Four blanks, one page
Who, what, how we charge, what it costs, answer all four and you know if the model can pay rent.
Volume 01, Chapter 3
Business Models: How Do We Actually Make Money?
Three bakers with identical skill, identical ovens, and identical flour open on the same road. A year later, one has closed down, one is barely surviving, and one is doing well. What made the difference wasn't how well any of them could bake.
The Golden Rule
The business model, not the product, decides how money behaves: how much arrives, how often, and how much risk comes with it.
Every business model answers four small questions. If any one of the four is fuzzy or unwritten, the business is running on hope, not arithmetic.
Who & whatWho we serve, and what we actually offer them.
How we chargePer item, per job, a repeating fee, or bulk contract.
What it costs to deliverFrom receipts, not memory, this is where models quietly lose money.
A main model and a stabilizer
Most healthy small businesses quietly run two models at once, so if one slows down, the other keeps the business running.
Same skill, different risk
Three identical bakers can run three completely different businesses, purely by choice of model.
One customer isn't a model
If a single buyer is more than half your revenue, you have an employer who can fire you without notice.
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Definition
Remember the three bakers from the start of this chapter, same skill, same ovens, same flour, three very different outcomes. We'll walk through exactly what each of them did differently later in this chapter. The short version: each one had chosen a different business model without necessarily calling it that, and the model, not the baking, decided how their money behaved.
A business model is the answer, written down, to one question: exactly how does money end up in this business's account, and why is it more than the money that leaves? "We're a bakery" isn't a business model. "We sell bread over the counter to walk-in customers, at a per-loaf price" is closer. A real model is specific enough that you could actually calculate whether it works.
In One Sentence
Every business model answers four small questions: who do we serve, what do we offer them, how do we charge, and what does it cost us to deliver. If any one of the four is fuzzy, the business is running on hope, not arithmetic.
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The Four Questions
| # | Question | MANIAC MINDZ's Answer |
|---|---|---|
| 1 | Who do we serve? | Working professionals and wedding parties in Lagos who want clothes that truly fit |
| 2 | What do we offer? | Made-to-measure garments (main), plus a small ready-to-wear line (side) |
| 3 | How do we charge? | Per garment: 50% deposit at measurement, 50% on collection |
| 4 | What does it cost to deliver? | Fabric + trims (~₦8,000), labour (~₦4,000), rent/power share (~₦2,000) per ₦20,000 garment |
Answer all four and you can compute the only number that matters: ₦20,000 in − ₦14,000 out = ₦6,000 profit per garment. Multiply by garments per month, and you know whether this model can pay its rent before you've sewn a single stitch.
Memory Trick
Every business model must answer four questions: who you serve, what you offer, how you charge, and what it costs to deliver. If you can't answer all four, you don't have a model yet, you have an activity.
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The Common Model Families
Make & Sell
Customer pays per item you produced.
ProductionService
Customer pays for work done on their property or problem.
Pay per jobRetail
Buy at wholesale price, sell at retail price, keep the gap.
Buy & resellSubscription
Customer pays a repeating fee for ongoing access.
Most predictableWholesale
Few customers, large orders, lower price per unit.
Bulk contractFranchise
Others pay to use your name and system.
LicensingThere are endless business models, but small businesses mostly combine a few well-known families:
| Model Family | How Money Arrives | Example |
|---|---|---|
| Make & sell (production) | Customer pays per item you produced | MANIAC MINDZ garments · Golden Crust's bread |
| Service (pay per job) | Customer pays for work done on their property or problem | Rapid Auto Works repairs |
| Retail (buy & resell) | Buy at wholesale price, sell at retail price, keep the gap | A fabric shop reselling rolls it bought cheaper |
| Subscription | Customer pays a repeating fee for ongoing access | Nimbus Labs' monthly software fee · Bright Path's termly school fees |
| Wholesale / bulk contract | Few customers, large orders, lower price per unit | Green Fields selling the whole maize harvest to one processor |
| Franchise / licensing | Others pay to use your name and system | Covered fully in Volume 26: Scaling |
Did You Know?
Most healthy small businesses quietly run two models at once: a main one and a stabilizer. MANIAC MINDZ's made-to-measure work (high profit, unpredictable timing) is balanced by school-uniform bulk contracts (lower profit per item, but predictable). When one slows down, the other keeps the business running.
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Example Story: Same Skill, Three Different Models
Here are the three bakers from the start of this chapter, in full.
Three equally skilled bakers open on the same road.
Baker One
ModelMake & sell, over the counter.
Money arrivesDaily, in small amounts, weather-dependent.
Baker Two
ModelWholesale, supplies three hotels every morning.
Money arrivesMonthly, large predictable lumps, but two cancelled contracts could erase 60% of revenue overnight.
Baker Three
ModelSubscription, a 200-family "bread club."
Money arrivesWeekly, the most predictable of the three, but now needs delivery logistics.
Same ovens. Same flour. Same skill. Completely different businesses, different risks, different cash patterns, different growth paths. That's what "business model" means: the model, not the product, decides how the money behaves.
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Common Mistakes
Common Mistake #1: Copying a Model Because It Worked for Someone Else
The uniform contract that saved one tailor can sink another who lacks the cash to buy 200 garments' worth of fabric upfront. A model must fit your cash, capacity, and customers, see the four questions.
Common Mistake #2: Pricing Below True Cost
If question 4 (cost to deliver) is answered from memory instead of receipts, "profitable" work can quietly lose money on every sale. The cure is Volume 07: Finance and honest record-keeping (Volume 04).
Common Mistake #3: One Customer = The Whole Model
If a single buyer is more than half your revenue, you don't have a business model; you have an employer who can fire you without notice. See risk concentration in Volume 10: Risk Management.
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Quiz Yourself
Quiz 1
What are the four questions every business model must answer?
Who do we serve? What do we offer? How do we charge? What does it cost to deliver?
Quiz 2
A school charges families every term. Which model family is that?
Subscription, a repeating fee for ongoing access.
Quiz 3
Baker Two earns the most per month but was described as fragile. Why?
Revenue concentration: three hotel contracts make up most of the income, so losing one or two customers collapses the model.
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Practice Exercise
- Fill in the four questions for your business on one page.
- Compute profit per unit (price − true delivery cost). Use receipts, not memory.
- Identify which model family (or two) you're running.
- Ask: what is my stabilizer? If every naira arrives from one model and it's unpredictable, design a second, steadier stream, a bulk contract, a standing-order club, a retainer.
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Quick Summary
Quick Summary
- A business model = written answers to Who / What / How we charge / What it costs.
- The model, not the product, determines how money behaves: its size, timing, and risk.
- Most model families: make & sell, service, retail, subscription, wholesale, franchise.
- Healthy small businesses often pair a main model with a stabilizer.
- The deadliest model error is not knowing your true cost to deliver.
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