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What Is a Business Model?

Understanding business models, evaluating successful business models, how to create a business model.

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Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

business model office meaning

Investopedia / Laura Porter

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

  • A business model is a company's core strategy for profitably doing business.
  • Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
  • There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
  • The two levers of a business model are pricing and costs.
  • When evaluating a business model as an investor, consider whether the product being offered matches a true need in the market.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers a free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

  • Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
  • Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
  • Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
  • Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
  • Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
  • Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
  • Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

  • Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
  • Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
  • More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2023 ."

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What Is a Business Model?

  • Andrea Ovans

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A history, from Drucker to Christensen.

A look through HBR’s archives shows that business thinkers use the concept of a “business model” in many different ways, potentially skewing the definition. Many people believe Peter Drucker defined the term in a 1994 article as “assumptions about what a company gets paid for,” but that article never mentions the term business model. Instead, Drucker’s theory of the business was a set of assumptions about what a business will and won’t do, closer to Michael Porter’s definition of strategy. Businesses make assumptions about who their customers and competitors are, as well as about technology and their own strengths and weaknesses. Joan Magretta carries the idea of assumptions into her focus on business modeling, which encompasses the activities associated with both making and selling something. Alex Osterwalder also builds on Drucker’s concept of assumptions in his “business model canvas,” a way of organizing assumptions so that you can compare business models. Introducing a better business model into an existing market is the definition of a disruptive innovation, as written about by Clay Christensen. Rita McGrath offers that your business model is failing when innovations yield smaller and smaller improvements. You can innovate a new model by altering the mix of products and services, postponing decisions, changing the people who make the decisions, or changing incentives in the value chain. Finally, Mark Johnson provides a list of 19 types of business models and the organizations that use them.

In The New, New Thing , Michael Lewis refers to the phrase business model as “a term of art.” And like art itself, it’s one of those things many people feel they can recognize when they see it (especially a particularly clever or terrible one) but can’t quite define.

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  • AO Andrea Ovans is a former senior editor at Harvard Business Review.

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Understanding The Model Office Environment – UPDATED 2022

Understanding The Model Office Environment – UPDATED 2022

About the author

Jill Romford

Jill Romford

May 19,2022 - Last update: May 19,2022

In the wake of large-scale initiatives or programs, have you ever wondered why certain companies seem to easily shift to new methods of working while other organizations seem to struggle and find the experience disruptive? The Model Office may be the answer.  

Model Office

Model Office

A new suggested solution's people, process, and technology are all brought together in a Model Office . Using a simulated work environment, it repeatedly assesses the solution's utility and efficacy against real-world circumstances.

To ensure a smooth development process, relevant stakeholders are consulted at an early stage, allowing them to provide comments. It's also a terrific approach to get buy-in from everyone involved because you can show the solution's advantages early on.

There are assumptions that are found and tested so that customers may have the best possible experience. In this way, we can verify that the new solution meets all of our functional and quality requirements. Early information transfer to business teams reduces the learning curve for employees who will be working with the solution. Early identification of possible gaps in process, people, and technology promotes iterative design for the best method to address these gaps.

It promotes acceptance of the new solution and creates advocates for it, making it easier to implement.

Learn more:  Radar Model Ethics – What Is The Radar Model? UPDATED 2021

Learn more:  Iceberg Model of Culture – UPDATED 2022 – A Complete Guide

What is a Model Office?

What is a Model Office?

  When we think about testing, we usually think of testing the outputs of specific goods. We also consider testing the end-to-end system by combining these deliverables. One might easily overlook that these deliverables have a substantial influence on working methods, tools, and procedures employed within a company. This problem may be solved with the use of a Model Office.

As a functional prototype, the Model Office is the closest thing we have to a true representation of the actual production environment. We may test the suggested solution's utility and efficacy using the Model Office. When the project or program is finished, the systems and processes will be used by key Operations professionals who participated in the Model Office.

In order to get early feedback on the new system, the Model Office involves the key individuals who will be engaged in the transition early on, allowing for early feedback on the new system's design. As a result, it's a terrific method to get buy-in from everyone involved, as we can show them the advantages of the new system right away and incorporate their feedback into the solution as early as possible. The ability to predict problems and handle them before they exist is also a benefit.

👀 Read more: Preventing lack of communication in remote teams: Top technical solutions

Model Office Environment

Model Office Environment

​ Have you ever thought about why some businesses seem to easily adapt to new working methods when significant projects or programs are completed, while others struggle and find the experience quite disruptive? This is a common question. The Model Office may be the best place to look for the solution.

A new suggested solution's people, process, and technology are all brought together in a Model Office. Using a simulated work environment, it repeatedly assesses the solution's utility and efficacy against real-world circumstances.

Model Office phases

To ensure the Model Office is a success, it must be operated with very specific goals for the life of the project or program.

The Preparation Phase ​  

  During the beginning of the execution of the program, the Model Office Planning Phase takes place. The goal of this phase is to get the Model Office up and running so that it can run smoothly throughout the program. Typically, this stage includes the following steps:

  • 1)Determine who will be in charge of the Model Office.
  • 2)Model Office sessions should be scheduled in advance. The Model Office workshops must be aligned with key outcomes if you want to achieve this goal. Once a month, for example, R&D exposes new features to the public. If this is a recurring event, then a monthly meeting would be ideal.
  • 3)The Model Office has to have a working atmosphere. Make that a testing system exists and has enough data in it to accurately represent real-world use, if necessary.
  • 4)Prioritize a list of proposed changes and a list of the pros and cons of the new system compared to any existing systems that will be presented during the Model Office sessions.

Model Office in its early stages

The early stages of your project or program are unlikely to have any deliverables that can be evaluated. You can still operate the Model Office despite this. Business Scenario Walkthroughs can be conducted at this level using whatever is available (wireframes, initial notes on a new business process).

The goal of these BSW's is to walk through the business processes even when the software or hardware doesn't yet exist to test the intended business processes to ensure they are operational. Because no software or hardware exists players should be requested to role play, utilizing props or merely pieces of paper rather than genuine systems.

Mid-stage Model Office

​ This stage starts when the first genuine deliverable is available to test. At this level, in addition to completing Business Scenario Walkthroughs, we start carrying out Business Simulations. Real-world tasks are performed on the delivered systems in order to model as closely as possible the duties that will occur once the systems have been turned over to the Operations team. This is known as "Business Simulation." As much as feasible we are striving to recreate the full business process end-to-end.

Only a minority of the final systems are likely to be accessible at this point in the project. However, in addition to the systems delivered at this point, fresh wire-frames or designs will be ready for those components of systems being supplied next, and we should continue to undertake Business Scenario Walkthroughs on these things.

Late-stage of the Model Office

As soon as we no longer need to do Business Scenario Walkthroughs, we may move into the late-stage model office. The objective of this phase is twofold:

All systems provided must be approved as suitable for use in operations.

As a second goal, participants in the Model Office should go out into the company and teach and prepare colleagues to use the new systems that are being introduced.

Finally completing Operations and training plans at the end of the mid-stage Model Office is a smart idea. Final sign-off signifies that the systems being handed over to the Operations team have been thoroughly tested and that all of the appropriate personnel have been trained on how to utilize them.

Model Office Testing

Model Office Testing

​ In a pre-production test environment, Model Office Testing (MOT) is used to imitate real-world application usage as closely as feasible. A sequence of timed, realistic situations puts users and administrators of both front and back-office systems to the test.

Using MOT, organizations may smoothly transition large-scale change programs and demonstrate that a new system is feasible with each business department understanding their operational responsibilities in advance of a production setting. Data migration and large-scale transformation initiatives benefit greatly from the usage of MOT.

Model Office Testing Vs UAT

Model Office Testing Vs UAT

  When a software solution is ready for use, the company owners or clients of the product will do user acceptance testing (UAT) to make sure that it meets their needs. Several recurring challenges may arise in the later phases, making the assistance of seasoned professionals important.

Customers and solution providers might get into a lot of arguments when the requirements aren't well thought out. Due to their full-time jobs, many business teams are unable to devote sufficient time to UAT due to their lack of expertise in software testing. Testing data and environments might be a challenge for acceptance test resources.

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  • What is a business model? Types and examples

business model office meaning

Few things are as important to a company as its business model. Your business model serves as a template and guide for just about every part of your business. It's essential to not only create a business model that reflects how you will make money, but also adapt it over time as the needs of your market change.

How does a business model work? What are some common types of business models? This guide will introduce you to business models and provide a helpful guide so you can create your own.

Business model definition

A business model explains an organization's core strategy for running a profitable operation. It describes what will be sold, how revenue will be generated and how the customers will pay.

Business models capture the rationale and the plan for creating and delivering value. Business models also reflect the company's unique value proposition, which is the essential way in which the company meets the market’s needs.

Key components of a business model

While every company's business model will look different, a successful business model will contain the following key components:

  • A description of the products or services (including the cost of manufacturing)
  • A strategy for distributing that product (marketing, delivery, merchandising)
  • How the customer pays (pricing structure, payment methods)

Your business model integrates all of the components of your business and organizes them into a cohesive structure.

Business model vs. business plan

The term "business model" is sometimes used synonymously with "business plan." However, the two documents serve slightly different purposes.

A business model is a holistic portrait of how the company operates. Think of a business model as an aerial photograph of your organization, giving you a comprehensive view of your current and future operations.

A business plan refers to the specific strategy for accomplishing a particular goal. A business plan is more like the turn-by-turn directions you receive on your GPS device.

The business model and business plan must be in alignment, but the business model explains how you will succeed while the business plan shows how you’ll get there.

Why choosing the right business model is important

Writing for the Harvard Business Review, Joan Magretta explains that business models matter because they tell a specific story about your company. Your company's "story" explains how all the pieces come together and connects this narrative to your raw financial numbers.

Business modeling is, therefore, important for at least three groups of people:

1. Your company's employees

Your business model determines the scope and strategy of your business processes. It's important for you and your employees to understand your existing business model, as well as how it translates into your day-to-day activities.

But more than that, a successful business model will also provide a vision for the future, which empowers established businesses to improve their cash flow and make expansion plans.

2. Your target customer groups

Successful business models also create value for your business and help you communicate this value to your target customer segments. While your key customers will likely never read your business model, it should help you strategize ways to communicate your unique value proposition to your customers.

3. Investors

Investors will also need to understand your business model. Ideally, your business model describes a clear strategy for meeting a market need, establishing your goals, and setting a long-term vision. A clear business model will help you gain the confidence of investors and secure funding.

What are common types of business models?

There are many different types of business models, with new models emerging as entire industries adapt and grow. The following list is not exhaustive but represents some of the more common business models in use today, along with some business model examples to illustrate how they work in the real world:

Manufacturing business model

A manufacturing business model focuses on the production of goods by sourcing raw materials and using a standardized production process. Manufacturers typically sell their finished products to retailers and other distributors, though some manufacturers also sell directly to consumers.

Examples include Ford Motor Company, Frito-Lay, and Whirlpool.

Retail business model

Retail is likely the most familiar business model for most American consumers. A retailer purchases finished goods from a manufacturer or distributor, then sells these products directly to customers.

This setup usually takes place inside brick-and-mortar stores, though many companies are adapting their business framework to offer online options.

Some of the most common retail business model examples include stores such as Target or Wal-Mart.

Franchise business model

A franchise business model might overlap with other business models, though the key difference is how the business is structured. In the franchise business model, a franchisee purchases the rights to a business from the franchisor or parent company.

The franchisee then operates under the established brand, which gives them more stability than if they'd launched their own business from scratch.

Common franchise business model examples include McDonald's, Ace Hardware, and Planet Fitness.

eCommerce business model

An eCommerce business model functions similarly to a retailer, though it relies on online platforms to advertise products and conduct transactions. eCommerce companies also utilize delivery companies to transport products to their customers.

The most common eCommerce business model example is Amazon.com, though retailers like Target and Wal-Mart have also launched eCommerce segments.

Freemium business model

The freemium business model is popular among technology companies. Freemium business models blend free and paid features on the same platform. The idea is simple: customers who enjoy the free service can be encouraged to sign up and pay for access to premium features.

Flickr, the online photo app, is a good example freemium business model, though many companies offer introductory services before promoting their premium features.

Advertising business model

Advertising companies are third-party organizations that help connect other businesses to their core customer segments. Essentially, the business’s users and customers are two different groups. Strategies can vary widely, especially when digital companies offer print ads, internet marketing, and content for social media platforms to help their clients expand their advertising reach.

Facebook, Instagram, and TikTok all fit into this business model.

Affiliate business model

An affiliate business model is similar to an advertising model, though an affiliate business strategy is more subtle. Instead of clear, overt advertisements, an affiliate business will embed links into other content to drive sales.

For instance, an affiliate business might link to Hulu when writing a review of popular streaming platforms.

How to create a new business model

Creating a new business model is important when launching a startup, but many companies create entirely new business models to adapt as they grow. Here's how to create a new business model that works for your unique industry:

1. Define the problem

First, determine the problem or need that your company can uniquely address. Identifying the problem can ensure that there is a demand out there for your products or services.

Every business idea should start with the question, "Why?" Why does your business exist? What need does it fill? Why will customers want to purchase your product? Keeping this understanding center of mind will help you stay focused throughout the process.

2. Identify your target market

A good business model will focus on specific customer segments. Who are you trying to reach? This insight will help you refine your marketing efforts and product features based on the demographic groups you seek to build relationships with.

3. List your products or services

The next step is crucial. You want to list and describe your products and services and explain clearly how these satisfy the need you defined in step 1. It's important to ensure that your team’s expertise matches the products and services that solve these needs.

For example, if you have a background in personal finance, you might consider how a new accounting software system might assist certain types of established businesses. This stage tends to be iterative, meaning you'll come back and redefine your product offerings based on feedback and adapt them to new market needs.

4. Determine your business needs

Once you zero in on your products, you'll want to determine what you'll need to connect them to your customer base. This calculation can include costs incurred from

manufacturing/product development, as well as the need for personnel, marketing, and other expenses.

5. Build a network of key partners

Depending on the nature of your business, you may want to network with other professionals. For example, if you're relying on a retail business model, you may want to start networking with distributors, manufacturers, and other industry players.

You may want to consider if there's an eCommerce platform you'd like to use in conjunction with retail sales or if there are business tools that can help you run your business more efficiently.

6. Create a financial strategy

Successful businesses use their business model as a financial model to calculate their overall profitability. You'll need to determine how you intend to make money, including things like cost structure, profit formula, pricing, and other core considerations.

A successful business model will ensure that you satisfy the need you identified in step 1 while generating profits that help maintain and grow your operations.

7. Test and refine your model

The most successful companies will test their existing business models to determine how well they're performing. This work might reflect things like customer feedback, financial performance, or the need to adapt to new market conditions.

Here's a tip: conduct a "soft launch" of your business for a select group of customers. Offer discounts in exchange for honest feedback. Incorporate their feedback into your business model design, then proceed to a full-scale launch once you've refined your model.

How to improve your business model

If you've had the same business model for years, it may be time for a review. Improving your current business model can help you adapt to new technology, changing costs, and new customer demands. For example, if an advertising firm's business model doesn't take into account new social media platforms, the company may miss out on opportunities to connect with its audience.

Here are some strategies for business model innovation and improvement:

Listen to customer feedback

Turn your existing customers into coaches. Product and company reviews can be a gold mine for information about current client needs and how well your company meets those needs. You may discover new ways to innovate and adapt.

Lower your overhead

If your company struggles to make a profit, you may want to rethink some of your overhead costs. For example, automating some of your core business processes through technology can help your employees work more efficiently, reducing the number of hours you spend on back-office tasks.

Introduce a new product or service

When your company has been offering the same products and services for years, it might be time to shake things up. Introduce a new product or service to demonstrate your value to your customers, or use this as an opportunity to gain a whole new set of customers.

Reconsider your revenue model

Your current revenue model may be based on an outdated price structure. It may be that the cost of manufacturing or rising inflation warrants an increase in the price of your core products and services.

If you operate a subscription-based service (or a freemium model), you may offer discounts to existing customers while raising the price of a product or service for new customers.

Change your marketing message

Your marketing campaign is how you tell your story. If your story changes, so should your marketing message. Refine your marketing strategy by adapting to new digital channels, or consider developing content that directly impacts your target audience.

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What Is a Business Model?

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A business model is a plan describing how a business will make money. It is an outline that explains the company’s revenue and cost structure, and how it expects to turn a profit—or at least sustain itself as a going concern.

Key Takeaways

  • A business model is an outline of how your business will generate a profit. The plan includes important information like target market, market need, and details on business expenses.
  • There are lots of types of business models, and models can be combined as well. You’re probably familiar with some of the more common ones like manufacturer, distributor, retailer, and franchise. 
  • When creating a business model, you should be clear about who your target customer is and how you’ll reach them. You’ll also want to know specifics about what you’re selling, and what sets you apart from your competition.

Definition and Examples of a Business Model

A business model is an outline that breaks down the ways that a company makes its profit. It identifies the target market, the market’s need, and how the business will serve its customers. The plan also includes the costs incurred from expenses like producing and marketing the product. There are multiple types of business models, each tailored to fit the unique needs of various businesses.

An example of a business model is one in which the concepts are split into two categories—business ideas and business resources. Under the business idea category lies products and services, target audience, competition, differentiation, advertising, and sales. Business resources, meanwhile, are what’s needed to make the idea work and can be divided into ownership, staffing, facilities, financial model, funding, and balance sheet.

A business is unlikely to be successful unless all facets of the business model provided in the example above allow it to be competitive in its marketplace. 

Types of Business Models

Here are a few commonly used business models that you’re probably familiar with. 

Manufacturer

This type of business model is when a company makes a product from raw materials or assembles prefabricated items to create new merchandise. The business can sell the items directly to consumers itself, which is a business-to-consumer (B2C) model, or it can use a business-to-business (B2B) model in which it sells to other businesses. 

An example of a B2C manufacturer would be a shoe company that sells its products directly to customers. A B2B manufacturer would be a business that sews dresses and only sells its products wholesale to other businesses, which then sell the dresses to the general public. 

Distributor

The distributor business model is when a company purchases inventory from a manufacturer and sells it to either a retailer or directly to the public. A common challenge that distributors face is picking the right price point that allows them to make a profit on the sale, but still offers competitive pricing. An example of a distributor would be a company that buys soft drinks from a manufacturer and sells those beverages to restaurants at a higher price.

There are many different types of business models and multiple models can be combined to create a new approach.

Retail business models are those used by companies that buy inventory from a manufacturer or distributor and sell those products to the public. Retailers can range from a single mom-and-pop shop to huge chain stores—they often have brick-and-mortar locations, an online store, or both. 

An example of a retailer would be a hat store that buys the products from a distributor. A limited selection of the hat store’s products is available at its brick-and-mortar storefront, but its full inventory can be purchased online. 

The franchise business model can be applied to other business models, like the ones we just discussed. The franchisee takes on the business model of the franchise and with it, the latter’s pre-established processes and protocols. Examples of popular franchises include McDonald’s, KFC, Burger King, and 7-Eleven.

When developing your business model, identify your target customer and how you’ll reach them. You’ll also want to familiarize yourself with what you’re selling (costs, margins, features, benefits, etc.) and what your competitive advantage is .

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What is a business model? (Plus, how to define yours)

Last updated: September 2023

Business models distill the potential of a business down to its essence. Companies across every industry and at all stages of maturity need business models. Some rely on lengthy processes to build complicated models, while others move quickly to articulate the basics and take action. Either way, having the discipline to work through this planning tool forces internal alignment.

You must build something that real people with real needs will find value in and pay for — otherwise you do not have a lasting business. Brian de Haaff Aha! co-founder and CEO

For established enterprises, a business model is often a living document that is reviewed and adapted over the years. For companies launching products and services or entering new markets, a business model helps ensure that decisions are tied back to the overall business strategy . And for early-stage startups, a simple one-page business model enables founders to explore the mechanics of a business and how you anticipate it will be successful.

Defining and documenting a business model is an essential exercise. Whether you are starting a new venture, expanding into a new market, or shifting your go-to-market strategy , you can use a business model to capture fundamental assumptions about the opportunity ahead and tactics to addressing challenges.

Unfortunately, many companies fail to integrate their business model into all aspects of the organization — from recruiting talent to motivating employees. Part of the issue is accessibility. That is why forward-thinking companies choose tools that make it possible to quickly build and share your business model. The Aha! business model canvas, for example, gives you a collaborative space to explore concepts and connect your model to everyday work.

Build a business model in Aha! Notebooks. Sign up for a free trial .

Business model large

Start using this template now

You can access the business model template shown above using Aha! Notebooks . You can also try a similar template that is built into the product strategy section of Aha! Roadmaps . Or you can download these free Excel and PowerPoint business model templates .

This guide covers the basics of business models, from core concepts to best practices. Jump ahead to any section:

Definition of a business model

Business model components

Business model vs. business plan.

Different types of business models

Pros and cons of different models

Analyzing competitor business models

Business model templates

How to build a business model

What is the definition of a business model?

A business model defines how a company will create, deliver, and capture value.

A business model answers questions that are crucial for strategic decision-making and business operations. Creating a business model for your startup or product means identifying the problem you are going to solve, the market that you will serve, the level of investment required, what products you will offer, and how you will generate revenue. Pricing and costs are the two levers that affect profitability within a given business model.

A business model is part of your overall business strategy. Some business models extend beyond economic context and include value exchange in social or cultural terms — such as the intangible impact the company will have on a community or industry. The process of constructing and changing a business model is often referred to as “business model innovation.”

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This is why innovation programs fail

There are three main areas of focus in a business model: value proposition, value delivery, and value capture. The proposition outlines who your customers are and what you will offer. The delivery details how you will organize the business to deliver on the proposition. And the capture is a hypothesis for how the proposition and delivery will align to return value back to the business.

business model office meaning

Below are some components to include when you create a business model:

Vision and mission : Overview of what you want to achieve and how you will do it.

Objectives: High-level goals that will support your vision and mission, along with how you will measure success.

Customer targets and challenges: Description of target customers (written as archetypes or personas ) and their pain points.

Solution: How your offering will solve customer pain points.

Differentiators: Characteristics that differentiate your product or service.

Pricing: What your solution will cost and how it will be sold.

Positioning and messaging: How you will communicate the value of your offering to customers.

Go-to-market: Proposed approach for launching new offerings and services.

Investment: Resources required to introduce your offering.

Growth opportunity: Ways that you will grow the business over time.

Positioning vs. messaging

  • What is value-based product development?
  • What is a go-to-market roadmap?

Business models and business plans are both elements of your overall business strategy. But there are key differences between a business model and a business plan.

A business model is seen as foundational and will not usually be reworked in reaction to shorter-term shifts — whereas a business plan is more likely to be updated based on changes in the economy or market.

Related: Business plan templates

What is the benefit of building a business model?

Innovation is about more than the products or technologies that you build. The way that you operate your business is a critical factor in how you stand apart in a crowded marketplace. The benefit of building a business model is that you can use the exercise to expose and exploit what makes your company unique — why choosing your offering is better for customers than any alternatives and how you will grow the business over time.

Many people associate business models with lengthy documents that describe a company’s problem, opportunity, and solution in the context of a two-to-five-year forecast. But business models do not need to be a long treatise.

A one-pager is just as effective for distilling and communicating the most important elements of your business strategy. The concise format is useful for sharing with broader teams so that everyone understands the high-level approach. Done right, a business model can become a touchstone for the team by outlining core differentiators to promote and defend in the market.

Related: A more comprehensive business model builder

What are the different types of business models?

There are many different types of business models. Below are some of the most common business models with example companies for reference (take note of the companies that appear in several categories):

Did you keep track of the companies that appeared in several of the business model examples? Good. You now have a grasp of how complex enterprises with vast portfolios of products and services often employ many business models within the same organization.

Consider a company like Apple, which manufactures and sells hardware products as well as offering cloud-storage, streaming subscriptions, and a marketplace for other applications. Amazon, whose offerings range from retail (with the acquisition of Whole Foods) to marketplace (Amazon.com) to subscription services (Amazon Prime and Amazon Music) to affiliate, also features in different categories. Each division or vertical will have a distinct business model that reflects the nuances of how it operates while also supporting the corporate business model.

Related: The product manager vs. the portfolio product manager

Pros and cons of different business models

Some types of business models work better for certain industries than others. For example, software-as-a-service (SaaS) companies often rely on freemium business models. This makes it easy for potential users to experience the value of the product and incentivizes paid conversions via access to additional features.

Many social media platforms make money through advertising. By providing full access to the platform for free, these companies attract more users. In turn, this creates a more valuable audience for advertisers and increases revenue for the business.

How do you analyze a competitor’s business model?

Business analysts and investors will often evaluate a company’s business model as part of due diligence for funding or market research . You can apply the same tactics to analyze a competitor’s business model — with a few caveats.

Public companies are subject to reporting requirements. This means that the business must regularly disclose financial and performance data to the public — these disclosures occur quarterly and annually. The data includes everything from gross revenue, operating costs and losses, cash flow and reserves, and leadership discussions of business results. Designed to protect and inform investors, these reports can provide you with the information you need to understand the basics of the company’s business model and how well it is performing against the model.

Private companies are not required to reveal business data publicly. Investors or partners may be privy to certain aspects of the company’s performance, but it can be difficult to understand exactly what is happening from the outside. Some analysts or business websites will attempt to “size” a business or market by looking at a variety of factors — including the number of employees, volume of search terms related to the core offering, estimated customer base, pricing structure, partnerships, advertising spend, and media coverage.

Once you have identified relevant alternatives to your offering and gathered all of the information that you can find, a good way to analyze a competitor’s business model is to conduct a competitive analysis.

Related: Competitor analysis templates

You do not want to spend too much time thinking about other companies when you could be focused on your own. A simple SWOT analysis is a helpful way to map out strengths, weaknesses, opportunities, and threats that were revealed during your research.

Below are three types of business model example layouts you can use to succinctly and objectively assess what is possible and what challenges could arise for your business.

Aha! Notebooks business model template

Articulate the foundation of your product or service in a flexible whiteboard-style format with the Aha! Notebooks business model template.

The focus is on capturing key elements like why the solution is worth buying (messaging), pain points of the buyers (customer challenges), and ways you will grow the business (growth opportunities).

Aha! Roadmaps business model canvas

The Aha! Roadmaps business model is the most complete template in this guide — based on our team's decades of experience building breakthrough products and software companies.

You can drag and drop each component within a custom layout. And once you have completed your business model, it is easy to share with your team via a live webpage or exported PDF. This business model builder is included with the free 30-day trial of Aha! Roadmaps.

Business model in Aha!

Aha! Roadmaps lean canvas

Similar to the business model canvas, this model in Aha! Roadmaps takes a problem-focused approach to create an actionable business plan. It is most commonly used by startups and entrepreneurs to document business assumptions. The focus is on quickly creating a concise and effective single-page business model. It documents nine elements, including customer segments, channels used to reach customers, and the ways you plan to make money.

Lean canvas example in Aha!

How to build a business model in 10 steps

Crafting a business model is part of establishing a meaningful business strategy. But a business model is essentially a hypothesis — you need to test yours to prove that it will actually provide value. Many startup founders especially underestimate the costs and timeline for reaching profitability.

1. Identify your target market Who will benefit from your offering? What characteristics do prospective customers share?

2. Define the problem you will solve What is the problem that you are solving? What are the pain points of your potential customers?

3. Detail your unique selling proposition (USP) What will you build and how will you support it?

4. Create a pricing strategy How much will you charge for your offering? What factors will go into choosing your price point?

5. Develop a marketing approach How will you market your product and reach target customers? What channels will you choose for go-to-market?

6. Establish operational practices How will you streamline processes and procedures to reduce overhead and fixed costs?

7. Capture path to profitability How will your business generate revenue? What level of investment will be required and what fixed costs exist?

8. Anticipate challenges Who are your competitors? What opportunities and threats exist for your business?

9. Validate your business model Was your hypothesis correct? Does your business model solve a problem the way you thought it would?

10. Update to reflect learnings What can you do differently in the future to ensure greater success?

Your business model will ultimately guide your organization and influence your product roadmap. Give it the deep thought it deserves — questioning your core assumptions about how you will generate value and how your team will work towards achieving shared goals.

Deliver more with Aha! — try it free for 30 days .

Additional strategy resources

Using Aha! software

Aha! Roadmaps — Strategy overview

Aha! Roadmaps — Strategic models

Strategic blogs and guides

  • How to price your product
  • How to position your product

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8 Types of Business Models & the Value They Deliver

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  • 26 May 2016

You want to start a company but aren’t sure about a viable business model. How might you create something that people are willing to pay for and could earn you a profit?

Before diving into potential strategies, it’s important to understand what a business is and does. At its heart, a business generates value for its customers. A business model is a specific method used to create and deliver this value.

What Is Value in Business?

A successful business creates something of value . The world is filled with opportunities to fulfill people’s wants and needs, and your job as an entrepreneur is to find a way to capitalize on these opportunities.

A viable business model is one that allows a business to charge a price for the value it’s creating, such that the business brings in enough money to make it worthwhile and continue operating over time. Whatever the business is offering must also satisfy the customer’s needs and quality expectations.

It’s important to note that value is subjective. What’s valuable to one person may not be to another. Moreover, the concept of value excludes any moral judgments about the intrinsic worth of an offering. For example, while most would agree that human life is more valuable than sports, some professional athletes make far more money than the average brain surgeon.

Nonetheless, the concept of value provides a useful bedrock on which to begin building your business model. In particular, consider what forms of value people are willing to pay for. Here are eight potential business models and the forms of value they deliver—as well as the pros and cons of each—to help you get started.

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8 Types of Business Models to Explore

A product is a tangible item of value. To run a successful product-focused business, try to produce the item for as low a cost as possible while maintaining a reasonable level of quality. Once the item is produced, your objective should be to sell as many units as you can for as high a price as people are willing to pay to maximize profit.

Products are all around us. From laptops to books to HBS Online courses (products don’t have to be physical), products are a classic form of value with high upside if you can get them right.

  • Pros: Many products can be easily duplicated. Thus, firms can achieve economies of scale after bearing some upfront costs of production.
  • Cons: Physical products need to be stored as inventory, which can increase costs. They can also be damaged or lost more easily than, say, a service.

Related: How to Create an Effective Value Proposition

A service involves offering assistance to someone else for a fee. To make money from your service, provide a skill to others that they either can’t or don’t want to do themselves. If possible, repeatedly provide this benefit to them at a high quality.

Like products, services are in abundance, especially in the knowledge economy. From hairdressers to construction workers to consultants to teachers, people with lucrative skills can earn good money for their time.

  • Pros: If you have a skill in high demand or a skill that very few others have, you can charge a fair price for your time and stand out in your field.
  • Cons: If you don’t charge enough for your services, or many people have your skill, your business may not be as lucrative.

3. Shared Assets

A shared asset is a resource that many people can use. Such resources allow the owner to create or purchase the item once and then charge customers for its use. To run a profitable business around shared assets, you need to balance the tradeoff of serving as many customers as you can without affecting the overall quality of the experience.

For instance, think of a fitness center. A gym typically buys treadmills, ellipticals, free weights, bikes, and other equipment and charges customers monthly membership fees for access to these shared assets. The key is to charge customers enough to maintain and, if needed, replace their assets over time. Finding the right range of customers is the key to making a shared asset model work.

  • Pros: This model provides people access to a lot of assets they wouldn’t otherwise have access to. In addition, many people are willing to pay a lot for access to trendy social spaces.
  • Cons: Because they don’t own the assets, customers have little incentive to treat your resources well. Make sure you have enough in your budget for quick fixes, if necessary.

4. Subscription

A subscription is a type of program in which a user pays a recurring fee for access to certain specified benefits. These benefits often include the recurring provision of products or services. Unlike a shared asset, however, your experience with the product or service isn’t affected by others.

To have a successful subscription-based offering, build a subscriber base by providing reliable value over time while attracting new customers.

The number of subscription services has exploded in recent years. From magazines to streaming services to grocery and wine delivery subscriptions, businesses are turning to the subscription-based model, often with great success.

  • Pros: This model provides certainty in the form of predictable revenue streams, making financial forecasting a bit easier. It also benefits from a loyal customer base and customer inertia (for instance, customers may forget to cancel their subscription).
  • Cons: To run this model, your business operations must be strong. If you can’t deliver value consistently over time, you may want to consider a different business model.

5. Lease/Rental

A lease involves obtaining an asset and renting it out for an agreed-upon amount of time in exchange for a fee. You can lease virtually anything, but it’s in your best interest to rent assets that are durable enough to be returned in good condition. This ensures you can lease the good multiple times and, perhaps, eventually sell it.

To profit from leases, the key is to ensure that the revenue you get from leasing the asset before it loses value is greater than the purchase price. This requires you to price the rental of the item strategically and potentially not lease to those who may not return it in good condition. This is why many rentals of high-value items require references, credit checks, or other background information that can predict how someone may return the leased item.

  • Pros: You don’t have to have a novel idea to make money using a lease business model. You can purchase assets and rent them to others who wouldn’t buy them for full value and earn a premium.
  • Cons: You need to protect yourself from unexpected damage to your assets. One way to do so is through insurance.

6. Insurance

Insurance entails the transfer of risk from a customer to a seller of an insurance policy. In exchange for the insurance company (the seller of the policy) taking on the risk of a specified event occurring, they receive periodic payments ("premiums" in insurance lingo) from the policyholder. If the specified event doesn’t happen, the insurance company keeps the money, but if it does, the company has to pay the policyholder.

In a sense, insurance is the sale of safety—it provides value by protecting people from unlikely, but catastrophic, risks. Policyholders can take insurance out on almost anything: life, health, house, car, boat, and more. To run a successful insurance company, you have to accurately estimate the likelihood of bad events occurring and charge higher premiums than the claims you pay out to your customers.

  • Pros: If you calculate risk accurately, you’re guaranteed to make money using the insurance business model.
  • Cons: It can be difficult to accurately calculate the likelihood of specific events occurring. Insurance only works because it spreads risk over large numbers of policyholders. Insurance companies can fail if a large portion of policyholders is impacted by a widespread, negative event they didn’t see coming (for example, the Global financial crisis in 2007 and 2008).

Related: 5 Steps to Validate Your Business Idea

7. Reselling

Reselling is the purchasing of an asset from one seller and the subsequent sale of that asset to an end buyer at a premium price. Reselling is the process through which most major retailers purchase the products they then sell to buyers. For example, think of farmers supplying fruits and vegetables to a grocery store or manufacturers selling goods to a hardware store.

Companies make money through resale by purchasing large quantities of items (usually at a bulk discount) from wholesalers and selling single items for a higher price to individuals. This price raise is called a markup.

  • Pros: Markups can often be high for retail sales, enabling you to earn a profit on the items you resell. For example, a bottle of water might cost 10 cents to produce, whereas a customer may be willing to pay $1.50 or more for the same bottle.
  • Cons: You need to be able to gain access to quality products at low costs for the reselling business model to work. You’ll also need the physical space to store inventory to manage sales cycles.

8. Agency/Promotion

Agents create value by marketing an asset, which they don’t own, to an interested buyer. They then earn a fee or a commission for bringing the buyer and seller together. Thus, instead of using their own assets to create value, they team up with others to help promote them to the world.

Running a successful agency requires good connections, excellent negotiation skills , and a willingness to work with a diverse set of individuals. One example is a sports agent who promotes players to teams and negotiates on their behalf to get the best deal. In return, they typically receive compensation equal to a certain percentage of the contract.

  • Pros: You can highly profit from expertise and connections in your industry, be it publishing, acting, advertising, or something else.
  • Cons: You only get paid if you seal the deal, so you have to be able to live with some uncertainty.

So You Want to Be an Entrepreneur: How to Get Started | Access Your Free E-Book | Download Now

Setting Your Business Up for Success

These eight types of business models each have pros and cons and deliver value in their own ways. If you’re looking to start a business and need a place to start, one of these could be the best fit for your venture and entrepreneurial skill set .

Interested in honing your entrepreneurial skills? Explore our four-week online course Entrepreneurship Essentials and our other entrepreneurship and innovation courses to learn the language of the business world.

This post was updated on February 19, 2021, and is a compilation of two posts, previously published on May 26, 2016, and June 2, 2016.

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By Denis G.

The Model Office

In this article:

Have you ever wondered why some organizations appear to transition to new ways of working after the completion of large projects or programs seamlessly, whilst others struggle and find the experience very disruptive? The answer may well be The Model Office.

When we think about testing we naturally think of testing the deliverables produced by individual products. We also think of testing the combination of these deliverables to test the end-to-end system. It is easy to forget that these deliverables will have a significant impact on ways of working, tools, and processes used within the organization. A Model Office can be used to address this.

The Model Office  is a working prototype of operations which reflects the production environment as closely as is practically possible. The Model Office allows us to validate the usefulness and effectiveness of the proposed solution. Participating in the Model Office are key Operations personnel who will ultimately be responsible for using the systems and processes once the execution of the project or program is complete.

The Model Office engages the key personnel involved in the transition at an early stage allowing early feedback on the new system as it is developed. It is also a great way to obtain buy-in from all necessary parties, as it allows us to demonstrate the benefits of the new system to them early on, and enables us to take onboard their feedback early, and thus adjust the solution to meet their needs. In addition it can also allow us to anticipate issues and address them before they arise.

There are a number of benefits to a Model Office including:

  • It allows knowledge to be transferred to the operational teams at an early stage as the systems and processes develop, reducing the severity of the learning curve.
  • It gives operational and project team members the opportunity to use the system and processes as soon as possible, allowing us to identify gaps early
  • It encourages buy-in
  • It provides an environment allowing you to demonstrate the solution to a wider audience
  • After a number of Model Office sessions, as the system approaches its implementation and therefore go-live date, the members of the Model Office can champion educating the members respective teams on how to use the new systems, making the transition to the new systems much smoother.

The Model Office Process

In order for the Model Office to be a success it is essential to run it with very clear objectives throughout the duration of the project or program. Here is the process which I use:

model office process

Phase 1: The Planning Phase

The Model Office Planning Phase occurs at the start of program execution. The objective of this phase is to set-up everything necessary to facilitate the Model Office running throughout the duration of the program. This stage will typically contain the following steps:

  • Identify the key participants in the Model Office
  • Plan when Model Office sessions will take place. To do this you will need to align the Model Office workshops with key deliverables. If R&D are providing regular releases (for example monthly) then it will make sense to hold the sessions just after these releases are made.
  • Ensure an environment is available for use in the Model Office. This refers to ensuring a testing system exists and has enough data in it if necessary to reflect real world use.
  • Plan the desired outputs from the Model Office workshops, such as a prioritized list of recommended improvements, and a list of positives and negatives of the new system compared with any existing systems.

Phase 2: Early Stage Model Office

In the early stages of your project or program it is unlikely much will exist by way to deliverables which can be tested. This does not mean you shouldn’t run the Model Office. Using whatever does exist at this stage (wire-frames, rough notes on new business process), Business Scenario Walkthroughs can be performed.

The purpose of these BSW’s is to walkthrough the business processes even though the software or hardware doesn’t yet exist to test the planned business processes to ensure they are workable. Because no software or hardware exists participants should be asked to role play, using props or just pieces of paper rather than real systems.

Phase 3: Mid Stage Model Office

This stage starts when the first real deliverable is available to test. In this stage, in addition to performing Business Scenario Walkthroughs we start carrying out Business Simulations. Business Simulations involve using the delivered systems to perform real world tasks to simulate as much as possible the tasks which will happen once the systems are handed over to the Operations team. As much as possible we are trying to simulate the entire business process end-to-end.

At this mid-stage it is probable that only a fraction of the final systems will be available. However, in addition to the systems delivered at this stage, new wire-frames or designs will be available for those parts of systems being delivered next, and we should continue to perform Business Scenario Walkthroughs on these items.

Phase 4: Late Stage Model Office

The late stage model office starts when we no longer need to perform Business Scenario Walkthroughs and can solely rely on performing Business Simulations. The purpose of this phase is twofold:

  • To sign-off all systems delivered as acceptable for Operations
  • For the participants of the Model Office to go out into the organization and train and prepare their colleagues to use the new systems which are coming.

It is a good idea to prepare the final sign-off criteria for Operations, and training plans towards the end of the mid-stage Model Office. Final sign-off means that everyone is confident that the systems being transitioned to the Operations team are fit for purpose and the necessary people know how to use them.

The Model Office is a great way to ensure that systems developed during the project or program transition to operational use smoothly. It is also a great way to gain buy in from those people who will ultimately use the system, as it gets them involved early, adapts the systems based on their feedback, and ultimately gets them to sign-off the systems and processes as fit for purpose.

Cite this article

Minute Tools Content Team, The Model Office, Minute Tools, Aug, 2009 https://expertprogrammanagement.com/2009/08/the-model-office/

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Originally hailing from Dublin, Denis has always been interested in all things business and started EPM in 2009. Before EPM, Denis held a leadership position at Nokia, owned a sports statistics business, and was a member of the PMI's (Project Management Institute’s) Global Executive Council for two years. Denis now spends his days helping others understand complex business topics.

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The virtues of a model office.

This post discusses how a ‘Model Office’ approach to requirements capture, design, build and test can play a significant role in improving the success of an Electronic Document and Records Management System (EDRMS) implementation. As always, I would very much welcome any comments, observations, feedback.

What’s up Doc?

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The problem with the Waterfall approach stems at its source, the requirements capture. For many organisations, a large proportion of its user base will have little or no previous experience of using an EDRMS solution. Even for those users that might consider themselves reasonably knowledgeable of what EDRMS is all about, they are unlikely to be familiar with the latest developments in EDRMS technology, best practices and process.

As such, when it comes to requirements capture, there is a fundamental barrier to overcome in that most users don’t know what they don’t know. Therefore, how can we expect them to provide set of requirements that will form an accurate basis for the subsequent design, build, test and deployment? I don’t think we can, there is too much room for misinterpretation. Their expectations for what they think the solution will provide them might be very different to what we capture as requirements. And it is a bit late to find this out several months down the line when they get sight of the solution for the first time. A humorous analogy that alludes to this problem was written by Lee Dallas in his post WikiLeaks, Expectations and ECM .

In my view, the best way to overcome this barrier is to give users the opportunity to visualise the technology in action and give them time, with the help from experts, to understand how they can best use the technology to meet their specific business needs. Let the requirements naturally evolve based on true understanding of the technology and the impact of introducing it on people and existing processes.

This is the approach that the Model Office takes, overcoming many of the shortfalls of a Waterfall approach, and is the subject of this blog post.

The 2 Franks – my way and the right way

Achieving a high take-up percentage of users for a new EDRMS solution means addressing and conveying the value that the new solution will bring them at both a personal level (“what’s in it for me?”) as well at an organisational level.

The best way to do this is to get users that represent different parts of the organisation involved at the outset of the EDRMS programme of work such that the solution is designed and shaped by the people who will use it.

If this is not done then the chances are that the solution won’t be representative of what the users want, and many will find ways to passively resist using it, doing things their own ‘Frank Sinatra, my way’. It is so much better to catch potential issues, mistakes or ambiguities around requirements as early as possible in the programme where they can be resolved before the build commences. From an architecture perspective, Frank Lloyd Wright once spoke about it being easier to use an eraser on the drawing board than a sledgehammer on the construction site.

This is where the Model Office comes in.

Two Franks

What is a Model Office?

The Model Office represents a controlled ‘laboratory’ environment (one that doesn’t impact the operational business) that facilitates a rapid, agile and highly effective means to capture and agree requirements with key users across different parts of the organisation. It is an ideal means to refine the solution to meet the specific needs of the users that will be using it, allowing them to visualise how the solution can be designed to meet their requirements and new ways of working, and what the ‘wow factors’ and ‘quick wins’ might be to tip the balance in favour of wider user adoption. Importantly, it also identifies the requirements that really matter to end-users (rather than all requirements being mandatory) and ensures that the requirements stick to the overall business vision and objectives, avoiding going ‘off-piste’.

The approach follows an iterative loop around requirements capture, design, and build until the solution reaches a completion state (within the time-box parameters) that end-users are happy with. This gives users a sense of ownership for the solution with the opportunity to shape how it is built and rolled out. It additionally allows users to get a firm grip on the business, people and technology aspects of the overall solution. This is essential as technology plays the minor role in an EDRMS implementation; the major role being business change.

The Model Office is focused on producing a standard implementation blueprint that can be rolled out, with localised configuration, across the organisation. Processes, tools and material for business change activities such as training, migration, and new operational procedures can all be trialled during the Model Office.

By its very nature, a Model Office enables more of an ‘agile’ approach (i.e. incremental delivery of value over shorter iterations) to be taken to requirements capture, design and build. This gives it significant advantages over a traditional waterfall approach

model office

From an outcomes perspective, the key benefits from a Model Office tend to fall into two categories:

  • Allows users to see what works and what doesn’t work, with constant feedback from users enabling issues to be caught and addressed as early in the process as possible.
  • Users understand why they need it, how they should use it, feel ownership for it and buy into it;
  • More rounded solution based on addressing practical requirements and built in line with key business vision and objectives;
  • Business change aspects explored, refined and agreed prior to wider roll-out;
  • Allows training of super-users to be grounded on practical experience gained from working on the development of the Model Office;
  • Enables a comprehensive evaluation of the product, design and most business change activities without impacting the operational business;
  • Identifies selection of best pilot area(s) to take on solution in operational capacity;
  • Forges a bridge between IT/IS and the business as the Model Office will require staff from IT/IS and the business to work closely together;
  • The Model Office will typically yield a 5%-10% reduction in overall implementation timescales;
  • User Acceptance Testing (UAT) is fast-tracked as it is often just a formality as key users will have been involved in the design and build right the way through the Model Office;
  • In general, a Model Office should result in far fewer issues and encounter far less resistance to change during roll-out, all resulting in shorter implementation timescales.

There are, of course, some implications to be aware of when adopting a Model Office approach. For example, it will require key users representing different parts of the organisation to have availability to proactively participate in the Model Office, potentially away from their desks with some disruption to their daily activities. It will also require IT/IS support, infrastructure, space and facilities.

Nevertheless, I firmly believe that the benefits of reducing project risk and shortening the overall timescales that the Model Office provides will significantly outweigh any implications.

Transition to future office

After deployment, the Model Office could then transition into a Future Office to examine how the solution can further evolve and be enhanced going forwards. For example, it could be used to explore the wish-list of requirements that were not feasible to be included in the initial pilot and roll-out waves. In most organisations, the functionality provided within the solution during the initial roll-out is typically kept fairly simple (without all of the ‘bells and whistles’) as there will be enough challenges in rolling out the solution without trying to cater for every requirement. The Future Office could be used to test new ideas around technology, process and people. Analogous to the ‘Ideal Home Show’ that is run annually in the UK, the Model Office could represent an ‘Ideal EDRMS Show’ except that it runs every day.

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8 thoughts on “ the virtues of a model office ”.

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OK, this approach is specific to to EDRMS, which is a solution, not a requirement. What method was used to identify EDRMS as the best solution? That is the requirements you need first.

But more than that…”As such, when it comes to requirements capture, there is a fundamental barrier to overcome in that most users don’t know what they don’t know. Therefore, how can we expect them to provide set of requirements that will form an accurate basis for the subsequent design, build, test and deployment? I don’t think we can, there is too much room for misinterpretation. ”

Oh yes we can. Requirements Discovery is NOT getting users to provide a set of requirements to use. It is also not asking them what they want and hoping they didn’t forget something. It is collaborating with users to define what they do, current and especially future state, and what information and rules they use to do it. That is the source of functional requirements that are complete, correct, and clear.

Now, I am actually not denigrating the Model Office concept. As a means of designing and implementing a solution I have seen it used many times. It is just that Requirements come long before this, or you would not even know you need a Model Office.

Thanks David for your comments.

I think that we fundamentally agree with each other. The model office does provide the means for “collaborating with users to define what they do, current and especially future state”. This is one of its key remits. However, the model office only plays a part (in my view, an important part) in the overall requirements discovery process, it is not a replacement for requirements discovery.

The original requirements, defining the need for an EDRMS in the first place, are of course assembled well before a model office. The model office typically kicks in once the decision is made to commence the EDRMS implementation project (and after an EDRMS product has been selected) and engage with end-user representatives to collaborate on requirements.

EDRMS by itself is not a solution. The EDRMS technology is the easy bit. The hardest and most time consuming aspect of an EDRMS project is working out how it needs to be configured (such as the file plan, metadata model, access control, etc) to meet the needs of the organisation and getting all key departments/divisions/units across the organisation to agree and buy into it. The vast majority of effort that goes into an EDRMS project is effectively business change.

As such, the model office doesn’t just kick in at the design and implement stage (which I think you are saying in your comments), it kicks in much earlier than that in helping to capture and refine requirements around how the organisation wants to use and configure the technology (hopeflly softening the impact of business change), which all feeds into the design.

The Model office activities should start at requirements definition and analysis. The Model office in collaboration with users it should use USE CASE MODELS and UML diagrams to communicate and to elicit what would work for the user. This theorical model (use case mode and UML) will then be followed by a PRACTICAL SIMULATION excercise incremental in approach to design and build and demonstrate the solution to users.

Good post with points made succinctly. I think the points made apply to both EDRMS and non EDRMS solutions. In any IT project, I believe that Model Office is an excellent way of establishing (prior to production) that requirements have been met, comprehensive evaluation, refine solution, etc.

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Business Model Canvas Explained: Definition, Pros, Cons, and Building Blocks

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So, here's the thing. We all know that we need structure to work effectively, but where do we start with so many options available? One tool worth considering is the Business Model Canvas (BMC) . Used effectively, it can give solid structure to your planning. 

In this article we will examine how the model works and a few ways to use it effectively. Then, we will describe its best practices and some recommendations on getting started. Finally, we will explore possible alternatives. 

Ready to get to know all about the BMC? Let's begin.

The Business Model Canvas, explained

The Business Model Canvas is a strategic management tool that helps businesses visualize and analyze their business models. It consists of 9 fundamental building blocks that describe the core aspects of a company's value proposition, infrastructure, customers, and finances (more on that later, we promise). 

By using it, organizations can gain a deeper understanding of their overall business model , identify areas for improvement, and develop new strategies for growth. One of the key benefits of the BMC format is that it's very visual. Used adequately, it allows organizations to create a display of their business model in alignment with strategic business objectives and the overall value proposition.

The nine BMC building blocks were initially presented in 2005 by Alexander Osterwalder. They were based on his Ph.D. work on business model ontology, supervised by Yves Pigneur. Since its release, the authors have developed other related tools, such as the Culture Map and the Value Proposition Canvas, which have helped the BMC tool to evolve and added value to it.

Business Model Canvas examples

Some examples of the BMC include:

  • Strategy planning
  • Business planning
  • Business modeling

Lean Canvas vs. Business Model Canvas

Both the Lean and Business Model Canvas enable you to capture your entire model on a single page. The primary difference between them is that the Lean Canvas focuses mainly on solving a particular problem. The Business Canvas Model, on the other hand, is more sales orientated and usually focuses on selling products or services. 

Advantages and disadvantages of the Business Model Canvas

Even though the BMC offers a series of features in order to effectively visualize and analyze your organization's business model, there are also some possible drawbacks to be aware of – and avoid. 

To start on the right note, the benefits of the Business Model Canvas include:

  • A clear and comprehensive business model overview in a single visual format. This makes it easier to understand, articulate, and communicate.
  • Strong collaboration and breaking down silos. Using the BMC approach incentives people to work as one team, as it involves all stakeholders, and enables them to actively participate in developing, improving, and refining the business model.
  • Colleagues constantly progressing with feedback (to borrow from an ITIL principle). The BMC approach allows for a fast and efficient testing of different business model configurations, speeding up the innovation process and reducing the time to market.
  • A structured and systematic approach to analyzing and designing business models, which helps identify areas for improvement and innovation.
  • A flexible approach that enables innovation instead of limiting it. The framework can be adapted to different types of businesses, industries, and customer groups.

However, if you choose to work with this management tool, you need to consider its potential disadvantages :

  • Using the BMC approach effectively can be challenging without prior knowledge of business modeling concepts and terminology. You will need to put the work in and do some pre-reading to get the most out of it.
  • Because it's so visual, it may oversimplify the complexity of a business model, making it more challenging to articulate some of the aspects of the organization's operations and performance. This makes it unsuitable for highly-specialized or complex businesses.
  • Because it's a framework rather than a prescriptive standard that must be strictly adhered to, it doesn't provide detailed guidance on implementing or executing the business model, which can lead to difficulties in translating the canvas into action.
  • It can rely on assumptions and hypotheses, which may not always be accurate or relevant for real-world situations.

The 9 building blocks of a Business Canvas Model

business-model-canvas-building-blocks

The Business Model Canvas is organized in nine  building blocks that represent a business model's key elements. These building blocks are:

  • Value Proposition - The unique value the business provides to its customers and how it differentiates itself from competitors. In other words, it’s what sets your business apart, what makes it special, and what value it brings.
  • Customer Segments - The different groups of customers the business targets with its products or services. This building block looks at your most important customers.
  • Customer Relationships - The business' relationships with its customers and how it interacts with them. This is a fundamental building block as not only does it help you build and maintain a relationship, it also enables you to map out the cost and deliverables needed to continue to improve that relationship.
  • Channels - T he different channels that the business uses to reach and interact with customers, including physical and digital channels.
  • Key Partnerships - The relationships and collaborations that the business has with its suppliers, vendors, and other external partners.
  • Key Activities - The key activities that the business must perform to deliver its value proposition and operate successfully. This building block helps you to define your most mission-critical actions and prioritize them accordingly.
  • Key Resources - The key resources the business requires to operate, including human resources, physical assets, and intellectual property. This can also include relationships, distribution channels, and virtual assets.
  • Revenue Streams - The different sources of revenue that the business generates from its customers, including one-time sales, recurring revenue, and other revenue streams. This building block also helps determine how each stream contributes to the business profit.
  • Cost Structure - The various costs that the business incurs to operate, including fixed costs, variable costs, and other expenses. It also helps you identify your most expensive assets and activities to make effective financial plans for the future.

How to build a Business Model Canvas in 14 steps

The Business Model Canvas is flexible – no one size fits all. But for our money, there are 14 steps to effectively build it.

Step 1: Define the purpose 

The first step is to define the purpose of the Business Model Canvas. Where are you now, and where do you want to be? What do you hope to achieve? Who is the target audience? Have you double-checked to ensure what you want to achieve is in line with the strategic objectives of the rest of the business?

Step 2: Identify the nine building blocks

Identify the nine building blocks of the BMC, review each in relation to your business, and understand their purpose.

Step 3: Define the Value Proposition

What will add value? Start by defining the unique value that your business offers to customers. This will be the foundation of your canvas.

Step 4: Identify your Customer Segments 

Define the different groups of customers your business targets and their specific needs and preferences so you can focus and direct your efforts accordingly.

Step 5: Define Customer Relationships 

Identify your business' relationships with its customers and how it interacts with them. You can also use this step to identify your most important relationships so you can focus more effort on maintaining and improving them.

Step 6: Determine the Channels

Identify your business's channels to reach and interact with its customers, including physical and digital channels. From a service desk perspective, this could be offering a tier 0 channel with self-service or AI-enabled support capabilities before providing tier 1 and level 2 channels which offer a more people-centric user experience .

Step 7: Define Key Partnerships

Identify your business's relationships and collaborations with its suppliers, vendors, and other external partners. Remember, it's not just relationships with customers and stakeholders that matter, your suppliers are part of your team, so manage those relationships appropriately.

Step 8: Identify Key Activities

Define the key activities that your business must perform to deliver its value proposition and operate successfully.

Step 9: Determine Key Resources

Identify the key resources that your business requires to operate, including people, knowledge and wisdom, financial assets, and IT assets.

Step 10: Determine Revenue Streams 

Identify the different sources of revenue that your business generates from its customers. If you have a finance team,  work with them to identify current revenue streams and plan for future ones.

Step 11: Determine Cost Structure

Work with your finance team to identify the various costs that your business incurs to operate, CAPEX, and OPEX costs. 

Step 12: Build the Canvas

Once you have defined all of the building blocks, you can start creating the canvas to visualize what you are planning to accomplish.

Step 13: Review and refine

The BMC isn't a one-and-done approach. Review your model and seek feedback from your stakeholders to correct the course when needed.

Step 14: Keep going! 

In the words of Walt Disney, "Keep moving forward." Build and refine your model over time to reflect current and future activities more accurately. 

How to complete a Business Model Canvas

No one likes a blank page, do they? The difficult part is always getting started, but I promise, if you follow these steps, you'll be off to a great start: 

  • Start with the Value Proposition - Before you do anything else, fill in the Value Proposition block in the center of the canvas. This should describe the unique value that your business provides to customers and how it differentiates itself from competitors. Focus on getting this point right because value is everything in terms of the BMC.
  • Add in your enablers - This will include your key activities, customer segments, relationships (both customer and supplier relationships) assets, key activities, and channels.
  • Add in your financials - Put in your revenue dreams and your cost models to make your BCM more transparent and ensure there are no hidden costs.
  • Progress iteratively with feedback - Once you have filled in all the building blocks, review your canvas, iterate, and redefine  as needed. Seek input from stakeholders and make adjustments.
  • Give the gift of clarity - Remember, this is a visual model, so don't get too stuck on the details or use too much jargon. The effect you're looking for is clear, concise, and visual.
  • Relationships matter - We are talking about the relationship between each building block, so ensure they are correctly represented in your diagram.

Six alternatives to the Business Model Canvas

While the Business Model Canvas is a popular tool for developing and communicating a business model, other options are available too. Some alternatives include:

  • Lean Canvas - This tool is similar to the BMC but focuses on startups and small businesses. It includes fewer blocks and focuses on validating hypotheses and testing assumptions quickly.
  • SWOT Analysis - This tool helps to identify a business's strengths, weaknesses, opportunities, and threats. This can be a valuable tool for assessing the current state of a company and identifying areas for improvement.
  • Business Model Innovation - This involves developing a new business model that is different from the traditional one used in the industry. It can be done through creative thinking, exploring new technologies, or adopting a new approach to customer relationships.
  • Blue Ocean Strategy - This framework helps businesses to create new markets and uncontested market space. It involves identifying and focusing on areas of innovation that competitors have not explored.
  • Value Proposition Canvas - This tool helps businesses to define and communicate their value proposition to customers. It focuses on the customer's needs, desired outcomes, challenges, and how the company can better meet those needs than its competitors.

Key takeaways

The Business Model Canvas or BMC is a strategic management tool that helps businesses visualize, design, and analyze their business models. Some of its common applications include business planning, value propositions, and modeling.

If you want to give it a shot to plan your organization’s strategy, make sure that you have your BCM template ready with the nine key elements that need to be completed. And don’t forget to follow through our six tips on how to get started!

  Frequently Asked Questions

How do you make a good business model canvas .

To make a good Business Model Canvas, clearly define the unique value proposition of your business and ensure that the key building blocks of the canvas (such as channels, revenue streams, and cost structure) are aligned with the overall strategic objectives of the business. Review and improve the canvas as needed to continue improving and aligning with business needs.

What are the four types of business models? 

The four types of business models are product, service, platform, and sub-subscription-based.

What are the three sections of the Business Model Canvas? 

Value Propositions, enablers, and financial planning.

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Home Blog Business What is a Business Model Canvas? Quick Guide + Examples

What is a Business Model Canvas? Quick Guide + Examples

What is a Business Model Canvas

Based on the work of Alexander Osterwalder, a Business Model Canvas , or BMC for short, is a diagram used to visualize a business model; it allows structured organization and a quick method of evaluation and reflection on the effectiveness of a Business Model. The use and study of Business Model Canvas Examples allows us to understand it in a complete way and apply it to different types of organizations.

The Role of the Business Model Canvas

What are the benefits of using a business model canvas, 1. customer segments, 2. value propositions, 3. customer relationships, 4. channels, 5. revenue streams, 6. key activities, 7. key resources, 8. key partnerships, 9. cost structure, the power of a bmc in entrepreneurship: visualize the business model, mcdonald’s.

  • How to Utilize a Business Model Canvas for your Success

Business Model Canvas PowerPoint Templates

Whether it be in small business entrepreneurship or large corporate product launches, the business model sits at the center. The one thing that stands at the very heart of the daily operations of an organization, is a model that dictates where the opportunity lies and how the company effectively acts on it at each step in the process.

The very best professionals will have all of this knowledge and action driving their decisions. However, the original business model one may follow may not always be applicable to the obstacles that an organization faces, thus it’s incredibly useful to fully display organizational structure and operations.

The Business Model Canvas is a powerful tool for businesses of all sizes and industries. Here are some key benefits of using this visual framework:

Simplifies Complexity: Business models can be intricate, with various elements and interactions. The BMC simplifies this complexity by breaking down the model into nine essential building blocks. This visual representation makes it easier for entrepreneurs, team members, and stakeholders to grasp the core components of the business without getting lost in a lengthy business plan. It’s a powerful tool for distilling complex ideas into a clear, concise format.

Enhances Focus: When creating a BMC, you’re prompted to think critically about each building block, such as customer segments, value propositions, and revenue streams. This process encourages a deep understanding of how these components interact and depend on each other. By explicitly defining these elements, you gain a sharper focus on your business strategy and objectives. It helps you identify gaps, redundancies, or areas where your model can be refined.

Promotes Collaboration: The BMC is designed to be a collaborative tool. It’s not something a single person creates in isolation; instead, it encourages cross-functional teams to work together. Each team member can contribute their expertise to fill in the relevant sections. This collaborative approach ensures that everyone involved in the project shares a common understanding of the business model, which is essential for successful execution.

Iterative and Adaptable: Business environments are dynamic, and your business model should be too. The BMC supports an iterative approach, allowing you to make changes and updates as needed. For instance, if market conditions change, you can easily adjust your value propositions or customer segments. It’s a flexible tool that accommodates experimentation and learning. You can use it to test different assumptions and hypotheses about your business and refine your model accordingly.

Cost-Effective: Creating a traditional business plan can be a time-consuming and expensive process. In contrast, developing a BMC is a cost-effective alternative. It doesn’t require extensive resources or financial investments. This makes it particularly valuable for startups and small businesses with limited budgets. It’s a pragmatic way to initiate strategic planning, especially in the early stages of a venture when resources are scarce.

The Basics of the Business Model Canvas

Whether one is creating an all-new business model, comparing a pre-existing model, or adjusting a model to improve value, the BMC excels in keeping anyone invested in the business on track without wasting time and focus. By displaying only, the most critical pieces in business operations or a product, this tool is both a time saver and a method to sharpen your awareness of expectations vs. reality.

Here is the Business Model Canvas explained: There are nine sections in a BMC, each containing a specified topic of information that composes the core of any business model.

PPT Template Business Model Canvas

This section contains the information related to the core target audience that you are selling to. Simple and traditional segmentation analysis must be done to identify the top segments of the model. Start simple with questions like Which are the demographics of the major customer groups being targeted? Why are they going to be interested in the product or service? In essence, how well does the model comprehend who is being sold to? It is crucial that you identify clearly the segments as when facing reality, you will need to focus only in a few (1 or 2) to really test your model without a full operation in place.

Create a list of the unique business value propositions you will offer. Why is the idea or company valuable? What makes it stand above competitors? If there aren’t any direct competitors, what gaps are being filled in given markets?

This section could be extremely lengthy, depending on the business model, but should only contain the most central concepts at the heart of the model that attract customers or generate revenues. This section will contain the aspects of the business that relieve a customer’s pains. If you’re struggling to identify what is most important, consider using a Value Proposition Canvas, another easy-to-visual tool that helps establish your target audience with your strengths. Focus on solving a real pain for the segments identified.

The information of this section should refer to how to connect segments and the value proposition. During the analysis, you should be asking questions like How are customers convinced that your product or organization has the advertised special qualities? What methods are used to interact with them? How does an audience engage with each strategy in the product lifecycle? Additionally, how is customer engagement tracked?

Once the customer is convinced of the goods or services, how would you deliver them? This should include every step of the process it takes to make the financial transaction and value delivery possible. Is there a separate supplier? Who distributes the product? How is it displayed? Think about what the model requires from start to finish in order to make a sale.

If the customer connects with the product or service, and they want to proceed with doing business, then how does the actual exchange of money happen? How is the cash flow tracked? Are there any middlemen between the sale and the income to the business?

Business Model Canvas Diagram for PowerPoint

Source: Editable Business Model Canvas PowerPoint Template

This section should include specific activities that the organization will do to create value. Unlike the Value Propositions, it’s not just about a new product or business practice, but rather the day-to-day operations that each team will take.

Similar to Key Activities but focusing on assets that are used. Is there a special supplier? Is there access to any materials or a local storefront that puts you in an advantageous position? Do you have a special intellectual property or patent that introduces new knowledge into the niche?

For areas that may be lacking, or areas that are too costly for the business to manage by itself, what can be outsourced to partners to focus on? Which areas would it be more cost-efficient to hire from supporting businesses? Specifically, identify model strengths, maximize time and money on them, and move identified weaknesses to connected partners that can address them better or solve them altogether.

Finally, what are the major expenses in the model? Are they a flat fee, or are they a variable cost? This may factor into previous sections, like key activities, resources, and partnerships.

Additionally, how does this relate to the Revenue Streams? How will the predicted costs vs. the actual be monitored? Most importantly, what will be done if costs outweigh the incoming funds?

Creating a Business Model Canvas involves analyzing each of these sections individually and as a whole, and connecting the dots between them.

Introducing a new business or product to the world is no small undertaking, especially when you consider how much competition and other new ideas are thrown into the world on a regular basis.

This also means keeping the model current and responsive. A business model, after all, is only a well-educated guess on how to generate success from a demand. If reality does not match up to the prediction, then even the very best business models are useless. A BMC is your abstract representation of how a business delivers value to customers to help them solve problems.

Steven Blank’s book to entrepreneurs and business leaders, ‘Four Steps to the Epiphany’ , demonstrates the difference between those who watch and listen to their model in action, and those who convince themselves that their business model is flawless, and the world will adjust to follow it instead. The fact is, you may have the most amazing ideas in the world, but it won’t matter if you aren’t paying attention to unforeseen challenges that arise between conception and actualization of a successful model.

The BMC is an excellent tool to get away from the guesswork, and out into the metaphorical streets. It allows an individual or team to compare expectations with reality, to double-check targets and see if those targets are still manageable, and it gives an opportunity to make adjustments to a business model before it’s too late.

This practice is called, ‘Get out of the building’, an important part of the Lean Startup Methodology . It means to develop a BMC and test it against reality. For this to work, you need to create an MVP ( Minimum Viable Product ) that materializes your Value proposition and tests it against real-life customers. Testing means that they should really purchase the MVP and that they complete the different sections of the BMC for true validation. This process is really iterative, and it helps entrepreneurs and business executives make the adjustments necessary to really market a value proposition, reducing the risk of mounting a full-scale operation.

Get Out Of The Building PowerPoint Template

Business Model Canvas Examples

By using examples of Business Model Canvas, we can evaluate business models and identify just what changes need to be made to the model in order to ensure growth and success. In addition, analyzing Business Model Canvas examples and being able to study success stories is beneficial to be able to apply it in different industries, helping you better understand Business Model Canvas explained with examples.

Let’s take a look at the BMC Example of the MoviePass company, which launched with the idea to sell a monthly service to the general public for daily movie tickets at major theater chains for a flat monthly membership fee. The company reasoned that they could benefit two groups, the average moviegoer would be able to see more movies, and movie theaters themselves would see better attendance. This innovative approach required the development of robust membership software to handle the logistics and subscriptions efficiently, making it one of the notable examples of a business model.

In theory, it sounds like a reasonable concept, but in reality, MoviePass had not developed a functional business model which resulted in a poor performance against new technologies. There was no constant evaluation to keep track of their cash flow, and by failing to keep the company growing fast enough, it couldn’t support the necessary costs. Perhaps if leadership had followed a BMC these issues may have been recognized earlier.

Business Model Canvas Example - MoviePass

By using the BMC, MoviePass could have visualized earlier that the business model was in need of a pivot, a change to a section of the model in order to address an issue. In MoviePass’s case, areas like cash flow and customer acquisition had some gaps that required a solution. Had the company been more aware of its business model, it might have seen a need for a Minimum Viable Product (MVP) where they could test the results of their ideas with a few early adopters.

An MVP is the bare bones of a product or service that can provide invaluable information about how a small group of customers reacts. By having a testing period of limited engagement, a business can limit costs while drastically improving knowledge on how to proceed. Had MoviePass used this, they might’ve been able to observe early on that some customers used their service to the max, purchasing a movie ticket per day, far outweighing the profit of their service from the cost of providing it.

The pivot would adjust to their business model, and a new MVP could be created to test the new approach. This new iteration of the business may have changed the original direction of the company. Through each pivot and each new iteration of the model, MoviePass BMC would adjust accordingly, allowing an easy method in which to keep track of the major changes without getting overwhelmed in all the details that lay underneath each educated decision.

There are, however, examples of well-crafted business models that can be observed on a BMC. Let’s take a company that has spread its business model all over the world and has undoubtedly enacted countless pivots and iterations of the business model in order to evolve, adapt, and thrive over the years: McDonald’s, as one of the prime business model examples.

When thinking about the massive scope of McDonald’s, it’s both interesting and telling of how the BMC can still capture the essence of their business model. McDonald’s is a global corporate cash cow requiring a rock-solid model, but that doesn’t mean it’s the same one since the conception of the company.

With the many decades in operation, you can be sure that a McDonald’s BMC would not look the same at the beginning as it does today. What originally started as a single burger joint on a street corner, now faces the challenges of global food service. Each time a new challenge or opportunity presented itself, the McDonald’s business model was forced to pivot by observing the environment, developing an appropriate plan of action, and monitoring the progress accordingly.

Over the years the world has grown to experience many iterations of the McDonald’s brand, whether it be an icon of American cuisine or an example of adaptation to dietary health. Flexible and ambitious, McDonald’s always made sure the business model matched the desired outcomes.

Business Model Canvas Example McDonalds

Uber is a ride-hailing service that has caused massive disruption for conventional taxi services. By using digital technology and a specific standard for cars and drivers offered to customers, many taxi services and individual taxi drivers have found it hard to compete with Uber. In contrast to developed countries, taxi drivers in developing countries have been unable to meet the minimum vehicle standards to qualify as Uber drivers, competing with them virtually out of the market. On the contrary, it has also attracted a new segment of people looking to use Uber as a part-time job to earn extra money.

By looking at Uber using the BMC Example we can see that its key partners include customers, drivers, payment processors, mapping data providers, and local authorities in the country it operates. Its key activities include developing its digital platform and algorithms, driver onboarding, marketing to balance demand and supply, and supporting customers using the service. The key resources of Uber are its digital platform, pricing, and routing algorithms. Uber relies on a peer-to-peer (P2P) circular economy. Where customers and drivers continue to contribute to the Uber revenue in almost a loop. And since Uber is easier to use compared to conventional taxi services, both customers and drivers tend to often use it as a routine. For example, many drivers have completely switched to Uber from conventional taxi services and new drivers entering the market cannot imagine providing services without the model Uber provides. Similarly, customers can get used to the service in a way that the Uber service itself becomes a part of their daily routine.

The value proposition of Uber is the provision of an on-demand taxi service for customers, whenever and wherever they need it. Uber fills the gap for the availability of an instant taxi service, without the need to necessarily ensure pre-booking or find a taxi manually. This offers user convenience, with various value benefits for both the customer and drivers, including the option to avail a cash-free taxi service by customers, earning opportunities for drivers and the supply of passengers and drivers through its ever-increasing base of users.

Uber reaches its customers and even attracts new drivers through its marketing and makes it easier for people to use its services through its app. Making it easy for the customers and drivers to communicate. Uber provides the utility of not just an on-demand service but also uses its algorithms to match supply and demand, find the shortest routes for customers, and to allocate the closest driver. However, since Uber is primarily connecting customers and drivers, it also shifts much of its costs to the former, since it does not require owning and maintaining a large fleet of cars. It can also adjust its revenue based on the market it’s operating in, and adjust prices to match not only demand and supply but the purchasing power and market rates of the country or area it operates in.

Business Model Canvas Example - Uber

When Amazon started in 1994, terms like e-commerce or online shopping were virtually unheard of. In fact, Amazon can be easily credited with being one of the first e-commerce platforms in the world. However, its customer-led approach, with the convenience Amazon offered soon turned it into a famous retailer, which now has various other services attached to its name including an online video streaming platform called Amazon Prime, a cloud storage service (Amazon Drive), Kindle tablets, Fire TV, etc. However, to keep things simple, let’s look at Amazon’s BMC Example in the context of its retail store.

Amazon provides users with a range of services from its network of sellers. These sellers are rated by customers according to their experience and sellers that fail to adhere to Amazon’s standards are removed from the platform. For example, during the start of the COVID-19 pandemic, many people began hoarding hand sanitizers and selling them at inflated prices online. Amazon was quick to act to remove such vendors.

The approach that Amazon has is based on not just connecting buyers and sellers but ‘continually raising the bar of the customer experience’. To ensure this, amazon often takes innovative steps that not only include improving its digital platform but also ensuring a steady supplier base. In 2019, Amazon announced $10,000 and three months worth of their gross salary to employees who quit their jobs and started a delivery service. Anticipating the need to expand its supplier base. Amazon has also been famous for offering competitive employee benefits and creating a corporate culture that encourages innovation and employee loyalty.

Through its colossal warehouses, customer-centric approach, and corporate culture that creates an atmosphere of employees to remain closely connected with the company, Amazon’s revenue stream simply does not rely on its customer experience, workforce, or supplier base but on how it’s able to create an environment where stakeholders, including customers and employees feel a sense of loyalty towards the company.

Business Model Canvas Example Amazon

Over the years, AirBnb has been among companies that have leveraged their platform to transform conventional modes of doing business. Using its rating-based digital platform, AirBnb enables people looking to rent accommodation and hosts to be able to connect and become a part of its revenue stream with a few simple taps or clicks.

The platform has not only helped people who have conventionally been renting out their property but also enabled individuals with extra space to consider becoming hosts to earn extra money by renting out space for a short period of time. Similarly, the customers benefit from avoiding hefty rates of hotels and expensive accommodation options.

Like Uber, AirBnb has also been a disruptive force in the market it has operated. It uses its digital infrastructure to connect travelers and hosts. While offering the value proposition of making money by utilizing underutilized space to hosts and offering low-cost accommodation for people looking to save money. This model has enabled the company to surpass large hotel chains and make a major impact in the industry for rent and accommodation. In 2020 AirBnb was valued at $75 billion, surpassing giants like Hyatt Hotels valued at $2.07 billion and Marriott Hotels International valued at $10.57 billion.

Business Model Canvas Example - AirBnb

From its launch in 1997 to 2006 in the United States, Netflix had a per-rental model per DVD. However, in 2007 it launched a subscription-based model that turned out to be more successful. Today, Netflix is available for streaming in over 190 countries, each with its own catalog of Movies and TV shows.

According to Netflix’s Business Model Canvas Example, its value proposition is the provision of on-demand entertainment regardless of where you are. Its subscription models provide access to one or more screens, with the utility to watch Netflix via mobile, tablet, laptop, gaming consoles, etc. Its packages include an economical package with an SD (480P) resolution limited to a single device to more exclusive packages offering Full HD (1080p) Ultra HD (4K) and HDR (2160p) resolutions.

Needless to say, the market segment of Netflix is quite close to universal. Outmaneuvering cable operators and conventional TV channels with exclusive on-demand content. While Netflix’s partners have included broadcasters and production companies, it has recently been focusing on original content. Through Netflix’s subscription-based model, there is very little need (if any) for customer interaction, unless a user is reporting a bug. The Netflix model focuses on self-service with an ‘all you can eat’ style subscription model, with algorithms constantly suggesting content to users to keep them engaged based on their viewing preferences.

Neflix Business Model Canvas Example

Ikea’s value proposition is to provide affordable furniture that is sturdy, aesthetic, and functional enough to cater to customer needs. In doing so Ikea claims to create a better everyday life for people who use its products. The Business Model Canvas Example of Ikea includes its vendors, suppliers, franchisees, and logistics partners making it possible to reach out to customers globally.

Unlike companies like Amazon, e-commerce is only part of Ikea’s operations, as it has a robust physical presence in more than 50 countries. Over the years Ikea has undergone continuous product development with new furniture designs and a range of products being released on a consistent basis. This has helped the company to cater to the needs of different customer segments including families, businesses, and people who need something that is easy to use, assemble, and disassemble.

Ikea Business Model Canvas Example

How to Utilize a Business Model Canvas for Your Success

Whether it be a brand-new business endeavor or a product launch at a long-standing company, it’s critical that the business model is kept at the core of every decision. A Free Business Model Canvas Template is a tool to easily keep the model insight and offers an easy method to open the dialogue when that model may need to pivot.

The whole purpose of the BMC is to allow for a simple presentation of information, reducing complications in understanding just what is required in each new iteration of a business model. At a glance, anyone invested in the outcome of the model should be able to understand the who, what, when, where, and why of the model, or bring it to everyone’s attention if they don’t.

Most importantly, the BMC is a tool to help drive success. If there are issues in your business model that need to be addressed, a BMC makes it easier to visualize where the gaps are, and how they may be filled. Keep in mind that pivoting is crucial to the success and survival of a business model and that change, growth, and adaptation are not an abandonment of what matters, but a natural progression to find the best outcomes to the ultimate goal. As Eric Ries, author of Startup Lessons Learned, puts it: ‘pivoting may lead [successful startups] far afield from their original vision, but if you look carefully, you’ll be able to detect common threads that link each iteration.’

Frequently Asked Questions

Business Model Canvas is like a blueprint for your business. It’s a visual tool that helps you plan, understand, and describe how your business works. It breaks down your business into key parts, like who your customers are, what you offer them, and how you make money.

A real-life example would be Airbnb. They use the Business Model Canvas to show how they connect hosts with travelers, offer unique accommodations, and earn money through commissions on bookings.

To determine your value proposition , you need to identify what makes your product or service special. Ask yourself: What problem does it solve for customers? What benefits do they get? Your value proposition should clearly communicate these advantages.

Building and maintaining customer relationships involves providing excellent customer service, staying engaged with customers through various channels (email, social media), seeking feedback, and addressing their needs promptly.

When establishing partnerships, consider what resources or expertise your business lacks and seek partners who can provide them. Think about how these partnerships will benefit both parties and align with your overall business goals.

The Business Model Canvas allows you to see all aspects of your business in one place, making it easier to identify weaknesses and opportunities. By analyzing each component, you can make informed decisions to optimize your model for better results.

Yes, the Business Model Canvas is versatile and can be used for various businesses, from startups to established companies, in different industries. It helps structure and clarify the business model for any venture.

The frequency of updates depends on your business and market dynamics. In rapidly changing industries, you might need more frequent updates, while others may do so annually or when major changes occur.

Use your Business Model Canvas as a visual aid during presentations. Walk stakeholders through each section, explaining how your business operates and creates value. Encourage questions and discussions to ensure clarity and alignment.

If you want to create professional-looking Business Model Presentations, take a look at the following Business Model Canvas templates , ready to edit and easy to use.

1. Free Business Model Canvas Template for PowerPoint

business model office meaning

Build a top-notch company presentation using Free Business Model Canvas Template for PowerPoint. The cool scheme is relaxing to the eyes. The clear layout can provide the audience with quick understanding of the entire report in just one slide.

Use This Template

2. Animated 3D Business Model Canvas Template for PowerPoint

business model office meaning

Created with a 3D Model, this professional PowerPoint Template is ideal for creating videos or animated versions of your Business Model Canvas. Very popular among educators and speakers of the entrepreneurship niche.

3. Business Model Canvas PowerPoint Templates

business model office meaning

This Business Model Canvas PowerPoint Template is created 100% with editable PowerPoint Shapes, allowing the user to customize the content and visual appearance of the presentation. Suitable for educational presentations where you need to navigate each section of the BMC, or for investors presentations where you need to deep dive on each section of your Business Model.

4. Business Model Canvas Template for PowerPoint

business model office meaning

Our most popular Business Model Canvas Template. Ideal for working in groups and iterating with different BMC’s. Its suitable for cooperation editing, and allows very simple compositions. Well suited for developing your MVP and crossing the assumptions that were negated by reality.

5. 3D Perspective Business Model Canvas PowerPoint Template

business model office meaning

This Business Model Canvas Design is inspired in the idea of empty boxes, that entrepreneurs need to fill with their ideas. The design is simple to edit and decorated with a colorful theme. Designed to impress every audience.

6. Lean Canvas PowerPoint Template

business model office meaning

This Lean Canvas template for PowerPoint and Google Slides is perfect for anyone who needs to pitch a business idea to investors, present their idea to stakeholders or company leadership. This template is 100% editable, allowing the user to customize the content and visual appearance.

7. Product Management Canvas PowerPoint Template

business model office meaning

The Product Management Canvas PowerPoint Template is a strategic planning and modeling presentation. This is a single-slide template showing various aspects of product planning and successful management. The purpose of this canvas is to consider all aspects of the product.

8. Editable Business Model Canvas PowerPoint Template

business model office meaning

Editable Business Model Canvas PowerPoint Template is a professional presentation representing the Business Model Canvas in “board” format. All the presentation design is completely editable and the user can move, or add, post-its like text boxes to work with the canvas.

9. Simple Business Model Canvas Template for PowerPoint

business model office meaning

If you are looking to create an aesthetic Business Model Canvas Template, the Simple Business Model Canvas Template for PowerPoint will allow you to give your presentation the style you need. You will be able to add sticky notes with information for each of the sections of your Business Model.

10. Business Model Canvas Template with Widget Design

business model office meaning

100% editable Business Model Canvas template for Google Slides and PowerPoint presentations, with a widget design and look and feel.

business model office meaning

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Acquisition, Business Model Canvas, Channels, Cost Structure, Customer Development, Customer Relationship, Customer Segments, Key Activities, Key Partners, Key Resources, Lean Startup, Management, Minimum Viable Product, MVP, Prototyping, Revenue Streams, Startup, Steve Blank, Strategy, Value Proposition Filed under Business

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2 Responses to “What is a Business Model Canvas? Quick Guide + Examples”

If your business is a non-for-profit , how can you adapt your MVP? You are not selling anything as such, so how do you test if your product (MVP) will be purchased?

Hi Elena If there is a “business model”, there is always a business. So, you are selling something. Even non-for-profit sell. They just sell at “cost” or “subsidized”, but there are customers which pay at the end. Otherwise, rather non-for-profit, it is philanthropy and there is no “business” around. Hope this helps. Regards GV.

Leave a Reply

business model office meaning

business model office meaning

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What Is a Business Model? Explained With Types & Examples

The Business Model Canvas Template

Free Business Model Canvas Template

Ayush Jalan

  • December 15, 2023

business model office meaning

Capital is the lifeblood of any business. From building a startup to sustaining an MNC, your business model affects every decision you take. It’s one thing to have a great business idea and a whole other thing to turn it into a long-term profitable mechanism.

In this article, we’ll see what is a business model, factors to consider when choosing one, and 15 of the most successful business models to look into.

What is a Business Model?

A business model is the DNA of a company. It dictates how you earn profits, price your products, and manage costs. It envelops all the necessary processes that need to happen to convert returns on your investments.

Picking a business model for startups is especially tricky as it greatly influences the funding they raise. Investors study your business model to evaluate its viability, profitability, and sustainability.

A business model answers these six important questions:

  • Who is your target audience?
  • What are you planning to offer them?
  • How are you going to market your offerings?
  • What are the costs involved?
  • What is your pricing strategy?
  • What are your revenue streams?

Which Business Model Should You Choose?

Few things to consider while choosing a business model

A few things to consider while choosing a business model are:

Consumer buying behavior:

Flexibility:, competitors:, industry leaders:, 15 types of business models with examples, 1. brick and mortar.

Brick and mortar is a traditional business model. Any business that sells its products directly in physical stores or offices uses this business model.

While this business model has been the standard for ages, the rise in internet access has led to an increase in online stores—negatively affecting physical counterparts.

Examples: grocery stores, restaurants, and coffee shops.

2. E-commerce

The polar opposite of the brick-and-mortar model is the e-commerce business model . It is opted for by companies that sell their products or services on the internet via e-stores.

Since these businesses operate virtually, they don’t need a physical outlet. Over the years, e-commerce has transformed how people shop , making it convenient, easy, and seamless for consumers.

Examples: Shopify, Alibaba, PayPal.

3. Bricks and clicks

A hybrid of the above two is the bricks-and-clicks business model. Companies that use this model sell their products online as well as in physical stores.

Many traditional brick-and-mortar businesses have started selling online to steal a piece of the e-commerce pie. Conversely, e-commerce companies are setting up physical stores to increase visibility and brand loyalty.

Examples: Zara, Walmart, Amazon, and Target.

4. Manufacturer

The manufacturer business model refers to the companies that use raw materials to produce goods or assemble parts to create finished products. These companies either sell directly to customers or intermediaries.

Examples: Toyota, General Motors, Samsung, LG, Sony.

5. Wholesale

Wholesalers buy large quantities of finished products from manufacturers and sell them to multiple retailers or distributors in smaller quantities. They are a key intermediary in the supply chain.

Examples: Costco, Walmart, and Johnson & Johnson.

Retailers are the last intermediary in the supply chain. They buy products from wholesalers, distributors, or even directly from manufacturers and sell them to consumers.

Nowadays, there are many businesses and individuals who make money through Amazon, for example, while also using many of its benefits.

Examples: Target, The Home Depot, Best Buy, Casper.

7. Subscription

The increasingly popular subscription business model allows companies to charge their customers a recurring fee for continual benefits. Think SaaS companies and subscription box companies.

Examples: Netflix, Disney+, Amazon Prime Video, FabFitFun, BirchBox, and Dollar Shave Club.

8. Freemium

The freemium business model is quite similar to a subscription model. Except, it includes a free version on top of the paid service. The latter is usually displayed as a premium variant.

For instance, Hulu offers a 7-day free trial while Spotify offers a free version that can be used indefinitely.

Examples: MailChimp, Evernote, LinkedIn, and DropBox.

9. Franchise

In this model, a franchisor company grants the rights over its brand identity, intellectual rights, and resources to a franchisee company in exchange for a fee called royalty.

For instance, McDonald’s permits its franchisees to run their restaurants under its brand name. In exchange, the franchisee pays an initial fee and a cut of the revenue incurred.

Examples: Subway, Domino’s, UPS Store, Coca-Cola, Nestlé, and Hyundai.

10. Razor and blades

The name ‘razor and blades’ comes from the pricing tactic used by the popular Boston-based company Gillette. The company sold its razor handles at a lower price to increase the sales of its razor blades.

In a nutshell, companies sell a primary ‘razor’ product at a low margin to boost the sales of its complementary ‘blade’ products which are sold at a high margin.

Examples: Microsoft Xbox, Sony PlayStation, Nespresso.

11. Reverse razor and blades

Contrary to the above, in the reverse razor and blades business model, companies sell the primary ‘razor’ product at a high margin and sell complementary ‘blade’ products at a bargain.

For instance, Amazon sells the Kindle Paperwhite at a high price because it allows buyers to further purchase ebooks at a discounted price.

Example: Apple sells iPhones at a premium price and allows users access to affordable complementary services like Apple Music and App Store.

12. Advertising

Advertising is one the oldest business models wherein an advertiser pays to get their product promoted on a publisher’s platform. Earlier, this used to be limited to newspapers, magazines, and storefronts.

Today, advertising is a highly saturated business model covering platforms such as social media, video games, job portals, billboards, email, mobile apps, etc.

Examples: Google, YouTube, TikTok, Meta, Twitter, and LinkedIn.

13. Crowdsourcing

In this model, a company solicits contributions like ideas and services from a crowd of unaffiliated providers. These contributions are then pooled into a unified platform controlled by the company to create something of value.

There are multiple types of crowdsourcing but perhaps the most recognizable one is used by Wikipedia. Here, volunteers contribute to creating and adding value to the platform accessible to everyone. The hosting company, Wikimedia Foundation, makes money via donations.

Example: McDonald’s asked fans to create new burger recipes under its “My Burger” campaign. The most acclaimed ones were then added to the menu to try and increase sales.

14. Hidden revenue model

All social media companies use the hidden revenue model. Unlike other models, this business model allows companies to offer their products to consumers for free—concealing their revenue.

Instead, they make money via third parties in the form of advertising. This helps keep the product free to use or subsidized enough to be available at a very low price.

Examples: Google, YouTube, TikTok, Facebook, Twitter, and LinkedIn.

15. Peer-to-peer

In this model, companies provide a platform for two parties to collaborate or make transactions. The company acts as a middleman overseeing the trade by establishing regulations to reduce the risks for both parties.

A perfect example is Airbnb; it allows hosts to rent out their properties to hostees. The company makes money via commissions from both parties.

Examples: Uber, Freelancer, OLX, Craigslist.

Actualize Your Potential with a Tailored Business Model

Choosing the right business model can be quite tricky since there’s so much at stake. However, with adequate research and testing, you can be sure to find a model or combination of models that work best for you.

Opting for a business model that has a proven track record can be a safer choice if you’re unsure of your startup’s viability. Although, if you’re willing to take some risk, creating a new model or tweaking existing ones can prove to reap more profits eventually

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with step-by-step Guidance & AI Assistance.

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About the Author

business model office meaning

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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Popular Templates

Business-Model-Canvas

Business Model Canvas: Explained with Examples

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Got a new business idea, but don’t know how to put it to work? Want to improve your existing business model? Overwhelmed by writing your business plan? There is a one-page technique that can provide you the solution you are looking for, and that’s the business model canvas.

In this guide, you’ll have the Business Model Canvas explained, along with steps on how to create one. All business model canvas examples in the post can be edited online.

What is a Business Model Canvas

A business model is simply a plan describing how a business intends to make money. It explains who your customer base is and how you deliver value to them and the related details of financing. And the business model canvas lets you define these different components on a single page.   

The Business Model Canvas is a strategic management tool that lets you visualize and assess your business idea or concept. It’s a one-page document containing nine boxes that represent different fundamental elements of a business.  

The business model canvas beats the traditional business plan that spans across several pages, by offering a much easier way to understand the different core elements of a business.

The right side of the canvas focuses on the customer or the market (external factors that are not under your control) while the left side of the canvas focuses on the business (internal factors that are mostly under your control). In the middle, you get the value propositions that represent the exchange of value between your business and your customers.

The business model canvas was originally developed by Alex Osterwalder and Yves Pigneur and introduced in their book ‘ Business Model Generation ’ as a visual framework for planning, developing and testing the business model(s) of an organization.

Business Model Canvas Explained

What Are the Benefits of Using a Business Model Canvas

Why do you need a business model canvas? The answer is simple. The business model canvas offers several benefits for businesses and entrepreneurs. It is a valuable tool and provides a visual and structured approach to designing, analyzing, optimizing, and communicating your business model.

  • The business model canvas provides a comprehensive overview of a business model’s essential aspects. The BMC provides a quick outline of the business model and is devoid of unnecessary details compared to the traditional business plan.
  • The comprehensive overview also ensures that the team considers all required components of their business model and can identify gaps or areas for improvement.
  • The BMC allows the team to have a holistic and shared understanding of the business model while enabling them to align and collaborate effectively.
  • The visual nature of the business model canvas makes it easier to refer to and understand by anyone. The business model canvas combines all vital business model elements in a single, easy-to-understand canvas.
  • The BMC can be considered a strategic analysis tool as it enables you to examine a business model’s strengths, weaknesses, opportunities, and challenges.
  • It’s easier to edit and can be easily shared with employees and stakeholders.
  • The BMC is a flexible and adaptable tool that can be updated and revised as the business evolves. Keep your business agile and responsive to market changes and customer needs.
  • The business model canvas can be used by large corporations and startups with just a few employees.
  • The business model canvas effectively facilitates discussions among team members, investors, partners, customers, and other stakeholders. It clarifies how different aspects of the business are related and ensures a shared understanding of the business model.
  • You can use a BMC template to facilitate discussions and guide brainstorming brainstorming sessions to generate insights and ideas to refine the business model and make strategic decisions.
  • The BMC is action-oriented, encouraging businesses to identify activities and initiatives to improve their business model to drive business growth.
  • A business model canvas provides a structured approach for businesses to explore possibilities and experiment with new ideas. This encourages creativity and innovation, which in turn encourages team members to think outside the box.

How to Make a Business Model Canvas

Here’s a step-by-step guide on how to create a business canvas model.

Step 1: Gather your team and the required material Bring a team or a group of people from your company together to collaborate. It is better to bring in a diverse group to cover all aspects.

While you can create a business model canvas with whiteboards, sticky notes, and markers, using an online platform like Creately will ensure that your work can be accessed from anywhere, anytime. Create a workspace in Creately and provide editing/reviewing permission to start.

Step 2: Set the context Clearly define the purpose and the scope of what you want to map out and visualize in the business model canvas. Narrow down the business or idea you want to analyze with the team and its context.

Step 3: Draw the canvas Divide the workspace into nine equal sections to represent the nine building blocks of the business model canvas.

Step 4: Identify the key building blocks Label each section as customer segment, value proposition, channels, customer relationships, revenue streams, key resources, key activities, and cost structure.

Step 5: Fill in the canvas Work with your team to fill in each section of the canvas with relevant information. You can use data, keywords, diagrams, and more to represent ideas and concepts.

Step 6: Analyze and iterate Once your team has filled in the business model canvas, analyze the relationships to identify strengths, weaknesses, opportunities, and challenges. Discuss improvements and make adjustments as necessary.

Step 7: Finalize Finalize and use the model as a visual reference to communicate and align your business model with stakeholders. You can also use the model to make informed and strategic decisions and guide your business.

What are the Key Building Blocks of the Business Model Canvas?

There are nine building blocks in the business model canvas and they are:

Customer Segments

Customer relationships, revenue streams, key activities, key resources, key partners, cost structure.

  • Value Proposition

When filling out a Business Model Canvas, you will brainstorm and conduct research on each of these elements. The data you collect can be placed in each relevant section of the canvas. So have a business model canvas ready when you start the exercise.  

Business Model Canvas Template

Let’s look into what the 9 components of the BMC are in more detail.

These are the groups of people or companies that you are trying to target and sell your product or service to.

Segmenting your customers based on similarities such as geographical area, gender, age, behaviors, interests, etc. gives you the opportunity to better serve their needs, specifically by customizing the solution you are providing them.

After a thorough analysis of your customer segments, you can determine who you should serve and ignore. Then create customer personas for each of the selected customer segments.

Customer Persona Template for Business Model Canvas Explained

There are different customer segments a business model can target and they are;

  • Mass market: A business model that focuses on mass markets doesn’t group its customers into segments. Instead, it focuses on the general population or a large group of people with similar needs. For example, a product like a phone.  
  • Niche market: Here the focus is centered on a specific group of people with unique needs and traits. Here the value propositions, distribution channels, and customer relationships should be customized to meet their specific requirements. An example would be buyers of sports shoes.
  • Segmented: Based on slightly different needs, there could be different groups within the main customer segment. Accordingly, you can create different value propositions, distribution channels, etc. to meet the different needs of these segments.
  • Diversified: A diversified market segment includes customers with very different needs.
  • Multi-sided markets: this includes interdependent customer segments. For example, a credit card company caters to both their credit card holders as well as merchants who accept those cards.

Use STP Model templates for segmenting your market and developing ideal marketing campaigns

Visualize, assess, and update your business model. Collaborate on brainstorming with your team on your next business model innovation.

In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company.

There are several types of customer relationships

  • Personal assistance: you interact with the customer in person or by email, through phone call or other means.
  • Dedicated personal assistance: you assign a dedicated customer representative to an individual customer.  
  • Self-service: here you maintain no relationship with the customer, but provides what the customer needs to help themselves.
  • Automated services: this includes automated processes or machinery that helps customers perform services themselves.
  • Communities: these include online communities where customers can help each other solve their own problems with regard to the product or service.
  • Co-creation: here the company allows the customer to get involved in the designing or development of the product. For example, YouTube has given its users the opportunity to create content for its audience.

You can understand the kind of relationship your customer has with your company through a customer journey map . It will help you identify the different stages your customers go through when interacting with your company. And it will help you make sense of how to acquire, retain and grow your customers.

Customer Journey Map

This block is to describe how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company.

Channels play a role in raising awareness of your product or service among customers and delivering your value propositions to them. Channels can also be used to allow customers the avenue to buy products or services and offer post-purchase support.

There are two types of channels

  • Owned channels: company website, social media sites, in-house sales, etc.
  • Partner channels: partner-owned websites, wholesale distribution, retail, etc.

Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions.  

A revenue stream can belong to one of the following revenue models,

  • Transaction-based revenue: made from customers who make a one-time payment
  • Recurring revenue: made from ongoing payments for continuing services or post-sale services

There are several ways you can generate revenue from

  • Asset sales: by selling the rights of ownership for a product to a buyer
  • Usage fee: by charging the customer for the use of its product or service
  • Subscription fee: by charging the customer for using its product regularly and consistently
  • Lending/ leasing/ renting: the customer pays to get exclusive rights to use an asset for a fixed period of time
  • Licensing: customer pays to get permission to use the company’s intellectual property
  • Brokerage fees: revenue generated by acting as an intermediary between two or more parties
  • Advertising: by charging the customer to advertise a product, service or brand using company platforms

What are the activities/ tasks that need to be completed to fulfill your business purpose? In this section, you should list down all the key activities you need to do to make your business model work.

These key activities should focus on fulfilling its value proposition, reaching customer segments and maintaining customer relationships, and generating revenue.

There are 3 categories of key activities;

  • Production: designing, manufacturing and delivering a product in significant quantities and/ or of superior quality.
  • Problem-solving: finding new solutions to individual problems faced by customers.
  • Platform/ network: Creating and maintaining platforms. For example, Microsoft provides a reliable operating system to support third-party software products.

This is where you list down which key resources or the main inputs you need to carry out your key activities in order to create your value proposition.

There are several types of key resources and they are

  • Human (employees)
  • Financial (cash, lines of credit, etc.)
  • Intellectual (brand, patents, IP, copyright)
  • Physical (equipment, inventory, buildings)

Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged in oder to reduce risks and acquire resources.

Types of partnerships are

  • Strategic alliance: partnership between non-competitors
  • Coopetition: strategic partnership between partners
  • Joint ventures: partners developing a new business
  • Buyer-supplier relationships: ensure reliable supplies

In this block, you identify all the costs associated with operating your business model.

You’ll need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners.  

Businesses can either be cost-driven (focuses on minimizing costs whenever possible) and value-driven (focuses on providing maximum value to the customer).

Value Propositions

This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment.

A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes.

Value propositions can be either quantitative (price and speed of service) or qualitative (customer experience or design).

Value Proposition Canvas

What to Avoid When Creating a Business Model Canvas

One thing to remember when creating a business model canvas is that it is a concise and focused document. It is designed to capture key elements of a business model and, as such, should not include detailed information. Some of the items to avoid include,

  • Detailed financial projections such as revenue forecasts, cost breakdowns, and financial ratios. Revenue streams and cost structure should be represented at a high level, providing an overview rather than detailed projections.
  • Detailed operational processes such as standard operating procedures of a business. The BMC focuses on the strategic and conceptual aspects.
  • Comprehensive marketing or sales strategies. The business model canvas does not provide space for comprehensive marketing or sales strategies. These should be included in marketing or sales plans, which allow you to expand into more details.
  • Legal or regulatory details such as intellectual property, licensing agreements, or compliance requirements. As these require more detailed and specialized attention, they are better suited to be addressed in separate legal or regulatory documents.
  • Long-term strategic goals or vision statements. While the canvas helps to align the business model with the overall strategy, it should focus on the immediate and tangible aspects.
  • Irrelevant or unnecessary information that does not directly relate to the business model. Including extra or unnecessary information can clutter the BMC and make it less effective in communicating the core elements.

What Are Your Thoughts on the Business Model Canvas?

Once you have completed your business model canvas, you can share it with your organization and stakeholders and get their feedback as well. The business model canvas is a living document, therefore after completing it you need to revisit and ensure that it is relevant, updated and accurate.

What best practices do you follow when creating a business model canvas? Do share your tips with us in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs About the Business Model Canvas

  • Use clear and concise language
  • Use visual-aids
  • Customize for your audience
  • Highlight key insights
  • Be open to feedback and discussion

More Related Articles

What is an Action Plan? Learn with Templates and Examples

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

  • 11.2 Designing the Business Model
  • Introduction
  • 1.1 Entrepreneurship Today
  • 1.2 Entrepreneurial Vision and Goals
  • 1.3 The Entrepreneurial Mindset
  • Review Questions
  • Discussion Questions
  • Case Questions
  • Suggested Resources
  • 2.1 Overview of the Entrepreneurial Journey
  • 2.2 The Process of Becoming an Entrepreneur
  • 2.3 Entrepreneurial Pathways
  • 2.4 Frameworks to Inform Your Entrepreneurial Path
  • 3.1 Ethical and Legal Issues in Entrepreneurship
  • 3.2 Corporate Social Responsibility and Social Entrepreneurship
  • 3.3 Developing a Workplace Culture of Ethical Excellence and Accountability
  • 4.1 Tools for Creativity and Innovation
  • 4.2 Creativity, Innovation, and Invention: How They Differ
  • 4.3 Developing Ideas, Innovations, and Inventions
  • 5.1 Entrepreneurial Opportunity
  • 5.2 Researching Potential Business Opportunities
  • 5.3 Competitive Analysis
  • 6.1 Problem Solving to Find Entrepreneurial Solutions
  • 6.2 Creative Problem-Solving Process
  • 6.3 Design Thinking
  • 6.4 Lean Processes
  • 7.1 Clarifying Your Vision, Mission, and Goals
  • 7.2 Sharing Your Entrepreneurial Story
  • 7.3 Developing Pitches for Various Audiences and Goals
  • 7.4 Protecting Your Idea and Polishing the Pitch through Feedback
  • 7.5 Reality Check: Contests and Competitions
  • 8.1 Entrepreneurial Marketing and the Marketing Mix
  • 8.2 Market Research, Market Opportunity Recognition, and Target Market
  • 8.3 Marketing Techniques and Tools for Entrepreneurs
  • 8.4 Entrepreneurial Branding
  • 8.5 Marketing Strategy and the Marketing Plan
  • 8.6 Sales and Customer Service
  • 9.1 Overview of Entrepreneurial Finance and Accounting Strategies
  • 9.2 Special Funding Strategies
  • 9.3 Accounting Basics for Entrepreneurs
  • 9.4 Developing Startup Financial Statements and Projections
  • 10.1 Launching the Imperfect Business: Lean Startup
  • 10.2 Why Early Failure Can Lead to Success Later
  • 10.3 The Challenging Truth about Business Ownership
  • 10.4 Managing, Following, and Adjusting the Initial Plan
  • 10.5 Growth: Signs, Pains, and Cautions
  • 11.1 Avoiding the “Field of Dreams” Approach
  • 11.3 Conducting a Feasibility Analysis
  • 11.4 The Business Plan
  • 12.1 Building and Connecting to Networks
  • 12.2 Building the Entrepreneurial Dream Team
  • 12.3 Designing a Startup Operational Plan
  • 13.1 Business Structures: Overview of Legal and Tax Considerations
  • 13.2 Corporations
  • 13.3 Partnerships and Joint Ventures
  • 13.4 Limited Liability Companies
  • 13.5 Sole Proprietorships
  • 13.6 Additional Considerations: Capital Acquisition, Business Domicile, and Technology
  • 13.7 Mitigating and Managing Risks
  • 14.1 Types of Resources
  • 14.2 Using the PEST Framework to Assess Resource Needs
  • 14.3 Managing Resources over the Venture Life Cycle
  • 15.1 Launching Your Venture
  • 15.2 Making Difficult Business Decisions in Response to Challenges
  • 15.3 Seeking Help or Support
  • 15.4 Now What? Serving as a Mentor, Consultant, or Champion
  • 15.5 Reflections: Documenting the Journey
  • A | Suggested Resources

Portions of the material in this section are based on original work by Geoffrey Graybeal and produced with support from the Rebus Community. The original is freely available under the terms of the CC BY 4.0 license at https://press.rebus.community/media-innovation-and-entrepreneurship/.

Learning Objectives

By the end of this section, you will be able to:

  • Define a business model and its purpose
  • Describe a business model canvas
  • Describe a lean model canvas
  • Describe a social business model canvas

According to Alexander Osterwalder and Yves Pigneur , the authors of Business Model Generation , a business model “describes the rationale of how an organization creates, delivers and captures value.” Nevertheless, there is no single definition of this term, and usage varies widely. 29

In standard business usage, a business model is a plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end users; and the how income will be generated through this process. The business model refers more to the design of the business, whereas a business plan is a planning document used for operations.

Each business model is unique to the company it describes. A typical business model addresses the desirability, feasibility, and viability of a company, product, or service. At a bare minimum, a business model needs to address revenue streams (e.g., a revenue model), a value proposition, and customer segments. In non-jargon English, this means you want to address what your idea is, who will use it, why they will use it, and how you will make money off it.

A canvas is a display that would-be entrepreneurs commonly use to map out and plan different components of their business models. There are several different types of canvases, with the business model canvas and the lean canvas being the most commonly used. There are hard-copy canvases modeled after an art canvas as well as digital versions. The original physical canvases are meant to serve as visual tools, used with sticky notes and sketches.

As developed by Osterwalder and Pigneur, the business model canvas has nine components, as shown in Figure 11.6 .

Link to Learning

Visit this site to see examples of completed Business Model Canvases for a variety of industries for a deeper understanding of how the different categories are filled in.

Osterwalder and Pigneur wrote Value Proposition Design as a sequel to Business Model Generation . Their value proposition canvas is a plug-in that complements the business model canvas, going in depth on activities such as encouraging entrepreneurs to address and tackle customer pains, gains, and jobs-to-be-done trigger questions, and designing pain relievers and gains. The complementary and accompanying activities and resources can be useful for a deeper dive into and understanding of customer value creation in the form of value proposition, although there are other approaches to conceptualizing your value proposition. For Christensen, the originator of the disruptive innovation and jobs-to-be-done theories, a value proposition is a product that helps customers do a job they’ve been trying to do more effectively, conveniently, and affordably.

Finding the intersection of your customers’ problems and your solutions is how you create a unique value proposition, according to the entrepreneur Ash Maurya , the author of Scaling Lean and Running Lean . In Running Lean , Maurya offers the following formula for creating an initial value proposition in the canvas, as shown in Figure 11.7 .

Maurya deviated from the standard business model canvas to create the lean canvas. It overlaps the business model canvas in five of the nine components: customer segments, value proposition, revenue streams, channels, and cost structure ( Figure 11.8 ]. Rather than addressing key partners, key activities, and key resources, the lean canvas helps you tackle problems, solutions, and key metrics instead.

Visit this site to see examples of completed Lean Model Canvases from some major companies for a deeper understanding of how the canvas can be applied.

While the business model canvas and the lean canvas are similar in format, there are differences in how they are used. It is generally accepted that the lean canvas model is a better fit for startups, whereas the business model canvas works well for already established businesses. The lean canvas is simpler; the business model canvas provides a more complete picture of a mature business.

Watch this Railsware video that demonstrates how the lean canvas model might be applied to startups to learn more. In the case example in the video, the lean canvas model is applied to the successful P2P ride-sharing app Uber, as if it were a startup.

Both the business model canvas and the lean canvas are designed for constant iterations, allowing for multiple versions and changes throughout the entrepreneurial process. Part of that process involves customer discovery; thus, the canvases invoke customer-focused design. The target customer is integrated into the canvas from the start through the use of a customer empathy map and a number of design-thinking ideation activities. 30 The customer empathy map is a portrayal of a target customer —the most promising candidate from a business’s customer segments—that explores the understanding of that person’s problems and needs ( Figure 11.9 ). Osterwalder and Pigneur used a customer empathy map as part of the design ideation phase of developing a business model canvas. There are differing versions of customer empathy maps, but most seek to answer common questions pertaining to the customer, such as:

  • With whom are we empathizing?
  • What do they need to do?
  • What do they see?
  • What do they say?
  • What do they do?
  • What do they hear?
  • What do they think?

Phillips, Proctor & Gamble, Microsoft, and Yeti are examples of well-known companies that make use of customer empathy mapping because, according to the journal Entrepreneur , every transaction can be turned into a meaningful and valuable customer interaction. 31 Once a company analyzes the results of customer mapping exercises, it may very well lead to new products that serve customer needs and/or wants.

For example, Philips used empathy mapping to detect a high level of fear in young patients immediately before an MRI medical procedure, so it invented a miniature version of the CAT scan equipment used in the procedure called the “kitten scanner” along with toy animal characters that were used to dispel the fear of MRIs among children. Proctor & Gamble created a new advertisement that was released for the 2012 Olympics visualizing the trials and tribulations of mothers raising young athletes, demonstrating Proctor and Gamble’s awareness that some of its customers wanted or needed empathy for the sacrifices they had made to help their children succeed. Likewise, Microsoft has attempted to demonstrate empathy with customers’ privacy concerns by developing an interactive website that explains not only how data is stolen but also how we can better protect our own data. 32

On their company website, the now-famous Yeti cooler company publicly extols the value of empathy mapping, explaining that it leads to better products. Yeti doesn’t just create one on its own, it actually asks its clients to work with the company to create an empathy map. 33 Thus, empathy mapping for Yeti is part of its product development process.

Customer empathy maps also strive to address customer pains (in this case, fears, frustrations, and anxieties) and gains (wants, needs, hopes, and dreams). 34

Strategyzer offers six videos outlining the business model canvas that total about 12 minutes; specifically they cover the prototyping journey from ideation to visualization of conceptualization.

Business Model Canvas 35

As Osterwalder and Pigneur describe it, according to Media Innovation and Entrepreneurship , their business model canvas blocks include revenue streams, customer segments, value propositions, cost structures, channels, key activities, key partners, key resources, and customer relationships.

Early on, your greatest focus should be on the right side of the canvas because:

  • These are, in many ways, the most critical aspects of starting a new venture (customer segments, value propositions, channels, and revenue streams).
  • The most fluid (revenue streams, channels, and value propositions will likely differ for the differing customer segments and, as you iterate and adapt throughout the customer discovery process, could likely change).
  • These follow a logical temporal order (there’s no need to focus on the costs of building a company if you won’t have customers).

In a follow-up to business model generation, the Strategyzer team created a second canvas, the value proposition canvas: https://www.strategyzer.com/canvas/value-proposition-canvas. The value proposition canvas is a new tool that pulls out the customer segment and value proposition blocks of the business model canvas, and encourages more in-depth exploration of those blocks to achieve a good fit between the two. The value proposition canvas tool looks at customer pains, gains and jobs to be done on the customer side and painkillers, gain creators, and products and services on the value proposition side. 36

Read this blog that provides a walk-through of how to fill in a value proposition canvas to learn more.

When you peel away the language used to describe business models, the early startup planning stages come down to a series of questions. When it comes to formulating a business model for a startup concept, another popular framework used in entrepreneurial circles is that of desirability-feasibility-viability Figure 11.10 ). This framework forces the entrepreneur to address broad questions about the startup concept:

  • Desirability: How desirable is the product? Who will use it and why?
  • Feasibility: How feasible is this idea? What are the costs of making it? How practical is the concept?
  • Viability: Will this idea remain viable? How will it make money? How will it be sustained over time?

These questions then begin to connect to form a narrative about where the startup concept came from, whom it serves, why it’s needed, how it will make money, and how it will be sustained in the future.

The value propositions, customer relationships, customer segments, and channels address the assumptions that will create customer value (desirability). The cost structure and revenue stream blocks are aimed at viability, or overcoming flawed business models. The key partners, key activities, and key resources are about execution and address feasibility. The risk of poor execution can undermine your assumptions that you chose the right infrastructure to execute your business model (feasibility). The risk of solving an irrelevant customer job (sometimes derisively labeled “a solution in search of a problem”) undercuts desirability in your business. The risk of a flawed business model would hamper the financial assumption that your business will earn more money than you spend (viability). Adaptability is about the assumption that you chose the right business model within the context of external factors such as technology change, competition, and regulation.

The business model canvas is not an exhaustive planning tool by any means. 37 , 38 The risk of such external threats is not specifically addressed on the canvas blocks. The external threats not specifically covered by the canvas blocks can be designed for adaptability, that is, the business model canvas is a necessary but insufficient component of determining the viability of the business idea/concept. There are many elements not included in the canvas that entrepreneurs must address. Industry analysis, including a competitive analysis, for example, falls “off canvas” but is important nonetheless.

The Lean Model Canvas

The lean model canvas is Ash Maurya ’s adaptation of the original business model canvas. As we noted earlier, gone are the customer relationships, key activities, key partners, and key resources blocks. Instead, a problem block is added, because as Maurya explains, “Most startups fail, not because they fail to build what they set out to build, but because they waste time, money and effort building the wrong product. I attribute a significant contributor to this failure to a lack of proper ‘problem understanding’ from the start.” Maurya next added a solution block to the lean model canvas, which corresponds well with features on a minimum viable product (MVP), which you will recall was covered in depth in Launch for Growth to Success . The lean model canvas also adds an “Unfair Advantage” block, similar to the block for competitive advantages or barriers to entry found in a business plan. 39

Social Business Model Canvas

As you’ve noticed by now, the core canvas components are common throughout the various versions. Many of the blocks of the social business model canvas are similar to those used in the business model canvas and the lean model canvas. 40 A few differences, as developed by Tandemic , focus on areas unique to social entrepreneurship ventures. For example, the new areas added include measures of what kind of social impact you are creating or developing, measures of surplus to address what happens with profits and where you intend to reinvest them, and measures of beneficiary segments, and social and customer value propositions. 41 These could be measures such as the number of trees planted, number of refugees housed and fed, jobs created, or investments made—depending on the venture. Social impact looks at an organization’s social mission beyond the bottom line. Measurement can differ among social entrepreneurs, but in terms of the canvas, impact measures are an effort to establish quantifiable metrics.

Social impact can be hard to measure, but nonetheless, many social entrepreneurs aim for long-lasting impact. 42 A 2014 report by the think tank, consultancy, and member network SustainAbility lists cooperative ownership, inclusive sourcing, and the “buy one, give one” model as three forms of social impact. 43 In addition to the Tandemic social business model canvas, there are other versions of similar canvases used for social entrepreneurship. For instance, Osterwalder adapted the business model canvas for mission-driven organizations into a mission model canvas. 44 There’s also a social lean canvas that adds purpose (explaining your reason for creating the venture in terms of social or environmental problems) and impact sections (describing the intended social or environmental impact). 45

This completed social business model canvas for the popular peer-to-peer lending platform Kiva illustrates how the business model canvas can and perhaps should be adapted for social entrepreneurship ventures.

What Can You Do?

Toms Shoes is perhaps one of the best-known companies for adopting a social entrepreneurship purpose into its business model. Part of its early success hinged on the fact that for every pair of shoes a customer bought, the company donated a pair of shoes to someone in need. The company won a prize in 2006 for its innovative solution to poverty. This “ 1-for-1 business model ,” sometimes commonly called the “Toms model” after the shoe company that popularized it, gained traction among other companies that followed suit in similar fashion, seeing both the social and the financial successes in the Toms model. Warby Parker is another example of a company that does essentially the same: A customer purchases a pair of eyeglasses, and the company donates a pair (although Warby Parker pays a third party to procure the glasses, as eyeglasses require an individual prescription, whereas shoes do not).

  • Can you think of an innovative social entrepreneurship business model?

The Birthday Party Project

Paige Chenault wanted homeless children in Dallas to feel special on their birthdays. Many have never experienced a birthday party. So this professional event planner sprang into action in January 2012. She launched the Birthday Party Project (https://www.thebirthdaypartyproject.org/), a nonprofit group whose mission is to celebrate the lives of homeless children (ages one to twenty-two). The group organizes monthly birthday parties with partner shelters. Since its inception, the concept has spread beyond Texas to cities across the United States, including Atlanta, Chicago, Los Angeles, New York, and San Francisco. In six years, the Birthday Party Project has celebrated 4,800 birthdays with 30,000 kids in attendance, eaten 40,000 cupcakes, cracked 30,000 glow sticks, and performed 1,100 renditions of “Happy Birthday.”

  • Identify a need in your community that could become a social entrepreneurship business, as Paige discovered with an initial passion project.
  • 29 Alexander Osterwalder and Yves Pigneur. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken, NJ: Wiley, 2010.
  • 30 Charlene Perrin. “Create A Customer Empathy Map in 6 Easy Steps!” Conceptboard . March 28, 2019. https://conceptboard.com/blog/create-a-customer-empathy-map-in-6-easy-steps/
  • 31 Vineet Arya. “How to Infuse Empathy in Your Marketing?” Entrepreneur . June 28, 2019. https://www.entrepreneur.com/article/335987
  • 32 Vineet Arya. “How to Infuse Empathy in Your Marketing?” Entrepreneur . June 28, 2019. https://www.entrepreneur.com/article/335987
  • 33 Mike Godlewski. “The Secret to Knowing What a Client Is Thinking? Empathy Maps.” Yeti. February 8, 2016. https://yeti.co/blog/the-secret-to-knowing-what-your-client-is-thinking-empathy-maps/
  • 34 Germán Coppola. “What Is an Empathy Map, and Why Is It Valuable for Your Business?” Medium . November 28, 2017. https://medium.com/swlh/what-is-an-empathy-map-and-why-is-it-valuable-for-your-business-14236be4fdf4
  • 35 This material is based on original work by Geoffrey Graybeal and produced with support from the Rebus Community. The original is freely available under the terms of the CC BY 4.0 license at https://press.rebus.community/media-innovation-and-entrepreneurship/.
  • 36 Michelle Ferrier and Elizabeth Mays. Media Innovation and Entrepreneurship . The Rebus Foundation, 2017. https://press.rebus.community/media-innovation-and-entrepreneurship/.
  • 37 Jennifer van der Meer. "Do You Suffer from Value Proposition Confusion?" Linkedin . October 19, 2016. https://www.linkedin.com/pulse/do-you-suffer-from-value-proposition-confusion-jennifer-van-der-meer/
  • 38 “The Value Proposition Canvas.” Strategyzer . n.d. https://strategyzer.com/canvas/value-proposition-canvas
  • 39 Ash Maurya. “Why Lean Canvas vs Business Model Canvas?” Medium . February 27, 2012. https://blog.leanstack.com/why-lean-canvas-vs-business-model-canvas-af62c0f250f0
  • 40 "Social Business Model Canvas.” Business Model Toolbox . 2013. https://bmtoolbox.net/tools/social-business-model-canvas/
  • 41 “The Business Model Canvas Reinvented for Social Business.” Tandemic . n.d. http://www.socialbusinessmodelcanvas.com
  • 42 Ayse Guclu, J. Gregory Dees, and Beth Battle Anderson. “The Process of Social Entrepreneurship: Creating Opportunities Worthy of Serious Pursuit.” Duke/Fuqua case . 2002. https://centers.fuqua.duke.edu/case/knowledge_items/the-process-of-social-entrepreneurship-creating-opportunities-worthy-of-serious-pursuit/
  • 43 Lindsay Clinton and Ryan Whisnant. “Model Behavior: 20 Business Model Innovations for Sustainability.” SustainAbility . February 2014. https://sustainability.com/wp-content/uploads/2016/07/model_behavior_20_business_model_innovations_for_sustainability.pdf
  • 44 Alexander Osterwalder. “The Mission Model Canvas: An Adapted Business Model Canvas for Mission-Driven Organizations.” Strategyzer . February 25, 2016. https://blog.strategyzer.com/posts/2016/2/24/the-mission-model-canvas-an-adapted-business-model-canvas-for-mission-driven-organizations
  • 45 Social Lean Canvas. n.d. https://socialleancanvas.com/

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Access for free at https://openstax.org/books/entrepreneurship/pages/1-introduction
  • Authors: Michael Laverty, Chris Littel
  • Publisher/website: OpenStax
  • Book title: Entrepreneurship
  • Publication date: Jan 16, 2020
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/entrepreneurship/pages/1-introduction
  • Section URL: https://openstax.org/books/entrepreneurship/pages/11-2-designing-the-business-model

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Business Model

What is a Business Model?

A business model is essentially the blueprint or framework that outlines how a company plans to generate revenue and sustain its operations. It serves as a roadmap that defines the way a business creates, delivers, and captures value. A well-structured business model not only helps a company understand its revenue streams but also how it will maintain profitability over time.

A business model typically addresses several key aspects:

Value Proposition: This describes the product or service the company offers and how it solves a problem or fulfills a need for its customers.

Customer Segments: Identifying the target audience or customer groups is crucial. It's important to understand who will benefit from the product or service.

Revenue Streams: A business model outlines how the company intends to make money. This could include various sources such as sales, subscriptions, advertising, or licensing fees.

Channels: The methods through which the product or service reaches the customer. This might include physical stores, online platforms, distribution networks, and more.

Key Resources and Activities: What does the business require to function efficiently? This includes people, technology, partnerships, and other essential resources.

Cost Structure: Understanding the costs associated with running the business, including fixed and variable expenses.

Competitive Advantage: How the business distinguishes itself from competitors, which can be through pricing, innovation, quality, or other factors.

Types of Business Models

There are various types of business models that companies can adopt, each with its own unique characteristics and revenue generation strategies. Some common business models include:

Retailer: Businesses that purchase products from manufacturers or wholesalers and sell them directly to consumers. Example: Walmart

Manufacturer: Companies that produce goods or products and then sell them through various distribution channels. Example: Apple

Fee-for-Service: Businesses charge customers a fee for specific services or expertise, such as consulting firms or legal practices. Example: Equirus Wealth

Subscription: Customers pay regular fees, often monthly or annually, for access to a product or service. Examples include streaming services and software subscriptions. Example: Netflix

Freemium: Offer a basic version of a product or service for free and charge for premium features or advanced functionalities. Example: Dropbox

Marketplace: Connect buyers and sellers, earning a commission or fee for facilitating transactions. Examples include Amazon and eBay.

Affiliate: Promote other companies' products or services and earn a commission on sales generated through your referrals. Example: Amazon Associates

Franchise: Allows individuals or groups to operate a business under an established brand in exchange for fees and royalties. Example: McDonald's

Pay-As-You-Go: Customers pay only for the resources or services they use, often seen in utility companies or cloud computing services. Example: Amazon Web Services (AWS)

Brokerage: Facilitate transactions between buyers and sellers and earn a commission for matchmaking services, common in real estate and stock trading.

How to Create a Business Model?

Creating a business model involves careful planning and analysis. Here are the key steps to create a business model:

1. Market Research: Understand your target audience, their needs, and the competitive landscape.

2. Value Proposition: Clearly define what makes your product or service valuable to customers.

3. Customer Segmentation: Identify specific customer segments that your business will target.

4. Revenue Streams: Determine how you will make money, considering pricing strategies and multiple revenue sources if applicable.

5. Channels: Choose the most effective channels to reach your target customers.

6. Key Resources and Activities: List the resources and activities required to deliver your value proposition efficiently.

7. Cost Structure: Calculate your operating costs and establish a sustainable cost structure.

8. Competitive Advantage: Identify what sets your business apart from competitors.

9. Testing and Iteration: Continuously test and refine your business model as you gather feedback and learn from the market.

Popular Calculators

Judge fines Donald Trump more than $350 million, bars him from running businesses in N.Y. for three years

The judge who presided over a civil business fraud trial against Donald Trump on Friday ordered the former president, his sons, business associates and company to pay more than $350 million in damages and temporarily limited their ability to do business in New York.

Judge Arthur Engoron ordered the former president and the Trump Organization to pay over $354 million in damages , and barred Trump “from serving as an officer or director of any New York corporation or other legal entity in New York for a period of three years,” including his namesake company.

New York Attorney General Letitia James, whose office brought the case, said that with pre-judgment interest, the judgment totals over $450 million, an amount “which will continue to increase every single day” until the judgment is paid.

“Donald Trump is finally facing accountability for his lying, cheating, and staggering fraud. Because no matter how big, rich, or powerful you think you are, no one is above the law,” James said in a statement, calling the ruling “a tremendous victory for this state, this nation, and for everyone who believes that we all must play by the same rules — even former presidents.”

The ruling also bars Trump and his company from applying for any bank loans for three years.

In his first public remarks after the ruling, Trump said, “We’ll appeal and we’ll be successful.”

Speaking to reporters at Mar-a-Lago on Friday night, Trump bashed the ruling as “a fine of 350 million for a doing a perfect job.” He also repeated previous attacks by calling the judge “crooked” and the attorney general “corrupt.”

Trump did not take any questions from reporters after speaking for about six minutes.

The judge’s decision is a potential blow to both Trump’s finances and persona — having built his brand on being a successful businessman that he leveraged in his first run for president. Trump is currently running for the White House for a third time. This case is just one of many he is currently facing, including four separate pending criminal trials, the first of which is scheduled to begin on March 25.

Engoron also ordered the continued “appointment of an Independent Monitor” and the “the installation of an Independent Director of Compliance” for the company.

In posts on his social media platform Truth Social, Trump called the ruling “an illegal, unAmerican judgment against me, my family, and my tremendous business.”

“This ‘decision’ is a complete and total sham,” he wrote.

During the trial, Trump and executives at his company, including his sons Donald Trump Jr. and Eric Trump, attempted to blame exaggerated financial statements that were the heart of New York Attorney General Letitia James’ fraud case on the accountants who compiled them. Engoron disagreed.

“There is overwhelming evidence from both interested and non-interested witnesses, corroborated by documentary evidence, that the buck for being truthful in the supporting data valuations stopped with the Trump Organization, not the accountants,” he wrote.

In explaining the need for a monitor, the judge cited the lack of remorse by Trump and his executives after the fraud was discovered.

“Their complete lack of contrition and remorse borders on pathological. They are accused only of inflating asset values to make more money. The documents prove this over and over again. This is a venial sin, not a mortal sin. Defendants did not commit murder or arson. They did not rob a bank at gunpoint. Donald Trump is not Bernard Madoff. Yet, defendants are incapable of admitting the error of their ways,” Engoron wrote.

“Defendants’ refusal to admit error — indeed, to continue it, according to the Independent Monitor — constrains this Court to conclude that they will engage in it going forward unless judicially restrained,” he added.

The ruling also bars the Trump sons — who’ve been running the company since their father went to the White House — “from serving as an officer or director of any New York corporation or other legal entity in New York for a period of two years.” Both were fined over $4 million, plus interest, for their roles in the scheme.

Donald Trump Jr. posted on the social media site X that “We’ve reached the point where your political beliefs combined with what venue your case is heard are the primary determinants of the outcome; not the facts of the case! It’s truly sad what’s happened to our country.”

In a statement, Eric Trump called the judge “a cruel man.”

“He knows that every single witness testified to that fact that I had absolutely NOTHING to do with this case (as INSANE as the case truly is),” Eric Trump said.

He also attacked the ruling as “political vengeance by a judge out to get my father.”

 Trump attorney Alina Habba called the verdict “a manifest injustice — plain and simple.”

“Given the grave stakes, we trust that the Appellate Division will overturn this egregious verdict and end this relentless persecution against my clients,” she said in a statement.

A spokesperson for Trump Organization called the ruling “a gross miscarriage of justice. The Trump Organization has never missed any loan payment or been in default on any loan.”

High legal costs

An appeal in the case would likely take years, but Trump could have to post a bond for the full amount if he does so.

Read more: Trump faces about $400 million in legal penalties. Can he afford it?

The judgment is the second this year against Trump after he was hit last month with an $83.3 million verdict in writer E. Jean Carroll’s defamation case against him. Trump has said he plans to appeal that verdict as well, but would have to post a bond for that amount as well.

James had been seeking $370 million from Trump, his company and its top executives, alleging “repeated and persistent fraud ” that included falsifying business records and financial statements. James had argued those financial statements were at times exaggerated by as much as $2.2 billion.

James contended the defendants used the inflated financial statements to obtain bank loans and insurance policies at rates he otherwise wouldn’t have been entitled to and “reaped hundreds of millions of dollars in ill-gotten gains.”

Trump had maintained his financial statements were conservative, and has called the AG’s allegations politically motivated and a “fraud on me.”

“This is a case that should have never been brought, and I think we should be entitled to damages,” Trump told reporters when he attended closing arguments in the case on Jan. 11.

Trump testimony knocked

The monthslong civil trial included testimony from Trump and his oldest children . The former president was combative in his day on the stand, blasting James as a “hack” and calling the judge “extremely hostile.”

Trump repeatedly complained about Engoron before and throughout the trial, and the judge slapped him with a partial gag order after he started blasting the judge’s law clerk as well. Trump’s complaints led to a flood of death threats against the clerk, as well as Engoron, court officials said, and Trump was fined $15,000 for twice violating the order.

Among the examples cited as fraud by the attorney general’s office during the trial was Trump valuing his triplex home in Trump Tower in New York City at three times its actual size and value, as well as including a brand value to increase the valuation of his golf courses on the financial statements, which explicitly said brand values were not included.

Another example pointed to by the attorney general clearly got under his skin — a dispute over the value of Mar-a-Lago, his social club and residence in Florida. Trump’s financial statements from 2011 to 2021 valued Mar-a-Lago at $426 million to $612 million, while the Palm Beach County assessor appraised the property’s market value to be $18 million to $27 million during the same time frame. Trump had also fraudulently puffed up the value of the property by saying it was a private residence, despite having signed an agreement that it could only be used as a social club to lower his tax burden.

Trump maintained during the trial the property was worth much, much more .

“The judge had it at $18 million, and it is worth, say, I say from 50 to 100 times more than that. So I don’t know how you got those numbers,” Trump testified, adding later that he thinks it’s actually worth “between a billion and a billion five.”

In his ruling Friday, Engoron said he didn’t find Trump to be a credible witness.

“Overall, Donald Trump rarely responded to the questions asked, and he frequently interjected long, irrelevant speeches on issues far beyond the scope of the trial. His refusal to answer the questions directly, or in some cases, at all, severely compromised his credibility,” the judge wrote.

Michael Cohen testimony ‘credible’

James’ investigation into the former president’s business began in 2019 as a result of congressional testimony from his former personal lawyer Michael Cohen , who told the House Oversight Committee that Trump would improperly expand and shrink values to fit whatever his business needs were.

Cohen testified during the trial about his role in the scheme, and said while Trump didn’t explicitly tell him and then-Chief Financial Officer Allen Weisselberg to inflate the numbers in the financial statement, he was like a “mob boss” who tells you what he wants without directly telling you.

Trump claimed Cohen’s testimony exonerated him while also painting him as an untrustworthy liar because he admitted having previously lied under oath.

In his ruling, Engoron called Cohen an “important witness” and said he found his testimony “credible.” “This factfinder does not believe that pleading guilty to perjury means that you can never tell the truth. Michael Cohen told the truth,” the judge wrote.

Former CFO ‘evasive’

Engoron was less forgiving about former Trump CFO Weisselberg, who previously pleaded guilty to carrying out tax fraud at the company.

Weisselberg’s “testimony in this trial was intentionally evasive, with large gaps of ‘I don’t remember.’”

“There is overwhelming evidence that Allen Weisselberg intentionally falsified hundreds of business records during his tenure” at the company, the judge wrote. “Weisselberg understood that his assignment from Donald Trump was to have his reported assets increase every year irrespective of their actual values. The examples of Weisselberg’s intent to falsify business records are too numerous to itemize,” he added.

The judge permanently barred Weisselberg “from serving in the financial control function of any New York corporation or similar business entity operating in New York State,” and ordered him to pay the $1 million he’s already received from his $2 million separation agreement from the company as “ill-gotten gains.”

AG initially sought less

James filed her suit seeking $250 million in damages from Trump in 2022, and the judge appointed a monitor to oversee the company’s finances that November.

In a summary judgment  ruling the week before the trial started, Engoron found Trump and his executives had repeatedly engaged in fraud. The “documents here clearly contain fraudulent valuations that defendants used in business, satisfying [the attorney general’s] burden to establish liability as a matter of law against defendants,” the judge wrote, while denying Trump’s bid to dismiss the case.

Engoron summarized the Trump defense as “the documents do not say what they say; that there is no such thing as ‘objective’ value; and that, essentially, the Court should not believe its own eyes.”

The order, which Trump appealed, held that Trump’s business certificates in New York should be canceled, which could have wreaked havoc on Trump’s company and forced the sell-off of some assets.

Engoron backed off of that decision in his ruling Friday, saying the addition of the “two-tiered oversight” of the monitor and the compliance director makes that move “no longer necessary.”

Trump had complained about the summary judgment ruling while he was on the witness stand. “He said I was a fraud before he knew anything about me, nothing about me,” Trump said. “It’s a terrible thing you did.”

business model office meaning

Adam Reiss is a reporter and producer for NBC and MSNBC.

business model office meaning

Dareh Gregorian is a politics reporter for NBC News.

Circular economy: definition, importance and benefits

The circular economy: find out what it means, how it benefits you, the environment and our economy.

business model office meaning

The European Union produces more than 2.2 billion tonnes of waste every year . It is currently updating its legislation on waste management to promote a shift to a more sustainable model known as the circular economy.

But what exactly does the circular economy mean? And what would be the benefits?

What is the circular economy?

The circular economy is a model of production and consumption , which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended.

In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are kept within the economy wherever possible thanks to recycling. These can be productively used again and again, thereby creating further value .

This is a departure from the traditional, linear economic model, which is based on a take-make-consume-throw away pattern. This model relies on large quantities of cheap, easily accessible materials and energy.

Also part of this model is planned obsolescence , when a product has been designed to have a limited lifespan to encourage consumers to buy it again. The European Parliament has called for measures to tackle this practice.

Infographic explaining the circular economy model

Benefits: why do we need to switch to a circular economy?

To protect the environment.

Reusing and recycling products would slow down the use of natural resources, reduce landscape and habitat disruption and help to limit biodiversity loss .

Another benefit from the circular economy is a reduction in total annual greenhouse gas emissions . According to the European Environment Agency, industrial processes and product use are responsible for 9.10% of greenhouse gas emissions in the EU, while the management of waste accounts for 3.32%.

Creating more efficient and sustainable products from the start would help to reduce energy and resource consumption, as it is estimated that more than 80% of a product's environmental impact is determined during the design phase.

A shift to more reliable products that can be reused, upgraded and repaired would reduce the amount of waste. Packaging is a growing issue and, on average, the average European generates nearly 180 kilos of packaging waste per year . The aim is to tackle excessive packaging and improve its design to promote reuse and recycling.

Reduce raw material dependence

The world's population is growing and with it the demand for raw materials. However, the supply of crucial raw materials is limited.

Finite supplies also means some EU countries are dependent on other countries for their raw materials. According to Eurostat , the EU imports about half of the raw materials it consumes.

The total value of trade (import plus exports) of raw materials between the EU and the rest of the world has almost tripled since 2002, with exports growing faster than imports. Regardless, the EU still imports more than it exports. In 2021, this resulted in a trade deficit of €35.5 billion.

Recycling raw materials mitigates the risks associated with supply, such as price volatility, availability and import dependency.

This especially applies to critical raw materials , needed for the production of technologies that are crucial for achieving climate goals, such as batteries and electric engines.

Create jobs and save consumers money

Moving towards a more circular economy could increase competitiveness, stimulate innovation, boost economic growth and create jobs ( 700,000 jobs in the EU alone by 2030 ).

Redesigning materials and products for circular use would also boost innovation across different sectors of the economy.

Consumers will be provided with more durable and innovative products that will increase the quality of life and save them money in the long term.

What is the EU doing to become a circular economy?

  In March 2020, the European Commission presented the circular economy action plan,  which aims to promote more sustainable product design, reduce waste and empower consumers, for example by creating a right to repair ). There is a focus on resource intensive sectors, such as electronics and ICT , plastics , textiles and construction.

In February 2021, the Parliament adopted a resolution on the new circular economy action plan demanding additional measures to achieve a carbon-neutral, environmentally sustainable, toxic-free and fully circular economy by 2050, including tighter recycling rules and binding targets for materials use and consumption by 2030. In March 2022, the Commission released the first package of measures to speed up the transition towards a circular economy, as part of the circular economy action plan. The proposals include boosting sustainable products, empowering consumers for the green transition, reviewing construction product regulation, and creating a strategy on sustainable textiles.

In November 2022, the Commission proposed new EU-wide rules on packaging . It aims to reduce packaging waste and improve packaging design, with for example clear labelling to promote reuse and recycling; and calls for a transition to bio-based, biodegradable and compostable plastics.

Find out more

  • Infographic on the circular economy

Related articles

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Watch CBS News

Read the full decision in Trump's New York civil fraud case

By Graham Kates

Edited By Stefan Becket, Paula Cohen

Updated on: February 16, 2024 / 8:27 PM EST / CBS News

The judge overseeing the civil fraud case in New York against former President Donald Trump and the Trump Organization has issued his long-awaited ruling , five weeks after the  trial in the case concluded . 

Judge Arthur Engoron ordered Trump and his company to pay $354 million in fines — a total that jumps to $453.5 million when pre-judgment interest is factored in. It also bars them from seeking loans from financial institutions in New York for a period of three years, and includes a three-year ban on Trump serving as an officer or director of any New York corporation. 

Additional penalties were ordered for Trump's sons, Eric and Donald Trump Jr., who are executives at the company, and two former executives, Allen Weisselberg and Jeffrey McConney.

New York Attorney General Letitia James  brought the civil suit  in 2022, seeking a  penalty that grew to $370 million  and asking the judge to bar Trump from doing business in the state. 

Judge Engoron had already ruled in September that Trump and the other defendants were  liable for fraud , based on the evidence presented through pretrial filings. 

The judge had largely affirmed James' allegations that Trump and others at his company had inflated valuations of his properties by hundreds of millions of dollars over a the course of a decade and misrepresented his wealth by billions in a scheme, the state said, intended to trick banks and insurers into offering more favorable deal terms.

Trump and his legal team long expected a defeat, with the former president decrying the case as "rigged" and a "sham" and his lawyers laying the groundwork for an appeal before the decision was even issued. He is expected to appeal.

Read Judge Engoron's decision here :

  • The Trump Organization
  • Donald Trump
  • Letitia James

Graham Kates is an investigative reporter covering criminal justice, privacy issues and information security for CBS News Digital. Contact Graham at [email protected] or [email protected]

More from CBS News

Trump's civil fraud judgment is officially over $450 million, and climbing

Judge in Trump fraud case denies bid to pause $354 million judgment

Jury finds Wayne LaPierre, NRA liable in corruption civil case

Trump claims immunity in move to dismiss classified documents case

Are banks, post offices, UPS and FedEx open on Presidents Day 2024? What to know

business model office meaning

If you need to mail a package, buy some stamps or run to the bank, it is a good idea to get that errand done before Sunday.

Major banks and U.S. Postal Service offices will be closed on Monday, Feb. 19 in observance of George Washington's birthday , a holiday more commonly known as Presidents Day .

After Presidents Day , which is celebrated on the third Monday of February every year, there are no more federal holidays until May, so you may have to wait a while for another three-day weekend at work or school.

The date of Presidents Day changes every year because of the Uniform Holiday Bill signed in 1968 by President Lyndon B. Johnson. The bill mandated that three holidays, including Presidents Day, occur on Mondays to prevent midweek shutdowns and add long weekends to the federal calendar.

Here's what you need to know about banks, post offices and shipping services, like UPS and FedEx, on Presidents Day this year.

Fun facts about US presidents: Celebrate Presidents Day by learning fun, interesting facts about US presidents

Is the post office open on Presidents Day? Will mail be delivered?

Postal service facilities will be closed for retail transactions on Monday, Feb. 19, and there will be no residential or business deliveries, the U.S. Postal Service told USA TODAY.

Are banks open on Presidents Day?

Branches of Wells Fargo, Citibank, Bank of America, and Truist, among others, will be closed on Feb. 19, the companies told USA TODAY.

Is UPS open on Presidents Day? Will packages be delivered?

UPS pickup and delivery services are available and UPS Store locations will be open on Monday, according to the company's website .

UPS SurePost and UPS Mail Innovations deliveries will require one additional business days' time in transit due to the USPS holiday.

Presidents Day food deals: Presidents Day promotions include sandwich, food and drink specials

Is FedEx open on Presidents Day? Will packages be delivered?

FedEx pickup and delivery services are available and FedEx Office locations will be open on Monday, according to the company's website .

FedEx Ground Economy deliveries may be delayed due to the USPS holiday.

Are Costco, Walmart and Target open on Presidents Day?

Yes, Costco , Walmart and Target , as well as most major retailers , grocers and restaurants, are open on the holiday.

Purchases you make through our links may earn us and our publishing partners a commission.  

Contributing: Clare Mulroy, USA TODAY

COMMENTS

  1. What is a Business Model with Types and Examples

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  13. The Model Office

    The Model Office is a working prototype of operations which reflects the production environment as closely as is practically possible. The Model Office allows us to validate the usefulness and effectiveness of the proposed solution.

  14. What Is a Business Model? Definition and Examples

    A business model outlines a company's strategy to create a profit with its products or services. Some factors of a business model can include target customer base, potential expenses and pricing strategies.

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    The Business Model Canvas is a strategic management tool that helps businesses visualize and analyze their business models. It consists of 9 fundamental building blocks that describe the core aspects of a company's value proposition, infrastructure, customers, and finances (more on that later, we promise).

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  18. What is a Business Model Canvas? Quick Guide + Examples

    Quick Guide + Examples. Based on the work of Alexander Osterwalder, a Business Model Canvas, or BMC for short, is a diagram used to visualize a business model; it allows structured organization and a quick method of evaluation and reflection on the effectiveness of a Business Model. The use and study of Business Model Canvas Examples allows us ...

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  22. 11.2 Designing the Business Model

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  23. Business Model: Meaning, Types and How to Create

    A business model is essentially the blueprint or framework that outlines how a company plans to generate revenue and sustain its operations. It serves as a roadmap that defines the way a business creates, delivers, and captures value.

  24. Central business districts become activity centers in downtown

    Monikers like "central business district" and "financial district" have long described places of business and key sources of revenue in America's downtowns. But with less frequent in-office work ...

  25. Judge Engoron fines Trump more than $350M, bars him from running

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    What is the circular economy? The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.In this way, the life cycle of products is extended.. In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are ...

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  30. Are banks, post offices, FedEx, UPS open Presidents Day 2024?

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