Business Models explained

A business model is an abstract conceptualization of a business. A business is defined as a transaction between two systems, such as two companies or two people, where one offers a service in exchange for gratification.

The exchange process is called a transaction. An example is Mike giving Molly an apple for money. However, for it to be a business, the transaction needs to be repeatable.

To repeat a transaction, Mike needs more apples (suppliers), more customers (Mollys), and established processes for acquiring and selling the apples. These elements are crucial for any business model.

Most business models involve a 'principle' (a system that asks for something), a system that offers something and expects gratification, and an 'agent' (a system that delivers something to the server). These three elements can describe most business models.