If you’re a small business owner or an entrepreneur looking to get your business off the ground, you might be wondering what the difference is between a business model and a business plan. Here’s what you need to know.
What is a business model?
A business model is a concept that defines how a business generates revenue by creating value for its customers. Typically presented as a document, it outlines the key activities, strategies, and available resources needed to deliver the company’s product or service offering to the best effect. There are various different business models in existence, from traditional product-led models to more modern subscription-based services.
What is a business plan?
The business plan takes the model and breaks it down into an intentional series of activities and focuses, often as projects, that will happen throughout a defined period of time. There might be a five-year plan and there is usually an annual plan. Depending on the size of the company, different parts of the plan will be assigned to owners from other departments, according to their functional specialisms, such as operations, marketing and sales.
How are these documents developed?
Very often, businesses will use specialist experts to help guide their efforts and bring in the latest thinking and external experiences. For example, Cheltenham business coaching services, such as https://www.randall-payne.co.uk/services/business-advisory/business-coaching/cheltenham, will provide consultants to help focus development work and secure the best results.
How do successful businesses use their models?
Businesses will usually aim to integrate their model into their operation, so that it drives every aspect of what they do, from hiring to development. Business models usually include guiding corporate values or a purpose and mission definition, to help ensure everyone is working in the same direction and to the same end.
How do successful businesses use their plans?
The trick for businesses is to create a robust plan and then commit to its ongoing management, with regular reporting, resourcing and feedback, so that it is delivered as planned!
