What is the primary purpose of a business model?

The primary purpose of a business model is to define how a company creates, delivers, and captures value. A well-structured business model provides a comprehensive framework that explains the business's core operations, including its value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key activities, and key partnerships. This holistic view is essential for understanding how a business intends to make money and sustain itself in the long term.

By illustrating the relationship between various components, a business model helps stakeholders, including entrepreneurs, investors, and employees, to grasp the essence of the business and its competitive advantage in the marketplace. It also serves as a strategic tool for planning and decision-making, ensuring that the business remains aligned with its goals and responsive to market changes.

Other options may relate to aspects of a business's operations or planning but do not capture the overall purpose of a business model as effectively. Outlining cost structures or identifying potential investors can be parts of broader business considerations but do not encompass the comprehensive value creation aspect that is central to the definition of a business model. Similarly, evaluating employee performance is more focused on human resource management rather than the fundamental operations and strategy of the whole business.