What is a
Business Model?
A business model is a plan for how a company creates, delivers,
and captures value. It outlines the core components of a business
and how they work together to achieve success.
by Fatom Mouez
Key Components of a
Business Model
The Business Model Canvas is divided into nine building blocks,
each representing a critical element of a business model.
These building blocks are interconnected and influence each other,
highlighting how different aspects of a business work together to
create value.
Key Components of a Business Model
Value Proposition Customer Segments Channels
The value proposition is the benefit Your customer segments are the The channels are the ways that
that your product or service offers groups of people that you are you reach your customers and
to your customers. It addresses targeting with your product or deliver your value proposition.
their needs and pain points. A service. You need to understand These can include online channels
strong value proposition is clear, your target audience and their like websites and social media, as
concise, and compelling. needs to create a successful well as offline channels like retail
business. stores and partnerships.
Revenue Streams
1 Subscription 2 Transaction
Recurring payments for access to a service or product. Selling products or services on a one-time basis.
Examples include software subscriptions, gym Examples include online retailers, physical stores, and
memberships, and streaming services. service providers.
3 Advertising 4 Licensing
Charging companies to display ads on your website or Granting others the right to use your intellectual
platform. Examples include Google Ads, Facebook Ads, property, such as patents or trademarks. Examples
and display advertising. include software licenses, music licensing, and brand
licensing.
Cost Structure
Fixed Costs Costs that remain consistent
regardless of production or
sales volume, such as rent,
salaries, and insurance.
Variable Costs Costs that fluctuate based on
production or sales volume,
such as raw materials, labor,
and shipping.
Value Proposition
Problem Solving Innovation
Addresses a specific need or Offers a unique solution that
pain point for the customer. is not readily available
elsewhere.
Convenience Cost Savings
Provides a more convenient Offers a more affordable
way to access a product or option than competitors.
service.
Customer Segments
Mass Market
Targeting a large, undifferentiated market.
Niche Market
Targeting a smaller, more specialized group of customers.
Segmented Market
Targeting different segments within a broader market.
Multi-sided Market
Serving multiple customer segments with different value propositions.
Channels
Direct Sales Partnerships
Selling products or services Collaborating with other
directly to customers through your businesses to reach new
website, retail stores, or other customers or offer complementary
channels. products or services.
Marketing & Advertising Social Media
Using a variety of marketing Utilizing social media platforms to
channels to reach potential connect with customers, build
customers and create awareness relationships, and promote your
for your product or service. brand.
How to Develop a Successful Business Model
1 Market Research
Understand your target market, their needs, and their pain points. Analyze your competitors and their offerings.
2 Value Proposition
Develop a clear and compelling value proposition that resonates with your target customers.
3 Business Model Canvas
Use the Business Model Canvas to visualize and organize your business model. The canvas helps you identify key components and how they interact.
4 Testing and Iteration
Test your business model with real customers and gather feedback. Be prepared to adapt and refine your model based on the insights you gain.
5 Financial Projections
Create a financial model to project your revenue, costs, and profitability. This will help you determine if your business model is viable.
6 Scaling and Growth
Once you have a successful business model, focus on scaling and growing your business. This could involve expanding into new markets, developing new
products or services, or acquiring other companies.
