Doing online business is no different from a conventional business. You need to understand your business model. What is a business model anyway? A business model is exactly what it sounds like. It is a model – or diagram – of how a business will work.

Compare a business model to any other models you may have seen – for example, an architectural model of a new house. The model shows how the house will look, how it will be positioned on a lot, where the doors and windows will be, and how the inside rooms will be arranged. Depending on its size and detail, the model can also show how the systems within the house will work to provide water, light, heat, and air-conditioning. An architectural model can also show where and how furnishings will be arranged inside the house.

You are the architect of your business model. You can begin working on it once you have identified a business opportunity you want to pursue. It is an interesting and valuable experience. Your business model helps you identify what you need to establish, operate, and make a profit from your business. Most important, your business model highlights the decisions you need to make to have your business succeed. In short, your business model will show how your products or services will provide value to your customers and produce revenue that will allow the business to survive and grow.

Your business model is a keystone - a necessary part of your business plan. Potential investors, creditors, and suppliers will refer to your business model as they make decisions about how and when to provide you with the funds or services you need to start, manage, and expand your business venture.

Think of your business model as a blueprint and dynamic resource. It is a map of where you are and where you want to go with the business. However, as you learn more and as the business environment around you changes, you will want to edit or expand your business model accordingly. The time you spend on it, starting with the Review of your first thoughts, is time very well spent.

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