Ever since the beginning of the “dot com” era, the economic world has been buzzing with the sound of this term: business model. Specialists define it as the working description of the operations that take place within a company. Simply put, it is the way in which a corporation plans to make money.

Drawing up such a plan requires knowledge from many areas, such as economy, law, advertising and even some sociology. Still, it’s not a difficult job, as long as you stick to the basic structure of a business model. First of all, it should enunciate the purpose of the company: what products or services it will offer to the public and why. Then, it should identify the segment of the market that the company targets as buyers and explain in what way the products will improve the quality of their lives.

It is imperative for any manager to know that a business model must not be mistaken with a business plan. The former usually takes the form of a small diagram, while the latter must be in writing and can occupy up to 50 pages. The model is based on ideas and represents the way in which the company will work, while the plan must include a great deal of exact financial calculations and previsions.

The first element that a business model must include is the type of services or products that the firm will offer on the market. Then, it should state what category of clients it will attract and how exactly the products will help improve their lives. Another important element is the channel (or channels) through which the customers will be reached and what the ideal client-provider relationship would be. Financial issues are also very important, as the business model should also comprise a cost and revenue structure to clarify these issues from the beginning. You should also include details about eventual alliances with other corporations, although that may be more of an ulterior plan than one you start with.

Finally, know that a good business plan is considered to be the cornerstone of any successful corporation. It will help you remember the essence of your activity, as well as the reasons for which you first went into business: to help people, while at the same time helping yourself.

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