Business model vs Business plan

BUSINESS MODEL VS BUSINESS PLAN

What is a business model?

The proprietary method used to acquire, service, and retain customers

Example of Popular Business Models
Franchise Model
Low Cost Model
Advertising Model
Subscription Business Model
Direct Sales Model
AND MANY OTHERS

Let’s look at Wal-Mart Stores
Low Cost Model
“ Always Low Prices” tagline
Net Profit of US$13.4bn in 2009
Their stores include discount stores, super centers and neighborhood markets

Equally important is a Business Plan…. What is a business plan? A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals What does it contain? Executive summary, business description/overview, market research, operations plan, financial plan and project management plan, marketing plan etc

Let’s investigate the first three items in a plan.. What is an executive summary? Typically a 1-2 page document that summarizes the whole business plan for the reader to efficiently and quickly understand the overall business idea What is a business description? Highlights the business type, proposed business location(s), products/services offered, unique value proposition What is market research? Entails target market, SWOT analysis, market size, market positioning, survey results and risks analysis

Let’s investigate the next 4 items in a plan… What is an operations plan? Typically entail manufacturing and production information, facilities, inventory, distribution and maintenance/service What is a financial plan? Discusses required funding, cash-flow projections, income and balance sheet statements, scenario/sensitivity analysis What’s in a project management plan? Team experience/skills, staff hiring requirements/plans, organizational structure and key project milestones What’s in a marketing plan? Marketing strategy, marketing channels, marketing budget, marketing milestones and marketing working structure

So, why prepare a business plan anyway?
To get funding from investors or banks
Guides management in achieving goals
Thus, VERY IMPORTANT FOR ANY BUSINESS.
It also communicates the business model to potential investors or management

You know the sayings…….
“ If you fail to plan, you are planning to fail”
“ If you don’t have a plan, you will end up working for someone who does”
“ It's not the plan that is important, it's the planning”

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Business model vs Business plan

by Jim Muehlhausen on May 11, 2010

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