Business Model Definition

Why is it that, whenever you search for a simplistic defintion of "business model" you are presneted with lengthy, complicated and often artisic-sounding theories that leave you more confused than when you started your search? I've studied business organization, and have worked with rural aspiring entrepreneurs, and trust me - this concept need not be confusing.

For those of us working in the nonprofit sector, perhaps "business model" is alien, if not symbolic of the heartless corporate world. Such assumptions will stifle your startegic planning, and worse will confuse your main customers about what your competitive offering is. A business model is nothing more than a story, it should tell you (a) what you do, (b) how you do it, (c) with whom/what do you do it, and (d) who you do it for. Sometimes this story is presneted graphically, sometimes as a presnetation, or sometimes as a document.

Now what if you couldn't answer those 4 simple quetsions, then how can you expect your customers to understand it? How can you expect to have new customers lining up to obtain your offering? Worse, how can you grow or expand your offering into new markets if you don't know what you are expanding in the first place?

As an avid reader of the Strategic Entrepreneur Journal, often times great definitions, or new perspectives for viewing complex business concepts are presented. I prepared this diagram after reading the opening article in the recent edition entitled, "Business Models Within the Domain of Strtaegic Entrepreneurship." The diagram should help explain this abstract concept in a way that makes sense. Becoming familiar with the definition, and understanding the concept will allow you to then articulate your model not only to your team, but to yourself.