Business Model: a simple Financial Definition

Marc DeschenauxFlag btn

Marc Deschenaux

Created    on 2016-06-08 08:36

Published on 2016-06-08 08:52

"In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, business process, target customers, offerings, strategies, infrastructure, organizational structures, sourcing, trading practices, and operational processes and policies including culture. The literature has provided very diverse interpretations and definitions of a business model."(Source: Wikipedia)

However in the world of finance it has a much narrower definition:A business model is the business process through which an organization (or sometimes a person) generates revenue or captures value.In this definition the process is simply a series of actions or operations through which an organization generates revenue or captures value.

Although the business model is included in the business plan both should not be confused as the business model is a representation of how an existing business works, rather than how a prospective business can work.(Source: