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Saturday, January 08, 2011

A Recipe for Profit

Screenshot - 1_8_2011 , 10_39_31 PM What Exactly is a Business Model?

The short and simple answer is that a business model is a recipe.

Just like a recipe for anything else, it's a list of ingredients and detailed step by step instructions on how to go from ingredients to final results.

If it were a recipe for lasagna, it would be a list of everything that goes into the lasagna (noodles, cheese, sauce, etc.) and step by step instructions on how to turn those ingredients into lasagna. It doesn't leave anything out or leave you guessing about what or how much you need. It's well planned out. You'll know what you need to acquire before you start, what equipment is necessary, and a general idea of how long it will take and how much it will make. If you follow it to the letter, you will make a lasagna.

In the case of a business model, it's all those things you need and how to combine them into the result, which is profit.

Now, how do you determine what ingredients and equipment you need and how to turn them step-by-step into profit? Vivek Wadhwa wrote a great article that will give you a lot to think about as you decide that for yourself and formulate your own profit recipe for your business.

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