Business Model

Loading the player...

What is a 'Business Model'

A business model is the plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and functions of the business, as well as the revenues it generates and the expenses it incurs.

BREAKING DOWN 'Business Model'

Business model is a buzzword that everybody used (or overused) during the dotcom boom. In fact, poorly thought out business models were the downfall of many dotcoms.

However, the business model dates back to the earliest days of business; it merely describes the way in which a company makes money. A business model can be simple or very complex. A restaurant's business model is to make money by cooking and serving food to hungry customers. A website's business model might not be so clear, as there are many ways in which these types of companies can generate revenue. For example, some make money (or try to) by providing a free service and then selling advertising to other companies, while others might sell a product or service directly to online customers.

RELATED TERMS
  1. Business Cycle

    The fluctuations in economic activity that an economy experiences ...
  2. Electronic Commerce - ecommerce

    A type of business model, or segment of a larger business model, ...
  3. Business To Government - B To G

    Professional affairs conducted between companies and regional, ...
  4. Business-To-Business Advertising

    Marketing efforts directed toward other businesses rather to ...
  5. Better Business Bureau - BBB

    The Better Business Bureau (BBB) aims to promote ethical business ...
  6. Cost Of Goods Sold - COGS

    Cost of goods sold (COGS) are the direct costs attributable to ...
Related Articles
  1. Stock Analysis

    Starbucks Vs. Dunkin' Donuts: Comparing Business Models (SBUX, DNKN)

    Learn about the business models of Starbucks and Dunkin' Donuts. Discover how franchising and growth strategies impact these coffee makers.
  2. Investing News

    How Intuit's Transition to the Cloud Has Driven Revenue Growth (INTU)

    Learn how Intuit is transitioning its users to the cloud, and how the company's revenue growth is being affected in the short and long terms.
  3. Investing News

    3 Predictions for TV in the Next 10 Years

    Understand current technological trends in the TV industry and what has changed in the past. Learn about three predictions regarding the future of TV.
  4. Saving and Spending

    How to Invest Your Excess Cash in Undervalued Securities

    Learn how even small investors can shoot for substantial capital gains by starting to invest their excess cash in undervalued securities.
  5. Investing Basics

    5 Methods To Avoid Value Traps

    Learn about five key factors that can help investors identify and avoid value traps in their stock market portfolio selections.
  6. Stock Analysis

    Analyzing Southwest Airlines' Market Share (LUV)

    Learn about how Southwest Airlines has grown and continued to operate profitability despite being in a notoriously volatile and economically sensitive industry.
  7. Stock Analysis

    Analyzing Sirius XM's Return on Equity (ROE) (SIRI)

    Learn more about the Sirius XM's overall 2015 performance, return on equity performance and future predictions for the company's ROE in 2016 and beyond.
  8. Stock Analysis

    The Biggest Risks of Investing in Costco Stock (COST)

    Read about some of the biggest risks of investing in Costco stock. Gain a better understanding of its business model before buying in.
  9. Professionals

    Business Analyst: Job Description & Average Salary

    Learn the different types of business analyst careers available; understand the skills and education needed and the salary you can expect to make.
  10. Professionals

    Fixed Income Trader: Career Path & Qualifications

    Discover the career path the most fixed income traders follow and learn more about the qualifications needed and the average salary they earn.
RELATED FAQS
  1. How has Google's operations strayed from its original mission statement?

    Learn about Google's current mission statement and decide if Google is practicing what it preaches. Read Answer >>
  2. What do hard and soft goods in the retail sector refer to?

    Understand the difference between hardlines and softlines offered by various retailers and the characteristics of these basic ... Read Answer >>
  3. How is a product line depth related to a product line?

    Understand what a product line is and why it's important to a company. Learn how product line depth is related to a company's ... Read Answer >>
  4. What should be included in a restaurant business model?

    Learn what a business model is and its purpose, along with learning the specific elements that should be included in a business ... Read Answer >>
  5. What do you need to know to create a business model?

    Learn what a business model is, its importance and the primary elements that are needed in order to create a successful business ... Read Answer >>
  6. What are some good resources to help entrepreneurs develop a business model?

    Find out what resources are available for developing a small business model; learn what websites contain useful information ... Read Answer >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  3. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  4. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  5. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  6. Economies Of Scale

    Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because ...
Trading Center