A business model is a high-level plan for how a business will earn and maximize profits. Business models establish whether a company will offer a product or service, be online or brick and mortar, or sell to businesses vs directly to consumers, or a hybrid between several traditional business models. A business model is not an in-depth plan; it is a 30,000 ft view of the business which is used as a platform to build more in-depth plans upon. A business model has 2 main focuses: a marketing plan and a financial plan. Within a marketing plan, a company must establish its Value Proposition, Brand, and Target Market. Here is a marketing plan example: A financial plan forecasts revenues while assessing variable and fixed costs. Variable costs are costs associated with each unit of production, which are used to calculate the profit earned from each unit sold, known as "gross profit." Fixed costs are the necessary overhead costs to produce goods, such as a facility. A financial plan will evaluate how many units must be sold to cover fixed costs and become profitable. Every business' goal is to earn and maximize profits. However, many business owners fail to consider the many other factors that can potentially harm their businesses. With the help of a financial advisor who can assess the viability of your business model, potential risks can be minimized or avoided and profitability can be maximized. Business Model Definition
Marketing Plan
While TJMaxx and Abercrombie both sell clothing, TJMaxx is a cheaper alternative while Abercrombie positions itself as premium casual wear.
Financial Plan
Invest in Growth and Protection
Business Model FAQs
A business model is a high-level plan for how a business will earn and maximize profits and establish whether a company will offer a product or service.
A business model is not an in-depth plan; it is a 30,000 ft view of the business which is used as a platform to build more in-depth plans upon.
A business model gives a business definite specific goals that it will try to reach by the end of the time period that the model covers.
Business models establish whether a company will offer a product or service, be online or brick and mortar, or sell to businesses vs directly to consumers, or a hybrid between several traditional business models.
The primary parts of a business model are a marketing plan and a financial plan.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.