Business model is a three-dimensional model consisting of customer value, enterprise resources and capabilities, and profitability.

With a good business model, success is half guaranteed. A business model is the way or means by which a company makes money.

New explanation of business model: business model is a system for a company to meet consumer demand, this system organizes and manages all kinds of resources of the company (capital, raw materials, human resources, operation mode, sales mode, information, brand and intellectual property rights, the environment in which the company is situated, and innovativeness, which is also called the input variables), and forms the products and services that can provide the products and services that consumers can't do by themselves and have to buy (output variables), and thus has its own ability to replicate the business model. variables), and thus have characteristics that can be copied by themselves but not by others.

A good business model must contain at least the following nine basic elements.

1. Value Proposition

What is the need or problem that the startup is trying to fill? The value proposition must clearly define the target customer, the customer's problems and pain points, the unique solution, and the net benefit of that solution from the customer's perspective.

2. Target Market

The target market is the group of customers that the startup intends to attract through marketing and sell products or services to. This market segment should have specific headcounts as well as ways of buying the product.

3. Sales and Marketing

How to reach customers? Oral presentations and viral marketing are by far the most popular ways, but they are still not enough to launch a new business. Startups need to be more specific in their sales channels and marketing proposals.

4. Production

How do startups make products or services? Conventional practices include home production, outsourcing, or just buying off-the-shelf components. The key issues here are time to market and cost.

5. Distribution

How do startups sell their products or services? Some products and services can be sold online, others require multiple levels of distributors, partners or value-added retailers. Startups need to plan whether their products will be sold only locally or globally.

6. Revenue model

How do you make money? It's critical to explain to yourself and your investors how you're going to price your product, whether the revenue cash flow will cover all your expenses, including day-to-day expenses and after-sales support costs, and then there's a good return.

7. Cost structure

What are the costs of a startup? New entrepreneurs focus only on direct costs and underestimate marketing and sales costs, daily expenses and after-sales costs. When calculating costs, you can compare the estimated costs with the reports released by similar companies.

8. Competition

How many competitors does the startup face? No competitors likely means no market. More than 10 competitors indicate a saturated market. Think expansively here. Like airplanes and trains, customers always have a choice.

9. Market size, growth and share

How big is the market for the startup's product? Is it growing or shrinking? How much share can be gained?VC venture capitalists look for projects where the market has a double-digit growth rate per year, a market volume of more than $1 billion, and startups with plans for a market share of more than 10 percent.

A viable, investment-worthy business model is one of the first things entrepreneurs need to emphasize in their business plans. In fact, without a business model, entrepreneurship is just a dream.

There are three characteristics of a successful business model:

First, a successful business model provides unique value. Sometimes this unique value may be a new idea; more often it tends to be a combination of product and service uniqueness. This combination either provides additional value to the customer; or it enables the customer to get the same benefits at a lower price, or more benefits at the same price.

Second, business models are difficult to imitate. Businesses raise the barriers to entry in their industry by establishing that they are different, such as their dedication to customer care and unparalleled implementation capabilities, thus ensuring that the source of profit is not infringed upon. For example, the direct selling model (only "direct selling" point, can not be called a business model), everyone knows how it works, also know that Dell is the benchmark of direct selling, but it is difficult to copy Dell's model, the reason is that behind the "direct selling", it is The reason is that behind "direct sales" is a complete set of resources and production processes that are extremely difficult to replicate.

Third, a successful business model is down-to-earth. Businesses need to live within their means and break even. This seems self-evident, but it is not easy to do year after year, day after day. The reality is that many companies, whether traditional or new, do not know much about where they make their money, why customers value their products and services, or even how many customers actually do not bring profits to the business, but rather erode the business revenue and other key issues.