Question

What is a business model and why is it important? In your new business, what will be your fixed and variable costs?

Answer 1

A business model refers to the plan or a roadmap which emphasize on the operation of a business, finding the right sources of revenues and profit generation along with identification of the customer base, and source of financing.

Fixed costs in a new business: Office rental, Salaries of employees, machines costs, equipment costs, utilities, computers for employees, furniture costs etc.

Variable costs in a new business: Labor costs, sales commissions, shipping charges, delivery charges, bonus, incentives, electricity bills, mobile bills etc.