A business model is different than a business plan, though the objectives of both are closely related. A business model describes how revenues and profits flow to a company, ideally in ways that can outsmart competitors or lock down customers in innovative ways.

When prospective investors ask entrepreneurs, “What’s your business model?” they are not asking about all the cool features of a new product. Rather, they want to know who will buy the cool product plus how, when and how much they will pay. Be precise! Solve weaknesses wherever possible.