#Strategy #Fundamentals

When you're building a business, there are a lot of moving parts — your product, your customers, your team, your systems. But beneath it all lies one simple question: How does your business actually make money?

That’s what a business model answers.

The business model is the engine that turns ideas into income. It's not just a slide on a pitch deck or a diagram in a textbook. It's the real-world logic behind how your company delivers value — and gets paid for it.

So, What Is a Business Model?

A business model is the structure of how your business creates, delivers, and captures value. In other words, a business model explains:

1. who your customers are,
2. what you offer them,
3. how you deliver that offer, and
4. how you earn revenue in return

It covers:

• What you’re selling (products/services)
• Who you’re selling to (target customers)
• How you’re delivering it (channels, operations)
• Why customers are paying you (value proposition)
• How you’re making money (pricing + revenue model)

"Think of your business model as the blueprint for how value flows—from you to your customer, and back."

Why Does It Matter?

Many small businesses run on instinct or hustle — which works for a while. But if you don’t understand your business model, you can’t optimize it.

A clear business model helps you:

• Spot inefficiencies
• Make better pricing decisions
• Plan for growth
• Communicate value to investors or partners
• Stay focused on the customer

 “If strategy is the map, your business model is the vehicle.”

The Building Blocks of a Business Model

There are many ways to break down a business model. A simple and widely-used framework is the Business Model Canvas, which includes:

1. Customer Segments – Who are you serving?
2. Value Proposition – What problem are you solving for them?
3. Channels – How do you reach and deliver value to your customers?
4. Customer Relationships – How do you attract, retain, and grow your customer base?
5. Revenue Streams – How does the business make money?
6. Key Activities – What do you do to deliver your value?
7. Key Resources – What assets or people do you need?
8. Key Partnerships – Who helps you deliver your offering?
9. Cost Structure – What are your main costs?

You don’t have to fill out a canvas to understand your business model — but thinking through these elements helps bring clarity to what’s really driving your business.

Examples of Common Business Models

Let’s break it down with some simple examples:

• Subscription Model – Customers pay regularly (e.g., Netflix, software tools)
• Freemium Model – Basic product is free, premium features cost money (e.g., Spotify, Canva)
• Marketplace Model – You connect buyers and sellers and take a cut (e.g., Airbnb, Etsy)
• Productized Services – You turn a service into a standardized package (e.g., fixed-price web design)
• Direct-to-Consumer (DTC) – You sell directly, often online, cutting out middlemen (e.g., Warby Parker)

The best model for your business depends on your audience, value proposition, and growth goals.

Tips for Reviewing or Revising Your Business Model

Whether you’re starting out or revisiting your setup, here are a few prompts:

• Are we charging the right way for what we offer?
• Are there recurring revenue opportunities?
• Are we solving a real, painful problem for our customers?
• Can we deliver our product/service more efficiently?
• Are we overly reliant on one type of customer or income stream?

Your business model is more than just how you earn revenue — it’s how your entire business creates value and stays sustainable. The more clearly you define it, the better equipped you’ll be to grow, adapt, and succeed in any environment.

"Strategy is your plan to win; your business model keeps the game running"