Business model or business plan, that’s the same thing, isn’t it?
When I started my business years ago, I went to the Chamber of Commerce to register and get information. Their first advice to a start-up entrepreneur was to write a business plan. Basically, a description of my company (organisation and staff), and the financial picture (investments, financial plan, operational budget), goals and marketing strategy. The aim of the business plan was to convince partners, financiers and YOURSELF of the viability of your business. I, as very many other entrepreneurs didn’t know any different than to assume that a business plan is the same as a business model. But is it?
The word business model is just a trendy term, right?
The word business model exists since the 50’s but has been used more intensively in the last few years. What is meant by a “model” is a blueprint, a picture, an outline of your business. For me, a blueprint means a visual image of my company. Without a blueprint, I cannot describe my business, nor write a business plan.
When I started my company, I didn’t write a business plan, nor did I think about what my business model could look like.
I started working as a freelancer, charging by the hour, and “sold” myself. No one advised me to think about my business model. It is only later, once I wanted to start an internet business, that I took a serious look at my business model. I started reading about other possibilities to earn money with my business.
What are the advantages of starting to think about your business model?
There are many. I needed a visual blueprint that I could easily change without too many text adaptations. I am a visually oriented person and like simplicity. I want to see my business purpose in one glance. The idea of making a detailed description of my company in a business plan did not appeal to me at all. But I did want clarity on what, how and with whom I organised my business.
The biggest advantages to me were: saving time, focus, and having a tool that I could easily use and adjust. No long document stuck in a drawer. I now have 1 A4 sheet that I see every day and which reminds me of the goals I have set and the way to reach them. This sheet is the basis for the further development of my (financial) plans and the focus on my profit making revenue streams.
So, step 1 is thinking of a business model?
Indeed, the business model is the foundation of your business plan. You build your plan on it. This makes your business model an important part of your business plan and a requirement for success. In your business plan you describe the viability of your business model and use it to convince others. Without a good business model you cannot make credible predictions. A business plan is not a requirement for success, a business model is. A fantastic business plan cannot fix an unprofitable business model.
Think of your business plan as an action and implementation plan of your business model.
Make a business model plan
Mark Zuckerberg, the founder of Facebook, mentioned during an interview that when they started out, there was no business plan for Facebook. However, Facebook had a well-developed business model that worked in the market. So, if your business model works, you really don’t need a business plan.
But if you do want to write a good business plan, for the bank, partners or for yourself, then write a business model plan.
In the BIZZ ROAD MAP tool that I use for my own business, I have combined aspects of a business plan with those of a business model to produce a profitable (financial) plan.
How important do you find it to write a business plan?
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