what is a business model 
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 companies attract investment recruit talent and motivate management and staff businesses should regularly update their business model or they ll fail to anticipate trends and challenges ahead business models also help investors to evaluate companies that interest them and employees to understand the future of a company they may aspire to join investopedia laura porterunderstanding business modelsa business model is a high level plan for profitably operating a business in a specific marketplace this plan helps the company to identify the best way to go about doing its business while also serving to attract investors and talent 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 it should ideally be 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 and they are subject to change many businesses revise their business models periodically to reflect changing business environments and market demand 