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Business Model Meaning, The Importance, And The Type

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Business model meaning

Everyone who built a company wants their business to be successful. But to achieve that, there are many things to do. One of them is the investors. In order to run a company, you need to find investors willing to invest in your company. And to do that you need a business model. How’s important business model meaning to businessmen? Let’s find out about that.

Business model meaning

Business Model Meaning

When you’re going to present the product to the investors, you need to ensure that your product will benefit both the company and the clients. And that’s the role of a business model. It is different from a business plan or business strategy. Business model meaning is everything that relates to the company or product. It explains how your company is running and making money.

The policies of the company and the steps to achieve the company’s goal are included in the business model. Generally, there are three-part of the business model :

  • Design and Manufacture of the product and everything relates to them.
  • How to sell the product, start from finding the right consumers and the right distributors.
  • How the company makes money and how the consumers pay for the product.

A business model is a very important factor when you want to build a company. Without that, the company doesn’t have the purpose and will collapse slowly.

Business Model Type

Before starting the company, you should know that there are various types of business. And because of that, the business model do varies a lot. Basically there are four business models that you could find.

1. Manufacturer

This kind of business model deals with making the product. Manufacture makes a product from the raw materials to finished product. When you finish making it and want to sell your product, there are some ways. First, you can sell it to the distributors or middleman. Another way to sell the product is selling directly to the consumers. The example of a manufacturing company is Apple.

2. Distributors

If manufacture focus on making the product from raw, distributors company then focus on relating. It does not make the product but buys it from the manufacturing company instead. And then the distributor company will sell it to the consumers. One of the distributors’ companies you can find is Winsupply.

3. Retailer

The next business model is a retailer. The retailer company runs the business by purchasing the product from distributors. After that, selling the product to the public directly. Amazon is one of the popular retailer company.

4. Franchise

The franchise business is a company that sells its brand to other third parties. A franchise can be a manufacturer or distributor or even a retailer. The third party that buys the brand called franchisees. And then these franchisees will follow the business’s parent model while paying the royalties. A good example of this business is McDonald’s.

To a businessman, the business model meaning is not just a step to making a profit. The business model is an essential thing for the company that leads it to its success. That’s precisely why when you want to start your own company, first start from the business model.