A business model describes the manner in which a firm generates value to customers and how the company generates revenues in a normal and planned manner. It explains the products or services that the business is being involved with, who they serve and how various activities contribute to make it be effective in delivering the products or services. All businesses (large or small) have a type of business model that they operate under, though the owner may not have ever formalised the business model. Learning business models makes individuals view the bigger picture of businesses in regards to their operation beyond the day-to-day activities and transactions. It reveals how ideas become organised systems that help them to grow, stabilize and achieve success in the long term.

Value creation is at the heart of any business model. A company needs to offer something useful, meaningful, or useful in the lives of the customers. This value can be presented in the form of a product that will solve a problem or a service that will save time, or even an experience that will enhance comfort or convenience. Customers prefer one business to another since they feel that it values them more. Without customers perceiving value, there will be no survival of the business with all the marketing. The creation of value is as such the corner stone of all business models that are successful.

The other factor is also the target customer identification. Businesses need to know their customers, what they expect in a product or service, the challenges they encounter, and who they are. This knowledge will inform the decisions regarding design, prices, communication, and distribution. A business that has an understanding of its audience is able to develop solutions that are aligned to the actual needs rather than making assumptions. Effectiveness and minimization of waste are achieved through clear knowledge of the customers.

The delivery is also one of the major aspects of business model. This encompasses the manner in which the products are manufactured, the manner in which services are offered and the manner in which the consumers are receiving services. It entails procuring materials, running business, logistics and customer care. Effective delivery systems can regulate the expenses and enhance a better satisfaction. A well developed delivery structure would make sure that value is delivered to the customers in a consistent and reliable way.

Revenue describes the payment of the business. There are those businesses which sell directly. There are those who apply subscriptions, memberships, licensing, or advertising. Customers and profitability are largely influenced by pricing. The cost has to be reasonable to the customer and be cost effective as well as be able to sustain growth. The expenses that are incurred comprise labor, materials, technology and marketing. An effective business model will strike a balance between revenue and costs in order to enable the company to be sustainable.

Various business models are applied in various industries. Retail business is concerned with the sales of products. Subscriptions are common in software companies. Service companies can be billed per hour or per project. There is no single best model. Appropriate model is based on objectives, resources and market conditions. The important one is alignment between the value, customers, delivery, and revenue.

Business models cannot be forever. Markets change. The tastes of the customers change. Technology advances. Companies have to revise and modify their models with time. Resisting change is a challenge to companies, whereas learning and changes keep the company competitive.

Learning about business models aids the entrepreneur to structure their ideas into coherent patterns. It helps in improved planning and decision-making. Business models transform creativity into working systems that generate value, facilitate operation and establish sustainable businesses.