Business Model

/ˈbɪz.nɪs ˈmɑː.dəl/

There exist different ways to describe a business model.

A narrative of how a business works and makes money: it describes how it creates and delivers value to its customers at an appropriate cost and how it captures its share of value in turn.

In popular business parlance the term also often gets confused with the ‘revenue model’, a subelement of a business model, which describes a firm’s revenue and income streams. In innovators’ and entrepreneurs’ circles, the term ‘business model’ has become synonymous with the nine building blocks of Alexander Osterwalder’s Business Model Canvas, which is widely seen as a kind of industry-standard framework for describing its elements. However, countless other ‘models’ of business models also exist (as shown in the image above). If we were to explain it to our kids, we would probably just say that a business model is all about how we are going to ‘meet needs, profitably.’