Business Model and Business Plan

What is the difference between Business Modelling and Business Planning?

Is there really a difference or is just another name?

 

The ‘business model’ is the vehicle you are going to use to run the race. The business plan is how you will win the race. Changing the business plan has absolutely no effect on the business model.  I look at the business model as the “what” the business is about or what it will do for customers. The business plan is a more detailed definition of “how” the business will execute the model. It is much easier and cheaper to iterate what the business is about using the canvas before ever putting the wheels in motion to build everything in the plan needed to bring the model to life. Business planning includes such activities as researching the market place, establishing customer expectations, setting goals and establishing desired strategies. Depending on the business plan, the business model may have to be updated.

Lessons Learned from “No Plan Survives First Contact With Customers” by Steve Blank are the following:

  • A startup is an organisation formed to search for a repeatable and scalable business model.
  • There are no facts inside your building, so get outside and get some.
  • Draw and test the Business Model first, the Business Plan then follows.
  • Few if any investors read your business plan to see if they’re interested in your business
  • They’re a lot more interested in what you learned

Lessons Learned from “Business Plan” by Steve Blank are the following:

  • Business plans are the leading cause of startup death
  • No Business Plan survives first contact with a customer
  • Rapidly changing markets require continuous business model iteration/customer development
  • Business plans are the leading cause of startup death
  • Your ability to raise money has no correlation with customer adoption

These Lessons confirm that “Business Plan” follows “Business Model”.  The relationship between Business Model and Business Plan is very clear…

You need a Business Model to validate and test your hypotheses about Business-Idea for Revenues, Costs & Profits, using the 9-basic building blocks…

then…

you need a Business Plan to development and present your Business-Idea to Stakeholders & Financial Institutions (banks) to raise funds and invest in the business

What are the uses for a Business Plan?

1. Raising capital

2. Financing

3. Attracting Executive Talent

4. Alliances

5. Departmental uses

6. Keeping current

7. Staying on track

8. Long-term Planning

9. Improve communication

 

What are the uses for a Business Model?
1. Defining Indicators
2. Improving Decision Making
3. Improving Strategic Planning
4. Helping in the Design of Information Systems
5. Increasing Innovation
6. Improving Process Design

The business model is the heart of the business plan. The how, the strategy, to win the race. Before the business model you need to know where the end of the race is (goal) and how is the external environment to better adapt-design you car.

I work with SMEs wanting an internal BP to improve and grow their business. I use the business model canvas to get a plan of the business, and to identify areas for improvement and growth

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