01
Customer segments
The groups of people or businesses you intend to serve.
Polar Business Model Builder
Build a business model that explains how your business will actually work.
Use a business model canvas to connect your customers, value proposition, products or services, revenue streams, costs and the activities needed to turn your idea into a viable business.
What is a business model?
Your business model is the logic underneath the business.
A business model explains how a business creates value for customers, delivers that value and earns enough money to operate sustainably.
It connects the customer problem and your offer with the practical mechanics of running the business: how customers find you, how the product or service is delivered, what customers pay and what it costs you to provide it.
You can have a strong business idea without yet having a strong business model. The model forces you to ask whether all the pieces fit together commercially.
A business idea says what you want to sell. A business model explains how the whole thing can work.
It turns enthusiasm into something you can examine and improve.
Business model canvas
The nine building blocks of a business model canvas.
The business model canvas is a simple visual framework for seeing how the important parts of a business fit together on one page.
02
Value proposition
The value you provide and the reason customers should choose your offer.
03
Channels
How customers discover, buy and receive your product or service.
04
Customer relationships
How you attract, support, retain and communicate with customers.
05
Revenue streams
How customers pay you and where the business’s income comes from.
06
Key resources
The people, equipment, technology, knowledge and assets the business needs.
07
Key activities
The essential work the business must perform to deliver the offer.
08
Key partners
Suppliers, contractors, platforms and other organisations you may rely on.
09
Cost structure
The important costs involved in operating and delivering the business model.
How to create a business model
Build it in an order that follows the customer.
You don’t have to solve every detail immediately. Start with the customer and value, then work through how the business will deliver, earn and spend.
01
Define your customer
Use the ideal customer work you have already completed to decide who the model is designed to serve.
02
Define the value proposition
Clarify the customer problem, the outcome you provide and why the offer is worth choosing.
03
Choose how customers will buy
Decide whether customers buy directly, online, through sales, through partners, on-site or using another channel.
04
Choose how you will deliver
Work out the operational steps needed to fulfil the promise once the customer buys.
05
Define how the business makes money
Identify the revenue streams and payment model that suit the offer and customer.
06
Identify the key resources and partners
Decide what you need internally and what can be supplied by external organisations or specialists.
07
Estimate the cost structure
Identify fixed and variable costs and consider what happens as sales increase.
08
Test whether the model fits together
Ask whether the revenue can realistically support the work, people and costs required to deliver the value promised.
Business model examples
Different businesses make money in different ways.
You may use one business model or combine several depending on what customers buy and how they prefer to pay.
Service business model
Customers pay for work, expertise or time — for example trades, consultants, agencies, salons and professional services.
Product business model
Customers pay to own a physical or digital product, usually through retail, ecommerce or direct sales.
Subscription business model
Customers pay recurring fees for continued access to software, services, products or membership.
Marketplace model
The business connects buyers and sellers and earns through commission, fees or another transaction-based model.
Freemium model
Customers can access a free level while paying for additional features, capacity or service.
Project or package model
Customers buy a defined outcome or package rather than paying directly for each hour of work.
Revenue streams
Be specific about how money reaches the business.
“We sell things” is not yet a revenue model.
Decide what customers pay for, when they pay, whether income is one-off or recurring and whether you can create more than one sensible revenue stream.
The right model should suit the customer while still giving the business enough predictable income and margin to operate.
Cost structure
A business model must work financially, not just look good on a canvas.
Think about what it actually costs to win a customer, deliver the offer and keep the business operating.
Understanding the relationship between revenue and costs helps you see whether the model could realistically become profitable as it grows.
1
Fixed costs
Costs that remain broadly similar regardless of the number of sales, such as rent, software and some salaries.
2
Variable costs
Costs that increase when you sell more, such as materials, delivery or payment fees.
3
Customer acquisition costs
The marketing and sales costs required to win customers.
4
Delivery costs
The people, time, materials and systems needed to fulfil the offer.
5
Growth costs
Additional staff, equipment, systems or premises needed as demand increases.
Test your business model
The canvas contains assumptions until the market proves them.
The point of building a business model early is to identify the assumptions worth testing before they become expensive commitments.
Customer test
Are the people you identified genuinely experiencing the problem and willing to consider your solution?
Revenue test
Will customers pay enough, often enough, to support the business?
Delivery test
Can you fulfil the promise at the quality, speed and cost your model assumes?
Business model mistakes
Six ways a good idea can end up with a weak business model.
The model begins with creating value somebody actually wants.
A sustainable model needs repeatable demand and workable economics.
High sales are less exciting if every customer costs too much to serve.
A model that works for a larger competitor may not suit your customers or resources.
The business model should help you see how the business works, not hide it.
Customer behaviour, costs and competition change. Your model should improve with evidence.
Polar Business Model Builder
Turn the work you’ve already done into a business that fits together.
Polar already knows your idea, ideal customer, market, competitors and customer offer. Business Model Builder brings those pieces together and helps you work through how the business will operate and make money.
Instead of filling in a blank business model template, Polar can reuse what you already know and guide you through the gaps that still need decisions.
Business model FAQs
Creating a business model: common questions.
What is a business model?
A business model explains how a business creates value for customers, delivers that value and generates revenue. It connects customers, the value proposition, operations, revenue streams, resources, partners and costs.
What is a business model canvas?
A business model canvas is a visual framework used to describe a business model on one page. It normally covers customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners and cost structure.
How do I create a business model?
Start with the customer and the problem you solve. Define your value proposition, how customers find and buy from you, how you deliver the offer, how the business earns revenue, the resources and partners you need and the costs involved.
What is the difference between a business model and a business plan?
A business model explains the core logic of how the business creates, delivers and captures value. A business plan normally goes into significantly more detail about strategy, market research, operations, finances, goals and how the business will be developed.
What are the nine parts of a business model canvas?
The nine building blocks are customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partners and cost structure.
What are examples of business models?
Common examples include product sales, service businesses, subscriptions, marketplaces, freemium services, project-based work, retainers, licensing and commission-based businesses.
What is a subscription business model?
A subscription model charges customers recurring fees, commonly monthly or annually, for continued access to a product, service, membership or support.
What is a revenue stream?
A revenue stream is a specific way the business receives income. Examples include product sales, service fees, subscriptions, retainers, commissions and usage-based payments.
Can a business have more than one revenue stream?
Yes. Many businesses combine revenue streams, such as one-off sales with recurring maintenance, subscriptions with add-ons or a core service with related products.
When should I change my business model?
Review the model when customer evidence, costs, competition or sales results show that important assumptions are wrong. A business model should evolve as you learn more about the market.
See how the business fits together
A business model turns separate ideas into one connected commercial picture.
Polar Business Model Builder helps you connect your customer, offer, revenue, operations and costs — then carry that work into the next stage of building your business.