Business Model vs Business Plan: Strategy and Profit
In 2019 alone, there were 30.7 billion small businesses in operation in the United States. Are you looking to join this group in 2020? If so, it's important for you to understand some key elements of the business world, such as the difference between a business model vs business plan.
Read on to learn the difference between these two terms. You'll also get some insight into how you can create a great business plan and find the best business model for your company.
Read on to learn the difference between these two terms. You'll also get some insight into how you can create a great business plan and find the best business model for your company.
Business Model vs Business Plan: What's the Difference?
Before you can create a business plan or choose a model for your company, you need to have a solid understanding of the difference between a business plan vs business model.
In simplest terms, a business plan is an outline for your company's future. It tells you (as well as potential investors and lenders for your company) what steps you're going to take to make the business profitable. It also includes information about your target customer and the strategies you're going to use to reach them and get them to purchase your product or service.
A business model belongs at the center of your business plan. The business model dictates what kind of business you're going to run and how you're going to make money.
For example, are you going to run a subscription-based business? Will you make money from ad revenue or on a commission basis? Will you use a freemium model?
In simplest terms, a business plan is an outline for your company's future. It tells you (as well as potential investors and lenders for your company) what steps you're going to take to make the business profitable. It also includes information about your target customer and the strategies you're going to use to reach them and get them to purchase your product or service.
A business model belongs at the center of your business plan. The business model dictates what kind of business you're going to run and how you're going to make money.
For example, are you going to run a subscription-based business? Will you make money from ad revenue or on a commission basis? Will you use a freemium model?
How to Choose a Business Model
It helps to identify your business model before putting together your business plan. This can be tricky, though. If you're not sure which model will work for your company, here are things to think about:
It helps to talk to a business adviser or coach if you're struggling to choose the right business model. Try to find someone who works in the same industry that you're hoping to break into to see what they recommend.
- Estimated costs
- The problem your product/service solves
- Market potential
- Competition
- Distribution channels
- Strategic relationships
It helps to talk to a business adviser or coach if you're struggling to choose the right business model. Try to find someone who works in the same industry that you're hoping to break into to see what they recommend.
How to Create a Business Plan
Once you've chosen your business model, it's time to work on your business plan. You can use business plan templates for startups to help you fill in the gaps and make sure you've considered everything.
When you're putting together your plan, though, pay special attention to your target customer, how you're going to market your business, and the type of problem you're going to solve for your customers. Take note of your finances and how soon you plan to become profitable, too.
When you're putting together your plan, though, pay special attention to your target customer, how you're going to market your business, and the type of problem you're going to solve for your customers. Take note of your finances and how soon you plan to become profitable, too.
Start Your Business Planning Today
Now that you have a better understanding of the difference between a business model vs business plan, your next step is to get to work. Keep the information outlined above in mind so you can create an effective business plan and choose the right business model that will help you start your business off on the right foot and succeed sooner.
Do you want to learn more about business planning or business management? Do you have questions about the difference between a business plan vs strategic plan, for example? Check out the business section of our site today to find answers to all your business questions.
Do you want to learn more about business planning or business management? Do you have questions about the difference between a business plan vs strategic plan, for example? Check out the business section of our site today to find answers to all your business questions.
