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5. Business Plan Format, Section 5:
Business Model Explanation (1 page)
A business model is the profit-making engine of the business. It is central to a business’s success. The business model you choose will be a strong determining point of the future the success of your business.
Your business model must include information on what your company offers in terms of products or services; what makes your offering unique; who you sell them to; and how you make your money.
The important aspects of a business model that should be presented in a consolidated framework include: The sources of revenue
- The major costs involved in generating the revenue
- The profitability of the business (revenue less costs)
- The investment required to get the business up and running (to get to scale)
- The critical success factors and assumptions for making the profit model work
Good business model depend on three qualities, finding high-value customers, offering significant value to customers, and delivering significant margins.
They also avoid three things that can derail a business, namely difficulties in satisfying customers, trouble maintaining market position, and problems generating funding for growth.