A social entrepreneur on a phone call

A solid business model sets forth the plan for your company to turn a profit. It clearly shows how a business works: the product that you plan on selling, your key target markets, and it identifies all of your company expenses.

Your business model defines the problems that your company will solve, unique solutions to the problem that you can offer, and the financial strategies focused around your customer base.

Why is a Business Model Important?

The goal with your business model is to provide yourself and your investors some insight into the inner workings of your company. 

It also helps to show how you can be competitive. A strong business model can lead a company to financial success, and towards future expansion.

When discussing business models, Harvard Business Review states: 

“They are, at heart, stories—stories that explain how enterprises work. A good business model answers age-old questions: Who is the customer? And what does the customer value? It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?”

What is a Business Model Map?

According to Startup Wars, your business model needs to be clearly communicated, and you can do this by creating a business model map. 

A business model map provides a clear visual aid to show your plans. Generally speaking, it is a one page visual document that shows your business building blocks and profit model. It is a great starting point for showing your business plan to others.

Maps effectively explore through eye catching visualization, things like: your value, your sales, your purpose, your process, and your payout. You can create maps easily using design tools like canvas

Here is a sample image from medium:

What are the Elements of a Business Model?

There are several basic elements that must be included in your business model.

They are:

  • Customers – established customers and planned customer relationships
  • Value propositions – literal value perceived by the customer and why
  • Channels and pricing – distribution, cost structure pricing, and profitability
  • Revenue streams – current and future selling strategies
  • Key resources – scalable growth opportunities
  • Key activities – promotions and plans
  • Key partnerships – competition and partners
  • Cost structure – financial elements like expenses and required investments

Utilizing these above elements, you can create and show a primary strategy for generating a profit, including your unique ideas (such as a “razor and blades” business model) and exploring your future value.

Closing Thoughts

The goal of your business plan is to reflect what you hope your company hopes to accomplish. This will allow you to see your present and future challenges, and it will give you a clear objective to work towards. 

Business model maps are a great way to visually tell your business plan story, and Startup Wars can effectively guide you and your students in identifying how to create maps and models.

It’s important to constantly be reinventing your business model to have a winning business. Some business leaders update their plans seasonally. This can ensure that you are making solid progress to reach your goals. This also allows you to see if you and your investors, partners, and your customers are working in sync.

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How To Write A Company Description

What Is a Company Description? A company description is the “biography” or the “about me” component of your company, that directly follows your executive summary. 

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How to Create a Business Model

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Charlotte Kane
Charlotte Kane Undergraduate Student, The Ohio State University

Startup Wars allowed me to understand everything that goes into starting a business in 90 days.

Darshita Bajoria
Darshita Bajoria Undergraduate Student, The Ohio State University

Startup Wars is an interactive way to learn and hone entrepreneurial skills while being a no-risk outlet. Great tool for those pursuing entrepreneurship.