A Business Model is a company's profit-making strategy. It specifies the items or services that the company intends to offer, its target market, and any estimated expenditures. Business models are critical for both new and existing companies. They assist new and expanding businesses in attracting investment, recruiting talent, and motivating management and workers. Established firms should revise their business plans on a regular basis or they will fail to predict future trends and obstacles. Business plans assist investors in evaluating firms of interest.Business models are important because they dictate how much money a company can make as well as how it will go about making that money. For example, if a company wants to focus on selling products rather than services, then it needs to have an efficient system for mass producing those products at low cost. Alternatively, if a company wants to provide unique services that no one else offers, then it needs to find ways of distinguishing itself from the competition through marketing or customer service innovations.No matter what type of business model you choose however, there are some basic tenets that all businesses need adhere too. These include having clearly defined goals, assembling an effective team and establishing good financial controls. Without these essentials in place, even the best laid plans can come undone.
