A business model describes how you create, deliver, and capture value from your customers – Saul Kaplan

1. You create value for customers by solving a problem they want to be solved.
2. You deliver this value to customers through your solution which gets to them through specific channels (distribution).
3. Finally, you capture some of this value back as revenue.

For a business model to work, you need to create more value (even perceived) for customers than you capture back (what you charge them). This is the essence of a good value proposition.

Profit = value you capture back (revenue stream) – cost of value delivery (cost structure)

You can't get to profit without revenue.

You can't get to revenue without value creation.

This is why you have to initially prioritize value creation above the other two business model activities.

Value creation requires you to address a real customer problem worth solving. This reinforces the first mindset: Love the Problem.

The difference between a business and a hobby is revenue.

The true product of an entrepreneur then is not just building a solution to a problem, but building a working business model.

Business Model Design

Business Model Archetypes