Business plan, financial forecast, budget forecast, business plan, business model, economic model, business model … Are you about to embark on an entrepreneurial adventure? So you’ve probably heard of these terms before. And it is clear that many project leaders confuse two of these important concepts. Here are the differences between the business plan and the business model.
The business model reflects how you will make money
The business model, also known as the “business model”, is the way your business uses it to earn money. The model you are going to set up depends on many parameters: target target, positioning adopted (price, quality, etc.), distribution channels used, cost structure, etc.
You will find your business model only after a more or less long process of reflection and analysis. You will probably be called to probe your market (data collection, preparation and distribution of questionnaires), to segment your target of potential customers and to find differentiating factors from your competitors.
A business model is not necessarily unique, but it must be difficult to imitate. All elements of your business project are important and are intimately linked to each other. Their interactions (nature, intensity, etc.) will help form an inseparable whole that should turn to your advantage.
The business plan presents your business model and measures its performance
Your business model will fully integrate your business plan. It is, in fact, the central element. On the one hand, it must be described indirectly in the economic part of this document. In the latter, in fact, you must, in particular, present your creation idea, your product / service offer, your target, your team, your strategy, your action plan, etc.
The financial benefits of your business model will also be reflected in the second part of your business plan through the expected revenue (which results from your sales) and expenses (which depend on your cost structure). All of this information will appear in your forecast tables and feed into the various financial indicators.
In conclusion, always keep in mind that you must first find and validate your business model before working on your business plan. And don’t forget to edit your business plan later if you change an element of your business model.
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