Although the basic concept is easy to understand, business models are a deep subject with lots of gray areas. There are basic types of business models and then there are a whole plethora of other subtypes of business models. What exactly a business model includes can vary quite a bit from one business to the next. At the least, business models include a basic overview of how a company intends to make money. That’s the most important thing that a business model does — it describes where the money is coming from. Some would distinguish it significantly from a financial model, but others would view them as being largely similar. There may not be a lot of consensus on what can and cannot be included in a business model, but that doesn’t mean there’s no point in learning more about the topic.
In this book, we’ll begin with examining exactly what a business model is and we will also take a look at the various definitions of the term. Next, we will move on to talk about defining your business model. In some cases, defining your business model is incredibly easy, but in other situations things might not be so clear. In chapter three, we’ll learn about the four most basic types of business models. Then, we’ll move on to discuss some of the myriad subtypes of business models that have sprung up. Finally, we’ll talk a bit about some of the general traits of successful business models.