What is a business model? How does it differ from a business plan?
Business Model
The business model clearly identifies how your business converts its products and services into value. Quick MBA defines the business model as how the business “converts new technology to economic value.” This model takes the value of a product and identifies the target market that values the product. It then defines the valuable products that the business will create for those markets, the process that will generate revenue from the sales of those products and the steps required to remain competitive against its business counterparts. Unlike the business and strategic plans, it does not identify how the business will capture value or the challenges that will accompany those steps.
Business Plan
The business’ operations revolve around the business model. The operations are created to meet, if not exceed, the aspects that are defined within that model. The business plan identifies and explains the business’ operations, including its departments, staffing, location, equipment, marketing strategies and financial status of the business.
Related Reading: Why a Business Model Matters
Strategic Plan
The strategic plans, including the marketing plans, provide detailed steps and strategies that your business will use to achieve the goals identified by the business plan. These plans explain how your business will capture the value of its products, express the value to the target market and retain that target market after capture. Like the business plan, strategic plans revolve around the demands of the business model.
Variables
The business model is the leading force for the business plan, as well as the business’ strategies. However, it is quite easy for a business to stray away from its model. Internal and external factors such as a fluctuating economy, staff attrition and changing regulations are just some of the variables that can cause businesses to waver on its models. Thoroughly researched business plans and strategies, however, will prepare your business for the variables and help your business to stay on its course of success.
Considerations
At times, internal and external factors can require permanent changes to the business model. Shifts in the industry, new company technology and swings in customer demand can force businesses to change their methods and goals in order to maintain their success. If, and when, you decide to make changes to, or completely revamp your business model, you must also make revisions to your business plan and strategies. A yearly review of the business model, business plan and business strategies will help you to stay ahead of any necessary changes.
What is a business model? How does it differ from a business plan? Business ModelThe business model clearly identifies how your business converts its products and services into value. Quick MBA defines the business model as how the business “converts new technology to economic value.” This model takes the value of a product and identifies the target market that values the product. It then defines the valuable products that the business will create for those markets, the process that will generate revenue from the sales of those products and the steps required to remain competitive against its business counterparts. Unlike the business and strategic plans, it does not identify how the business will capture value or the challenges that will accompany those steps.Business PlanThe business’ operations revolve around the business model. The operations are created to meet, if not exceed, the aspects that are defined within that model. The business plan identifies and explains the business’ operations, including its departments, staffing, location, equipment, marketing strategies and financial status of the business.Related Reading: Why a Business Model MattersStrategic PlanThe strategic plans, including the marketing plans, provide detailed steps and strategies that your business will use to achieve the goals identified by the business plan. These plans explain how your business will capture the value of its products, express the value to the target market and retain that target market after capture. Like the business plan, strategic plans revolve around the demands of the business model.VariablesThe business model is the leading force for the business plan, as well as the business’ strategies. However, it is quite easy for a business to stray away from its model. Internal and external factors such as a fluctuating economy, staff attrition and changing regulations are just some of the variables that can cause businesses to waver on its models. Thoroughly researched business plans and strategies, however, will prepare your business for the variables and help your business to stay on its course of success.ConsiderationsAt times, internal and external factors can require permanent changes to the business model. Shifts in the industry, new company technology and swings in customer demand can force businesses to change their methods and goals in order to maintain their success. If, and when, you decide to make changes to, or completely revamp your business model, you must also make revisions to your business plan and strategies. A yearly review of the business model, business plan and business strategies will help you to stay ahead of any necessary changes.
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