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Business Model or Business Plan? You Need Both!

Credit: Plan-too

Credit: Plan-too

 

As a startup entrepreneur, you’ve likely heard and seen the terms “business model” and “business plan” in conversation and online.

 

While they sound nearly the same, they’re distinctive in their structures and purposes. When used together, they can help you keep your small business focused and on the path to success.

 

The Big Picture View: Your Business Model Canvas

A business model canvas is a one-page diagram of the essential components your business needs.

A business model should answer important questions, such as:

  • Who are your customers?
  • What do those customers expect and what do they value?
  • What is your value proposition? What problem are  you solving?
  • How will your business make money?
  • How do you intend to deliver value to your customers while making a profit?

It should also identify:

  • Customer segments
  • Customer channels
  • Revenue streams
  • Key vendors and partners
  • Cost structure
  • Value proposition
  • Resources
  • Key activities

 

The Roadmap For Staying On Course: Your Business Plan

A business plan is meant to help you navigate to where you want to go in your business. As important as it is for starting a business, it’s also a valuable tool for managing and growing a business.

A business plan includes:

  • Your business opportunity
  • Your products and services
  • Your marketing strategies
  • Your financial projections
  • Your staffing needs

In relation to your business model, a business plan defines how you intend to operate your business. The length of your business plan can vary—it just depends on the size and complexity of your business and the depth of information investors ask for.

 

Together, a Business Model Canvas and Business Plan Provide a Strong Foundation to Build Your Business

Having a business model canvas and a business plan can help you operate your company with purpose so you stay on track to accomplish your objectives. If you have one without the other, you might put time, effort, and money toward resources and initiatives that won’t sustain or grow your business. And when you do that, you risk missing out on opportunities, falling short of goals, and losing morale.

If you’re worried about the time it takes to develop a business model and business plan, relax. You don’t have to tackle them in one fell swoop. Work on them in smaller bits and pieces and set aside time on your schedule for them. To help you structure your business model and think through your business plan, consider using the Business Model Canvas. Also, explore the various business plan templates and software available online.

And remember, our SCORE mentors have experience in helping small businesses of all types start and run their companies. Contact us today to schedule a free mentoring session. We’re here to provide you with expert guidance as you work on your business model and business plan.

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