What is Business Model and How to Create a Business Model?

While different management gurus have defined a business model in their own ways, we like the definition given by Peter Ducker as his simple explanation helps in creating a winning business model, especially for a new startup business. A business model defined by him is a way of identifying potential customers, creating a product or service for their needs, using channels to reach them, and eventually making profits from them.

From his definition, there are four typical questions you will need to answer when it comes to developing your business model. Even we have found success in coming up with a business model for our solar water manufacturing firm Haadi Enterprises. Here are four critical questions that you need to consider while designing your business model.

Who are our customers?
How we can make a profit?
What can we offer them?
How we can reach them?


There are always people who are in need of your products or services but every one for sure is not going to buy them. So, you will have to seek out – who are really looking for your products and services.

Once you are able to identify your potential customers, profile them out by their occupation, age, society classes they fall in etc Take the case of Shaadi.com, they identified that young people(seeking partners) in India are browsing millions of times – how to find their life partners online. So, they spotted out who are their real potential customers.


After identifying – what are your customers looking for, you will have to think multiple times do you have any idea that can solve their problem. In case of Shaadi.com, they generated a solution for match seekers in the form a website.

Red Bus another good example, spotted the opportunity when people in India were looking for online bus ticketing service. Currently working in fifteen states, they are selling around 5000 tickets every day.


Next element of a business model is to find a channel or medium that would make you able to reach with your products and services to the potential customers. Internet was identified by Shaadi.com that could connect its matrimonial services to the customers.


The final question while developing a business model that needs to be answered is – how can i generate up my revenues  to grow and survive from my potential customers. Shaadi.com charges match seekers a form of fee to view, get contact details etc of other people who have registered on Shaadi.com. Thank you!

What is Business Model and How to Create a Business Model?

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