A business model is a framework for how a company will create value. Ultimately, it distills the potential of a business down to its essence. It answers fundamental questions about the problem you are going to solve, how you will solve it, and the growth opportunity within a given market.

Creating a business model is essential, whether you are starting a new venture, expanding into a new market, or changing your go-to-market strategy. You can use a business model to capture fundamental assumptions and decisions about the opportunity in one place, setting the direction for success.
Common business models used by technology companies:
- Subscription
- Transactional
- Freemium
- Affiliate
- Retail sales

Why is a business model important?
The process of building a business model establishes a plan for how you will realize your vision. It lays out the strategy behind a new undertaking or investment and provides a framework for tracking progress.
How do companies use business models?
For established enterprises, a business model is often a living framework that is reviewed and adapted every year based on changes with customers, employees, and the market. For companies launching new products or entering new markets, a business model can help get them off to the right start and ensure that early product and marketing decisions are tied back to the strategy.

Components of a business model
A business model should answer important questions about your business and set out a strong vision for the business. The key components of a business model should include relating to your target customers, the market, organization strengths and challenges, and essential elements of the product.

Vision - High-level introduction to the company and business model
Key objectives - Definition of the top-level goals and how they will be measured
Solution - How the product will solve those pain points
Pricing - A view into what the solution will cost and how it will be sold
Business model tools

A wide variety of tools are available to help you quickly build and share your business model. An example is Aha! business model builder which includes the most popular templates. Aha! lets you create your own custom business model, using the simple drag-and-drop interface.

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