The business model is a tool to help you map out your idea. It gives you a practical overview of how you intend to start your business and start making money.
Your business model sets out how your business concept can be realised and is a good means of communicating the idea to potential customers, business partners and banks and public support schemes.
Some of the key questions that you need to map out in your business model are:
- What will you sell?
- Who will your customers be?
- Who will be your competitors and who are your potential business partners?
- How will you sell?
- How will you deliver?
- How will you be paid?
- How will you generate a profit?
A living document
Your business model will be a "living document" in the sense that you will have to make continuous changes and adjustments as new information about your project comes to light. A business model will provide a sound basis for your decision as to whether or not you start up your business.
How to create a business model?
There are various approaches to creating a business model. At Innovation Norway, you can read more about different methods and tools for creating your business model.
From business model to business plan
Once you have created a business model which you can take further, you can draw up a business plan if you wish. A business plan will set out a more detailed description of your business model and you must focus on how you will establish your business. When preparing your business plan you must also draw up the necessary start-up budgets.