what's the difference between business model and business plan

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Business Plan vs. Business Model

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on December 11, 2023

If you’re starting a business , you have a business model, whether you know it or not. A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money.

A business plan , on the other hand, is the business owner’s plan to put that model into action. It’s much more detailed and includes financial projections, objectives, management decisions and further steps.

Still unsure? Have no fear, this handy guide lays out the differences between a business plan and a business model so that you know exactly what you and your business need to succeed.

Aspect	Business Plan	Business Model
Definition	A formal written document that elaborates on the operational, financial, and marketing details of a business. It is often used to secure funding or guide a business's growth.	A conceptual framework that defines how the business creates, delivers, and captures value. Often summarized visually with tools like the Business Model Canvas.
Purpose	To detail the company's strategy, milestones, financial projections, market research, and other specifics. Helps in providing direction, attracting investors, or guiding expansion.	To illustrate how a company operates, from sourcing raw materials to delivering the end product/service to customers, and how it intends to achieve profitability.
Components	Executive Summary Company Description/Overview Products/Services Offered Market Analysis Marketing and Sales Strategies Operations and Management Financial Plan Appendices	Value Proposition Key Activities Cost Structure Key Partners Key Resources Revenue Streams Customer Segments Customer Relationships Channels
Duration	Typically covers a specific time frame (like 1, 3, 5 years).	Timeless as long as the business operations remain consistent, but needs revision when the model changes.
Target Audience	Investors, lenders, partners, and internal team members.	Primarily for internal stakeholders but can be used externally for partners and strategic collaborations.
Level of Detail	Detailed and comprehensive. Can be dozens of pages long.	High-level and summarized. The Business Model Canvas, for instance, fits on a single page.
Flexibility	Tends to be fixed for the time frame it covers but can be updated as needed.	Typically more fluid, with frequent updates as the business learns and pivots.
Main Focus	Planning the future based on research, forecasts, and assumptions.	Describing how the business operates in its entirety and how it creates value.

Business Model

In simple terms, a business model is how the business will make money. Selling ice to eskimos, for instance, is a bad business model. Selling team jerseys to rabbit sports fans, on the other hand, is a solid business model.

The components of a business model are best illustrated by Swiss entrepreneur Alexander Osterwalder’s Business Model Canvas, which is a visual representation with nine sections. Four sections represent internal elements of a business that enable it to function and are related to costs.

Four other sections represent external elements that enable the business to bring in revenue and are related to the customer. The ninth section is the business’ value proposition.

Value Proposition

The value proposition is at the heart of your business model. Your value proposition, which should be no more than two sentences long, needs to answer the following questions:

What are you offering
Whose problem does it solve
What problem does it solve
What benefits does it provide
How is it better than competitor products

Key Activities

Key activities are all the activities required to run the business and create the proposed value. These can include product development and distribution and any other necessary activities.

Cost Structure

The cost structure is a sum of all you’ll need to spend to make the business function. It’s the costs you’ll incur to run the business and bring in revenue.

Key Partners

Key partners are external partners involved in delivering value, such as vendors and suppliers, or maybe a bank.

Key Resources

Key resources are any necessary practical elements that come with a cost. These might include your office space, employees, and equipment like computers.

Revenue Streams

Revenue streams are the ways in which you receive payment from customers. You may have more than one revenue stream, such as via direct sales and subscriptions.

Customer Segments

Customer segments are the groups of people to whom you provide goods or services. In other words, your target market. Maybe your products are aimed at younger women, for instance, or older men. Whatever your target segments, you should build customer personas of each group so that you know how and where to reach them with your marketing.

Customer Relationships

Customer relationships refer to how you interact with your customers to deliver value. Your interactions may be online only, by phone, in-person, or all of the above.

Channels refer to how you reach your customers, such as social media, internet search, direct sales calls, trade shows, and so on.

To Summarize

If you’re just starting a business, the Business Model Canvas is a great way to understand and examine your business model. One thing to remember is that the elements you put in your Canvas will be based on assumptions that will at some point be tested in the market and adapted as needed.

Another thing to remember is that you do not need to do a Business Model Canvas. It’s merely an exercise that can help provide insight into your business model.

Business Plan

A business plan is a detailed document that describes how the business will function in all facets. The key is in the “plan” part of the name. It will specify how you’ll launch your business, gain customers, operate your company, and make money. A business plan, however, is not a static document .

The initial version will be based largely on assumptions, supported by research. As you run your business you’ll constantly learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy.

You’ll present your business plan to potential backers, though in recent years some investors have begun to embrace the Business Model Canvas as a tool to assess a business’ potential.

A strong business plan includes eight essential components .

1. Executive Summary

The executive summary is the initial section of your business plan , written last, summarizing its key points. Crucial for capturing investors’ and lenders’ interest, it underscores your business’s uniqueness and potential for success. It’s vital to keep it concise, engaging, and no more than two pages.

2. Company Description/Overview

This section provides a history of your company, including its inception, milestones, and achievements. It features both mission (short-term goals and driving force) and vision statements (long-term growth aspirations). Objectives, such as product development timelines or hiring goals, outline specific, short-term targets for the business.

3. Products or Services Offered

Detail the product or service you’re offering, its uniqueness, and its solution to market problems. Explain its source or development process and your sales strategy, including pricing and distribution channels. Essentially, this section outlines what you’re selling and your revenue model.

4. Market Analysis

Industry Analysis : Research your industry’s growth rate, market size, trends, and future predictions. Identify your company’s niche or sub-industry and discuss adapting to industry changes.
Competitor Analysis : Examine main competitors , their unique selling points, and weaknesses. Highlight your competitive advantages and strategies for maintaining them.
Target Market Analysis : Define your target market , their demographics, needs, and wants. Discuss how and where you’ll reach them and the potential for market shifts based on customer feedback.
SWOT Analysis : Break down your company’s strengths, weaknesses, opportunities, and threats. Detail your unique attributes, potential challenges, market opportunities, and external risks, along with strategies to address them.

5. Marketing and Sales Strategies

Marketing and Advertising Plan : Use insights from your target market analysis to decide advertising channels, emphasizing platforms that best reach your audience, like TikTok over Instagram. Develop a concise value proposition to be central to all marketing, detailing how your product addresses specific needs.
Sales Strategy and Tactics : Define where and how you’ll sell, such as online, in-store, or through direct sales calls. Sales tactics should highlight the customer’s needs, presenting your solution without overly aggressive promotion.
Pricing Strategy : Decide on pricing based on market positioning, whether you aim to be a discount or luxury option. Ensure prices cover costs and yield profit, and position your product in a manner that aligns with the chosen price range. Justify your chosen pricing strategy in this section.

6. Operations and Management

Operational Plan : Outline daily, weekly, and monthly operations, specifying roles, tasks, and quality assurance methods. Include supplier details and order schedules, ensuring clarity on key business functions and responsibilities.
Technology Plan : For tech-based products, detail the development plan, milestones, and staffing. For non-tech companies, describe the technology tools and software you’ll employ for business efficiency.
Management and Organizational Structure : Define who’s in charge, their roles, and their backgrounds. Discuss your management strategy and forecast the development of your organizational hierarchy.
Personnel Plan : List current and future hires, specifying their roles and the qualifications necessary for each position. Highlight the significance of each role in the business’s operations.

7. Financial Plan

Startup Costs : Clearly detail every anticipated cost before starting operations. This will be vital for understanding the initial investment required to get the business off the ground.
Sales Projections : Estimate monthly sales for the first year, with an annual forecast for the next two years.
Profit and Loss Statement : An overview of revenue minus costs, resulting in either a profit or loss.
Cash Flow Statement : Provides clarity on the business’s liquidity by showing cash inflows and outflows over a specific period.
Balance Sheet : Displays the company’s net worth by detailing its assets and liabilities.
Break-even Analysis : Understand at which point revenues will cover costs, helping to predict when the business will start making a profit.
Funding Requirements and Sources : Enumerate the required capital and the sources of this funding. This should also include the purpose for which these funds will be used at different stages.
Key Performance Indicators (KPIs) : Identify the metrics vital for measuring the company’s performance. Use these indicators to spot challenges, understand where improvements can be made, and pivot strategies as necessary. Ensure that each KPI aligns with the business’s objectives and offers actionable insights for growth.

Remember, although the financial section might seem daunting, it is pivotal for understanding the economic feasibility of your business. Proper financial planning helps in making informed decisions, attracting investors, and ensuring long-term sustainability. Don’t hesitate to engage financial experts or utilize tools and software to ensure accuracy and comprehensiveness in this section.

8. Appendices

The appendices section of a business plan is a repository for detailed information too extensive for the main document. This can include resumes of key personnel, full market research data, legal documents, and product designs or mockups. By placing this data in the appendices, it keeps the main plan concise while allowing stakeholders access to deeper insights when needed. Always ensure each item is clearly labeled and referenced at the relevant point in the main document.

As you can see, business models and business plans have some similarities, but in the main they are quite different. Your business model explains the foundational concept behind your business, while a business plan lays out how you’ll put that model into action and build a business.

When you’re starting a business, it’s best to have both, as the work of getting them done involves learning about your business from every angle. The knowledge you’ll gain is likely to be invaluable, and could even be the difference between success and failure.

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Business Model Vs. Business Plan: What’s the Difference?

There’s a big misconception about the whole business model vs. business plan debate because both terms have been wrongly used. Today, we’ll look into what they’re really for and why they’re needed for the business.

Strategy has always been a building block of business. In the ever-competitive and highly volatile industry, you have to come up with a sustainable advantage over your competitors. Few lucky entrepreneurs successfully start on the right foot, but luck often runs out while keeping a great momentum. This is where a solid business strategy comes to play.

You can’t just launch your startup without establishing where it’s heading. You need a business strategy to identify which direction you’ll operate towards. This is why a business plan and a business model are essential factors in a company’s success. But because they seemingly have a similar purpose, they’re mistakenly used interchangeably. The truth is, one cannot exist without the other.

To truly understand the difference between a business model vs. a business plan, we’ll need to define what they are and what they’re used for.

What is a Business Model?

A business model is the company’s rationale and plans for making a profit. It explains how a company delivers value to its customers at a specific cost. A business model would include details about the company’s products and services, its target market, and all expenses related to the operations and production.

Why is it necessary?

It’s considered a roadmap for a business to achieve its financial goal in a given period. It maps out how you can sustain the value you deliver to your customers. Entrepreneurs use it as a tool to study, test, and estimate cost and revenue streams.

They can make quick hypothetical changes to the business model to determine how a financial decision can impact their long-term operations . This allows business owners to anticipate and adapt to trends and challenges in their industry.

Consequently, a strong business model also helps attract investors, recruit talent, and motivate employees. The management and staff are often motivated by how well a company adheres to the business model.

Types of Business Model

When it comes to different kinds of business models, there are several options for a company. For example, a software company might go with a subscription model because it’s easier to sell their product through a license subscription. On the other hand, retail companies might go for the accessories model because it’s more straightforward.

In determining which type of business model to use, companies choose the style that best suits their operations and industry. A growing method is using a combination of business models to create a hybrid system for the business.

The following are some of the most widely used types of business models:

Subscription
Transactional
Retail sales

Creating a Business Model

Now that we’ve established what a business model is, it’s time to learn how to create one for your startup. Your business model has to answer all the critical questions about your business.

Here are the key components you must include in your business model:

Key Objectives
Target Market
Product Value
Product Pricing
Required Funding
Growth Opportunity

Keep in mind, the business model has to be updated regularly to fit your goals. All companies undergo a stage of maturity that directly affects the business model it follows.

For early-stage startups, the business model would ideally be simple and straightforward. Most business owners would even opt for a flat organization where staff could communicate their concerns directly to the owner. This, of course, will change as the company expands.

Now that we’ve learned what a business model is, it’s time to move on to the next part of the business model vs. business plan discussion. So, let’s discuss what is a business plan.

What is a Business Plan?

A business plan is a written document that details a company’s goals and its strategies to achieve them . It’s considered the “blueprint of the business” because it summarizes all the essential aspects of the company such as finance, marketing, and operations.

It serves as a reference for the company owner and the management in making major business decisions. It can also be presented to investors when the owner is raising capital. It’s beneficial for startups who have no proven track record since a business plan can pitch its full potential.

A business plan is not only helpful to a business in its early stage, but it also helps it pivot during unforeseen circumstances. In a volatile industry, a company needs to adapt quickly and efficiently. Hence, update the goals and methods should accordingly.

Creating a Business Plan

So, what should a business plan include?

Business plans vary according to industry, but there is a general format for writing a business plan. You can expand or shorten this template based on long-term goals.

Executive Summary
Business Description
Market Analysis
Product Development
Marketing Strategies
Operations and Management
Financial Plans

You can choose from a wide selection of business plan templates when it comes to the actual writing. Remember to keep it concise and avoid jargon in the content. You will present your business plans to investors and stakeholders; hence, they need to get a clear idea of it in one reading.

Business Model vs. Business Plan: How to Use Them

At this point, we’ve established that both a business model and a business plan are essential to success. However, both can only take your business so far. How well you execute and follow them is a whole other story. It’s challenging to start a startup , let alone maintain it.

If you want to avoid common startup mistakes , you need to build your business on a strong foundation. Hire the best people, invest in reliable tools, and sign up for mentoring.

Speaking of mentors, Full Scale founders Matt DeCoursey and Matt Watson are incredibly passionate about helping entrepreneurs succeed. They’ve created Full Scale to assist startup owners in launching and managing their companies.

Full Scale is an offshore software development company that offers a wide array of services for startups. We offer the best talent and resources needed to begin your entrepreneurial journey.

We have seasoned project managers, marketing specialists, and technology experts at your service. We’ll take care of all the hassles out of your daily operations so you can focus on your core competencies.

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what's the difference between business model and business plan

Business Model vs. Business Plan: Key Differences

A business model is your core framework for operating profitably and providing value to customers; a business plan outlines how you’ll execute your goals.

a business binder: business model vs business plan

“A goal without a plan is just a wish,” wrote famed French author and aviator Antoine de Saint-Exupéry. These words ring especially true in modern business planning. As an entrepreneur, planning is a skill that can help ensure your success.

Business models and business plans are both integral aspects of starting a business. But what are the similarities and differences between the two, and when is the right time to think about each for your company? Here’s a breakdown.

Business model vs. business plan: What’s the difference?

A business model is a company’s core framework for operating profitably and providing value to customers. They usually include the customer value proposition and pricing strategy. A business plan outlines your business goals and your strategies for achieving them.

The two documents have a few critical differences, namely their structure and application. But the topics they deal with—such as a company’s finances, goals, and operational framework—are largely the same.

Financial projections

How they’re similar: Both business models and business plans provide an in-depth description for how a company will generate profits.
How they’re different: A business plan includes financial performance details relevant to both internal and external stakeholders, such as investors, lenders, or potential business partners. Alternatively, a business model describes your value proposition —what product or service a business will offer and why customers should buy it—as well as the target market .

Operational details

How they’re similar: Both business models and business plans include overarching information about how a company plans to operate, including components such as distribution channels and management structure.
How they’re different: Business models explain the fundamental structure of a company, such as how it plans to create and deliver value to customers, while business plans get into the actionable details of how to achieve a company’s operational goals.
How they’re similar: Business models and business plans are used to outline the goals, strategies, and operations of a business.
How they’re different: A business plan generally incorporates a business model, explaining how the model should be implemented and executed to achieve the business's goals.

4 examples of business models

Brick-and-mortar
Direct to consumer
Subscription

There are dozens of different templates that you, as a business owner, can draw from when building out your operation. Here are four examples of basic business models:

1. Brick-and-mortar

One of the most common retail business models, brick-and-mortar , includes a traditional physical storefront (or a pop-up shop ) selling either business to business (B2B), in the form of wholesale goods, or business-to-consumer (B2C). Although overhead such as rent is a consideration in this model, physical locations offer the competitive advantage of tapping in-person customers and building brand awareness through exposure.

2. Direct to consumer

Direct to consumer (D2C or DTC) is a retail model that allows your business to sell straight to customers, rather than going through a third-party retailer such as Amazon. There are numerous benefits to D2C, including higher profit margins because you don’t have an intermediary taking a cut. However, the main disadvantage of D2C is that you have to develop your own customer base without the help of an established platform.

3. Subscription

Projections indicate that the subscription ecommerce market has boomed in recent years and is set to hit nearly $900 billion in 2026. The subscription business model includes charging customers a recurring fee for a good or service—anything from home-delivery meal kits to media streaming. Subscription services are dependent on customer relationships and customer loyalty , but they can offer businesses a more predictable revenue stream.

4. Freemium

Under a so-called freemium model, consumers can access part of the business’s goods or services free of charge, but must pay to receive unlimited access to everything the company has to offer. Examples include many media organizations, such as The New York Times, which offers several free articles before requiring a subscription, or audio streaming service Spotify, which has a free version with ads, as well as a paid version without.

What's in a business plan?

A comprehensive business plan details many aspects of your company, including everything from marketing strategies to finances to the legal ownership structure. Here are a few key sections to include when writing your business plan.

Executive summary . The executive summary includes your mission statement , an explanation of your core values and goals, a brief company history, and descriptions of the products or services you plan to provide to a potential or existing market.
Organizational structure. Management hierarchy, as well as their roles and responsibilities, would be included in this section.
Marketing and sales. How do you plan to market your offerings? Who is your target market? What is your pricing strategy and how does it compare to that of your competitors? How do you plan to acquire and retain customers? All these questions should be answered in this section.
Expected financial performance. This includes projected revenue streams, cash flow management , cost structure, expenses, and anticipated profitability. It typically covers from one to five years in the future.
Business operations. This section covers everything about the day-to-day running of your business, including your storefront (if you have one), inventory management , supply chain, and production.

Business models vs. business plans FAQ

Which comes first, a business model or business plan.

A business model typically comes before a business plan . Business plans often include the business model, and then explain in detail how you plan to achieve the goals set out in a model.

How can a company test and validate its business model before creating a business plan?

Market research, financial modeling, and even seeking out expert advice or consulting are all ways to review and validate your operation’s business model before developing a business plan.

How often should a company review and update its business plan?

A business should be prepared to update its business plan dynamically, based on changes in the market, shifts within the operation, or new investment or opportunities. Many businesses update their plans annually

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Business Plan vs Business Model Canvas Explained

Male entrepreneur with shoulder length hair sitting in an office working on his computer. Exploring the business model canvas as a planning option.

6 min. read

Updated May 10, 2024

Download Now: Free 1-Page Business Plan Template →

It might be stating the obvious, but planning and preparation are keys to success in business.

After all, entrepreneurs put in hard work to develop their product, understand the market they plan to serve, assess their competitive landscape and funding needs, and much more.

Successful business owners also take time to document their strategies for guiding the growth of their companies. They use these strategies to take advantage of new opportunities and pivot away from threats.

Two common frameworks for documenting strategies – the business model canvas and the business plan – are also among the easiest to get confused.

Though they can complement each other, a business model canvas and a business plan are different in ways worth understanding for any entrepreneur who’s refining their business concept and strategy.

Let’s start by digging deeper into what a business model canvas is.

What is a business model canvas?

You may have heard the term “business model” before. Every company has one.

Your business model is just a description of how your business will generate revenue. In other words, it’s a snapshot of the ways your business will be profitable.

Writing a business plan is one way of explaining a company’s business model. The business model canvas takes a different approach.

A business model canvas is a one-page template that explains your business model and provides an overview of your:

Relationships with key partners
Financial structure
And more…

While the business model is a statement of fact, the business model canvas is a strategic process—a method for either documenting or determining your business model.

It’s meant to be quickly and easily updated as a business better understands what it needs to be successful over time. This makes it especially useful for startups and newer businesses that are still trying to determine their business model.

You can think of a business model canvas as a condensed, summarized, and simplified version of a business plan. It’s a great way to quickly document an idea and get started on the planning process.

The business plan is a way to expand on the ideas from the canvas and flesh out more details on strategy and implementation.

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Components of a Business Model Canvas

The simplest way to think about your business model canvas is to map it out visually. A business model canvas covers nine key areas:

Value proposition : A company’s unique offering in the market and why it will be successful.
Key activities: The actions that a company takes to achieve its value proposition.
Customer segments : The types of people or businesses that are likely to want a company’s products or services.
Channels : How a company reaches customers through marketing and distribution efforts.
Customer relationships: How a company interacts with customers and maintains important relationships.
Revenue streams: The ways in which a company makes money.
Key resources: The assets such as property, equipment and staffing that a company needs to perform its key activities.
Key partners: The relationships with suppliers, vendors, customers and other stakeholders a company must maintain in order to be successful.
Cost structure: The major drivers of company expenses that will need to be tracked and managed.

[Want an even simpler alternative? Try downloading our free one-page plan template and start building your plan in less than 30 minutes.]

To get a better sense of how a business model canvas documents business strategy, consider a company like Netflix. The streaming company’s business model is based on generating subscription revenue through its content library and exclusive content.

If Netflix executives were to create a business model canvas, it would map out how the company leverages key resources, partnerships, and activities to achieve its value proposition and drive profitability. The business model is the destination.

The great thing about a business model canvas is that you can quickly document business ideas and see how a business might work at a high level. As you do more research, you’ll quickly refine your canvas until you have a business idea you think will work.

From there, you expand into a full business plan.

What is a business plan?

If a business model canvas captures what a company looks like when it’s operating successfully, then a business plan is a more detailed version along with a company’s blueprint for getting there.

Think of your business plan as a process of laying out your goals and your strategies for achieving them.

The business plan is more detailed, and changes over time. It examines each aspect of your business, from operations to marketing and financials.

The plan often includes forward-looking forecasts of a company’s projected financial performance. These are always educated guesses. But these forecasts can also be used as a management tool for any growing business.

Comparing actual results to the forecast can be a valuable reality check, telling a business if they’re on track to meet their goals or if they need to adjust their plan.

A business plan is also a must for companies hoping to receive a bank loan , SBA loan , or other form of outside investment . Anyone putting up funds to help you grow will want to see you’ve done your homework.

So a business plan is how you not only prepare yourself, but also show your audience that you’re prepared.

Components of a business plan

While there are several different types of business plans meant for different uses, well-written plans will cover these common areas:

Executive summary : A brief (1-2 pages) overview of your business.
Products and services : Detailed descriptions of what you’re selling and how it fills a need in the market.
Market analysis : Assessing the size of your market, and information about your customers such as demographics (age, income level) and psychographics (interests, values).
Competitive analysis : Documenting existing businesses and solutions your target customers are finding in the market.
Marketing and sales plan : Your strategies for positioning your product or service in the market, and developing a customer base.
Operations plan : Describing how you will run the business from day to day, including how you will manage inventory, equipment, and staff.
Organization and management team: Detailing the legal structure of the business, as well as key members, their backgrounds and qualifications.
Financial Plans : Business financials that measure a company’s performance and health, including profit & loss statements, cash flow statements and balance sheets. Effective financial plans also include forward-looking sales forecasts and expense budgets.

How a business plan and business model canvas inform business strategy

Avoid the trap of using the two terms interchangeably. As we’ve shown, the two have different focuses and purposes.

The business model canvas (or our one-page plan template ) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as you test ideas and determine what’s feasible.

Once you have a clearer sense of your idea, you can expand the canvas or one-page plan into a business plan that digs into details like your operations plan, marketing strategy, and financial forecast.

When you understand how – and when – to use each, you can speed up the entire planning process. That’s because the business model canvas lays out the foundation of your venture’s feasibility and potential, while the business plan provides a roadmap for getting there.

The work of business planning is about connecting the dots between the potential and the process.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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Business Plan vs. Business Model: What's the Difference?

Dive into the nuances of Business Plans & Models. Uncover their key differences, applications, and tips for strategic growth. Master your business journey today!

November 28, 2023

In the world of business, two terms often emerge as foundational elements to startup founders, seasoned entrepreneurs, and everyone in between: the Business Plan and the Business Model. Both are crucial, yet their roles, purposes, and impacts are distinct, and understanding these differences can mean the difference between the success and failure of an enterprise.

In a landscape where innovation is rampant and industries are constantly evolving, having clarity about one's business direction is indispensable. It's akin to a sailor knowing the direction of the wind and having a map. While the wind's direction can be equated to the broader strategy of the sailor (the Business Model), the map which plots out the course in detail is akin to the Business Plan.

Yet, with these tools being so pivotal, it's alarming how often they are misunderstood or used interchangeably. Some entrepreneurs pour weeks into crafting the perfect business plan, only to realize they haven’t clarified their fundamental business model. Others sketch out a brilliant business model on the back of a napkin but falter when asked for the detailed strategy and projections that a business plan requires.

This guide aims to dissect the nuances between a Business Plan and a Business Model, highlighting their unique roles in the entrepreneurial journey and offering insight into how each can be harnessed most effectively. By the end of this exploration, readers will have a clear roadmap (pun intended!) for their own business endeavors, understanding when, why, and how to leverage each tool.

Definition of Key Terms - Understanding Business Plan and Business Model

In order to delve deep into the distinctions between a Business Plan and a Business Model, it's imperative that we first lay down clear definitions for each term. This ensures that as we progress, we're aligned in understanding and can avoid any ambiguities. So, let's start by putting these cornerstone concepts under the microscope.

Business Plan

A Business Plan can be envisioned as a detailed blueprint for setting up a business and ensuring its success. It's a comprehensive document that articulates what a business intends to achieve and the strategies it will deploy to make those aspirations a reality. Let's break down the typical components:

Executive Summary: A snapshot of your business, providing a concise overview of what the business is about, its mission, and how it stands out in the market.
Company Description: An in-depth look at the company, detailing its formation, mission, objectives, and overarching goals.
Market Analysis: A study of the industry landscape, understanding potential competitors, target audience, market trends, and opportunities.
Organizational Structure: A delineation of the company's hierarchy, roles, responsibilities, and the dynamics of how operations will be conducted.
Product or Service Line: A detailed description of the product or service the company offers, its benefits, lifecycle, and relevance in the market.
Marketing and Sales Strategies: Outlining the approach for promoting the product/service, attracting customers, and the strategies for sales conversion.
Funding Requirements: If seeking external investment, a clear layout of the capital needed, the reasons, and the strategy for effective utilization.
Financial Projections: Forecasts for the business, including projected income statements, balance sheets, cash flow statements, and break-even analysis.

Business Model

A Business Model is akin to the conceptual foundation of a business. It succinctly defines how a company plans to generate revenue, make a profit, and ensure sustainability in a competitive market. Core components of a business model include:

Value Proposition: What makes the company’s offering unique and desirable? How does it solve a problem or fill a need in the market?
Customer Segments: Who are the primary target customers? What are their needs and how will the business cater to them?
Channels: Through which avenues will the product/service be delivered to the customers?
Customer Relationships: How does the business intend to interact with its customers, ensuring retention and loyalty?
Revenue Streams: The avenues through which the company will make money. This can include sales, subscriptions, licensing, and other revenue models.
Key Resources: Assets required to run the business, which can be physical, intellectual, human, or financial.
Key Activities: The main operations and tasks that need to be performed to ensure the business runs smoothly.
Key Partnerships: Collaborations, alliances, and affiliations that will be essential in supporting the business operations.
Cost Structure: A clear breakdown of the business’s expenses and financial obligations.

Infographic: Definition of Key Terms - Understanding Business Plan and Business Model - 2

With these definitions at our fingertips, it becomes easier to discern the distinct role each plays in the grand scheme of establishing and running a business. As we progress further, we will delve into how these elements differ in scope, objective, and application.

Main Differences - Navigating the Nuances Between Business Plan and Business Model

Having delineated clear definitions for both a Business Plan and a Business Model, it's now time to pinpoint their distinctive differences. While both tools are essential to a business's success, they serve varied purposes and are used at different stages of the entrepreneurial journey. Let's explore the primary differences between the two:

Business Model: This represents the broader concept of the business's structure and its fundamental modus operandi. It's an overview of how the business plans to function at its core, capturing, delivering, and creating value.
Business Plan: This is a comprehensive document that dives deep into the strategy required to make the vision (often illustrated by the business model) a reality. It details everything from operations, marketing, sales, and finances to ensure the business is on the right track.
Business Model: Its primary aim is to define the method through which the company creates, delivers, and captures value. It's about answering the "What, Why, and For Whom" of the business.
Business Plan: This seeks to showcase the feasibility of the business model, detailing how the business will operate, generate revenue, manage costs, and expand. The business plan is more about the "How, When, and Where."
Business Model: While it is primarily crafted for internal stakeholders to align their vision and operations, it also serves as an overview for potential investors, partners, and other external parties who are interested in understanding the company's foundational strategy.
Business Plan: This is a tool tailored for both internal decision-makers and external stakeholders. When seeking investments, partnerships, or loans, a well-drafted business plan becomes indispensable. It provides the detailed insight that external parties often require before committing resources or capital.

Flexibility

Business Model: Given its higher-level perspective, the business model is often more adaptable. As market conditions change, customer preferences evolve, or new opportunities emerge, the business model can be adjusted to pivot or capitalize on these shifts.
Business Plan: Though not rigid, a business plan is more static compared to a business model. While it should be periodically updated as milestones are achieved, market conditions change, or business goals evolve, it typically requires a more formal revision process.

In essence, while the business model is about conceptualizing the heart and soul of the enterprise, the business plan is about putting flesh to that skeleton, bringing it to life with details, strategies, and actionable steps. Grasping these nuanced differences is vital for entrepreneurs as they chart the course of their business journey.

When to Use Which - The Strategic Application of Business Plan and Business Model

The distinctions between a Business Plan and a Business Model are clear, but knowing when to deploy each can be equally as crucial. Their application at the right junctures can enhance clarity, attract resources, and drive effective implementation. Here's a guide on when to use which:

Starting Up a Business

Business Model: Before any detailed planning commences, it's pivotal for entrepreneurs to draft a Business Model. This helps in conceptualizing the very essence of the business: what value it offers, who it caters to, and how it will generate revenue. Using tools like the Business Model Canvas can provide a visual and concise representation of this.
Business Plan: Once the fundamental business concept is clear, the Business Plan comes into play. This document will map out the strategy to realize the business model, offering detailed steps, financial projections, marketing strategies, and more. It's a roadmap for how the business will operate and grow.

Seeking Investments

Business Model: Investors will want a snapshot of your business's core. They want to know why your business exists and how it stands out. Thus, presenting a clear business model is paramount.
Business Plan: Alongside understanding your business's essence, investors also need reassurance on its feasibility and growth potential. This is where the Business Plan becomes crucial. It offers detailed projections, strategies, and plans that can instill confidence in potential investors, showing them the roadmap to returns on their investment.

Iterating on Business Ideas

Business Model: In rapidly changing industries or for startups practicing the lean startup methodology, frequent iterations might be needed. Every time there's a significant pivot or change in direction, the Business Model should be revisited and possibly adjusted.
Business Plan: While the Business Model might be revised more frequently, it's not always necessary to overhaul the entire Business Plan. However, if the pivot is significant enough to alter operations, marketing strategies, or financial forecasts, then a revision of the Business Plan is warranted.

Periodic Review and Expansion

Business Model: While the core of a business might remain steady, it's beneficial to revisit the Business Model periodically, especially when considering expansion into new markets, launching new products, or diversifying revenue streams.
Business Plan: As businesses hit milestones, they should update their Business Plan. This could be done annually or during strategic inflection points like mergers, acquisitions, or significant market shifts. A current Business Plan is also invaluable when seeking further investments, opening new branches, or exploring partnerships.

In summation, while the Business Model encapsulates the very soul of the enterprise, the Business Plan serves as the detailed blueprint for bringing that vision to fruition. Knowing when to focus on each, and how to leverage them effectively, can guide businesses through their initial setup, growth, challenges, and expansions. Both tools, when used strategically, are the compass and map guiding a business towards its envisioned success.

Real-world Examples - Illustrating the Nuances of Business Plan and Business Model

A theoretical understanding of the distinction between Business Plans and Business Models is one thing, but observing them in practice can offer an invaluable perspective. Let’s explore some real-world examples that showcase these tools in action:

Business Model: At its core, Airbnb’s model is about connecting people with spaces to rent to those looking for accommodations. Their value proposition revolves around offering unique, homely, and affordable accommodations compared to traditional hotels. Their primary revenue stream comes from charging hosts a commission on each booking.
Business Plan: When Airbnb sought investments, they presented a detailed startup business plan that included their marketing strategy, growth projections, financial details, and expansion plans into new markets. This plan articulated how they intended to move from their foundational model to a global powerhouse in the hospitality industry.
Business Model: Uber’s primary model is a platform connecting drivers with passengers. Their value proposition is offering a convenient, affordable, and reliable alternative to traditional taxis. Revenue primarily comes from taking a cut from each ride a driver completes.
Business Plan: Uber’s rapid expansion into cities worldwide didn’t happen by chance. It was part of a strategic plan that included targeted marketing campaigns, strategies to onboard drivers, handling regulatory challenges, and financial projections for each new market.
Business Model: Netflix started as a DVD rental-by-mail service, pivoting to streaming as technology and consumer preferences evolved. Their value proposition revolves around offering an extensive library of content for a fixed monthly price, without ads. Revenue comes from monthly subscriptions.
Business Plan: When Netflix decided to pivot from DVD rentals to streaming, and later into producing original content, it would have required detailed planning. Their business plan would outline content acquisition strategies, technological infrastructure needs, financial forecasts for the new ventures, and a marketing strategy to promote their evolving services.
Business Model: Dropbox’s model is based on providing cloud storage solutions for individuals and businesses. Their value proposition is offering a simple, reliable, and accessible means to store digital content. They employ a freemium model where basic services are free, but advanced features come at a cost.
Business Plan: As Dropbox sought to grow, especially in the competitive cloud storage market, they needed a comprehensive plan. This would include strategies for user acquisition, scaling their technological backend, partnerships with other software providers, and financial plans for managing their freemium model efficiently.

In essence, these examples vividly illustrate how the foundational concept of a business (Business Model) is different from the detailed strategy for its operation and growth (Business Plan). While the model captures the essence, the plan dives into specifics. Both are integral at different stages, and as seen with companies like Netflix, they need to be revisited and revised as the company evolves.

Navigating the Business Landscape with Precision

Throughout this exploration of Business Plans and Business Models, one thing remains abundantly clear: both are indispensable tools in the toolkit of every entrepreneur and business leader. However, understanding the nuanced differences between the two and knowing how to deploy each effectively can significantly impact a company's success.

A Business Model provides the visionary blueprint of a company – it's the big picture that showcases what the company stands for, its primary methods of generating revenue, and how it intends to deliver value to its target market. It’s the foundation upon which a company is built, a reflection of its core identity.

On the other hand, a Business Plan dives into the specifics, detailing the strategies, operations, financial projections, marketing approaches, and other key components necessary to bring the business model to life. It's the roadmap, detailing the route a business needs to take to achieve its goals.

In the rapidly changing world of business, where consumer preferences evolve, technologies disrupt traditional operations, and markets are continually in flux, having a robust business model is crucial. But it’s the detailed business plan that allows businesses to navigate these complexities with precision, foresight, and strategic acumen.

Drawing inspiration from real-world examples, we've seen how giants like Netflix and Uber have effectively utilized both these tools. They've conceptualized innovative business models and then deployed detailed business plans to capture market share, adapt to changes, and remain at the pinnacle of their respective industries.

In conclusion, as an entrepreneur or business leader, think of the business model as your compass, giving direction and purpose. The business plan is your map, detailing the terrain and showing the path forward. With both in hand, you're not only set for the journey but also equipped to tackle the challenges and capitalize on the opportunities that lie ahead.

Key Takeaways

Foundational Differences: A Business Model provides an overview of how a company creates, delivers, and captures value, whereas a Business Plan delves into the detailed strategies, operations, and financial projections for realizing the model.

Strategic Application: The Business Model sets the core vision and foundation for a business, while the Business Plan acts as a roadmap, detailing steps for achieving business goals and milestones.

Real-world Applications: Successful companies, such as Airbnb, Uber, Netflix, and Dropbox, have effectively conceptualized innovative business models and employed comprehensive business plans for strategic execution and growth.

Necessity for Adaptation: Both the business model and business plan should be revisited and revised periodically to ensure alignment with evolving market realities and business objectives.

Call to Action: Entrepreneurs and businesses should constantly reflect on, refine, and update their models and plans, engage with experts, commit to continuous learning, and actively share insights to ensure sustained success.

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Business Model vs Business Plan – What Is The No. 1 Difference

by IdeaBuddy Team
April 19, 2024
6 minute read

Table of Contents Hide

What should your business model include , the importance of choosing the right business model, what is a business plan , what should your business plan include , business model vs business plan: the difference, business model vs business plan: conclusion.

Whether you are new to the world of entrepreneurship and business or you already have solid experience dealing with business terminology, there is no harm in refreshing your knowledge and making sure you know how to differentiate between a business model vs business plan .

Although both are essential, they serve different purposes and contain distinct information that can determine the success of your business, so in this article we will aim to cover everything you should know about these two terms that stand behind business model vs business plan syntax so you can cross them off from your entrepreneurial to-do list!

So, is there a winner in the business model vs business plan race, or are they simply complementary parts of every business? Let’s find out and explain these two ingredients needed to kick off your business.

What is a business model?

When thinking about what stands between a business model vs business plan, you probably already know that the characteristic of business models is that there are multiple models that can be used in a business, and they always depend on the type of the product a company has.

Some of the most common business models are affiliate , product as a service , subscription model , franchise , and others.

A business model is basically the strategic blueprint that defines how your company creates, delivers, and, most importantly, how it is going to make profit in the future.

In simpler terms, it outlines how your business plans to make money and achieve its goals , describing what products or services it will offer, the target market it aims to capture, and the expected expenses and revenues.

Remember: a clear and detailed business model is the foundation of every successful venture. It’s not just about having a great idea, but about carefully mapping out how you’ll bring that idea to life and create value.

Your business model should include a compelling value proposition that determines your offerings and makes clear why customers should prefer them. You need to define your customer segments to tailor your approaches effectively, ensuring you understand who you’re serving and what they truly need.

Channels describe how you’ll reach your customers, while customer relationships detail the type of interactions you intend to maintain with them, whether through personalized service, automated systems, or community engagement.

Revenue streams outline how your business will earn money, be it through direct sales, subscriptions, or other creative monetization strategies. In your business plan, you should also provide clarity on key activities (what actions are crucial to deliver on your promise), key resources (what you need to operate), and key partnerships (who you’ll ally with to enhance your capabilities).

Business team working with new startup project plan and discussion information for financial strategy with laptop and digital tablet in a modern business lounge

Finally, a thorough understanding of your cost structure will ensure that your business model is not only viable but also financially sustainable. Each of these elements works together to provide a comprehensive overview that will guide your business from startup to success.

Your business model sets the stage for introducing a structured, detailed business plan. So, let’s see how choosing the right business model for your business actually helps you:

Selecting the right business model is critical to the success of your business, as it defines the framework through which your business will operate and flourish. Here’s why the strategic choice of the right business model is fundamental:

It gives you a competitive advantage : by adopting a business model that matches your business’s strengths and market needs, your business can distinguish itself from competitors.
Enhances flexibility and resilience : The right business model provides a structure that supports growth and facilitates quick adaptation to market changes or internal demands.
Helps you attract investment : A well-created business model can help demonstrating to investors that your business has a clear plan for revenue generation and long-term viability.

Now that we have a better understanding of the basics of the business model, it’s time to examine the other business ingredient – the business plan. You will learn in more depth the correlation between business model vs business plan, and understand how they overlap.

Just as there are various business models to suit different types of products and services, there are also multiple frameworks for business plans tailored to diverse business objectives. Common types of business plans include traditional , lean startup , and operations plans , each serving different strategic purposes.

A business plan is essentially a comprehensive document that details how your company plans to achieve its goals . It goes beyond the strategic outline provided by your business model to specify the operational steps, financial projections, and marketing strategies your business will employ. It describes in detail what your business will do, who your customers will be, and how you plan to succeed financially .

In simpler terms, a business plan not only maps out the products or services you will offer but also elaborates on the target market, the business structure, the team that will lead your venture, and the financial investments involved. It helps you anticipate any potential challenges and elaborate a plan on how you would address them, ensuring your business navigates towards its strategic goals effectively.

Remember: a clear and well-thought-out business plan is indispensable for translating the vision of your business model into a roadmap that guides every aspect of your business. It’s not just about having an innovative idea, but about methodically planning how to bring that idea into reality and secure its success in the marketplace.

As we mentioned before, a good business plan is a must if you are looking to turning your strategic vision into actionable steps! Here are some key components that your business plan should contain:

Executive Summary : The summary should capture the main aspects of your business, such as mission statement, business model, key products or services, leadership team, and a brief financial overview.
Company Description : Provide detailed information about your business, the problems it aims to solve, and the market needs it addresses.
Market Analysis : Demonstrate a thorough understanding of your industry, market trends, demographics, and competition.
Organisation and Management : Describe your company’s organisational structure, including details of the ownership, profiles of your management team, and the qualifications of your board of directors.
Services or Products List : Explain what you’re selling or what service you’re offering.
Marketing and Sales Strategy : Outline how you plan to attract and retain customers.
Funding : If you are seeking financing, you should specify the amount of funding needed over the next five years and give a brief explanation on how you plan to use these funds.
Financial Plan : Introducing the financial data, such as profit and loss, cash flow forecast, balance sheet and other projections can help both you and potential investors get a clear view on the direction and resources needed to succeed.

Each of these components need to work together to provide a comprehensive and detailed overview of your business.

As you develop your business plan, consider using tools like IdeaBuddy to streamline the process and ensure that every aspect of your plan is well-crafted and aligned with your business goals.

Understanding the difference between a business model vs business plan can help you more effectively communicate the core of your business to stakeholders and guide your strategic decisions. The business model focuses on the conceptual aspects of the business, showing the big picture of how value is created and delivered, while the business plan details the operational and financial specifics needed to achieve those goals.

Here’s why understanding the difference matters:

Focus and Clarity : While the business model offers a high-level view of your strategic direction, the business plan provides the details of exactly how you’ll achieve this.
Execution vs. Strategy : The business model is your strategy for how you’ll succeed, while the business plan is about execution—how you turn your strategic visions into operational realities.
Adaptability and Scalability : With a well-defined business model, you can adapt to changes without losing sight of your core objectives. The business plan allows you to scale these efforts, detailing specific actions, timelines, and resources needed as you grow.

We hope that now you understand the distinction and importance that stand behind the business model vs business plan buzzword. Let’s recap one more time: while the business model outlines the strategic blueprint for how your company will create, deliver, and capture value, the business plan details the specific steps and resources necessary to execute and achieve the goals set forth by your business model.

We hope this helps. For more information about the business model vs business plan topic, read the following articles:

Suggested read: What is a business model?

Suggested Read: Why do you need a business plan?

For those ready to dive deeper into the topic of business model vs business plan, or perhaps start a business from scratch, we have crafted an in-depth guide for all the steps of the way as you build your business – check it out here! 💡

IdeaBuddy Team

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Business Model vs. Business Plan

You might be wondering what the difference is between a business plan and a business model. The truth is, they are different things with different purposes.

The main difference between a business plan and business model is that a business plan outlines your goals and strategy to grow your company, while a business model shows you how to generate revenues. Read on to learn more about this subject, including what types of business models there are and how to figure out which type best suits your situation.

What is a Business Model?

business model explains how you generate profits

What is a Business Plan?

business plan explains company’s goals and road map

What Should Be Included in a Business Plan?

During the business planning process, especially if you are trying to attract investors, there are 10 essential elements of a business plan which you must include as follows:

Executive Summary
Company Description
Customer Analysis
Market Analysis
Competitive Analysis
Marketing Strategy & Plan
Operations Plan
Management Team
Financial Plan (Performance & Forecasting)

For each of these sections, you should provide an in-depth description of your research, analysis, and expected financial performance. You can learn more about the components of a business plan and review our repository of 100+ business plan examples to help you get started on writing your own business plan.

What Should Be Included in a Business Model?

A business model should include the details of every way in which your business makes money. It’s important not to leave anything out, even if it seems insignificant. Every dollar counts!

How Does a Business Model Differ from a Business Plan?

Business models outline how your company generates revenues. On the other hand, business plans focus on the specifics of how the business will achieve sales and growth over a given period of time, typically five years. Business plans discuss your business model among other things and are critical if you want to gain investments to grow your business.

The business model strategy is very different from a business plan. While they overlap a bit, the critical difference is that a business plan outlines the goals and business strategy while the basic business model shows you how to make money.

Your needs will change over time so it’s important to be able to switch between these two documents when needed. For example, if your goal is long-term growth then you may want more information about what type of strategy would work best for this situation or which resources might help get there faster. On the other hand, if you’re looking for some immediate income then paying attention to the various types of models available could give you an idea of where to start with generating enough sales quickly without too much cost upfront.

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Business Model Vs Business Plan – What is the Difference?

Do you want to know the difference between a and a business plan? If YES, here is a detailed comparison and analysis and how each is used. A business plan and a business model look amazingly similar like two peas in a pod, but they are equally different, just like two peas in a pod. They are both part of each other but play different roles thus making the line between them seem dim.

A business plan and a business model both contain , customer retention strategy, revenue generation strategies, and overall, they are used to outline the vision of the company. So what then differentiates a business plan from a business model and how can you make a clear distinction of both?

Business Model Vs Business Plan

What is a business model.

A business model is a company’s outlined plan for making profit. It identifies the products or services the business will sell, the target market it has identified , and the expenses it anticipates. A business model also shows the destination of the business, how it is meant to work, and what it is meant to become.

A business model ascertains how your business makes money. It identifies the services that your customers value and shows how funds are generated for the services your business renders to your customers. A small business can have more than one method of generating income, and it is the duty of the business model to simplify the money process by focusing on the largest income generator.

For instance, a gas station sells gas to customers, but it also provides other services such as a car wash, lube station, etc. The business model only recognizes the majority income generator, which is the sale of gas. Therefore, the business model will reflect the sale of gas to the customer, which generates income at the time of the customer’s purchase.

The business model summarily simplifies and makes revenue-generation easy to understand by focusing on the key generator, highlights exactly how you intend to acquire, retain, and service your customers. The business model can come in different distinct models like:

Franchise model
Direct sales model
Advertising model
Subscription based model
Lowcost model
Freemium model
Affiliate model
Production model

The business model is basically at the center of the business plan, as it describes how the company is positioned within its industry’s value chain, and how it organises its relations with its suppliers, clients, and partners in order to generate profits. The business plan translates this positioning in a series of strategic actions and quantifies their financial impact.

What is a BUSINESS PLAN

A business plan is a formal written document that contains business goals, the methods on how these goals can be attained, and the time frame within which these goals need to be achieved. A business plan acts like a GPS. It shows you the roadmap of how you intend to get to your destination as a business person.

It highlights the market opportunities you want to take advantage of, the existing competition, the strength and experience of your team, a detailed description of the products and services you intend to offer, and a roadmap that shows exactly how you intend to execute your plans in the market.

A business plan is a document presenting the company’s strategy and expected financial performance for the years to come.

The business plan provides the details of your business. It takes the focus of the business model and builds upon it. It explains the equipment and staff needed to meet the details of the business model. It also explains the marketing strategy of your small business, or how your business will attract and retain customers, and deal with the competition.

Furthermore, the business plan explains the financial stability of your small business at a particular point in time, as well as in the forecasted future. Overall, the business plan supports the business model and explains the steps needed to achieve the goals of that model

The business plan pays close attention to your goals, projects the cash flow, profits or losses, and ultimately shows how long and what would be required to enable the business break-even.

A sample structure of a business plan is seen below:

Executive Summary
Business Description
Service or Product Line
Market Analysis & Strategies
Organization & Management
Funding Request
Financial Assumptions
Financial Projections

Differences Between a Business Plan and a Business Model

Some of the major differences between a business plan and a business model are outlined thus;

A business model aims at highlighting the profit making potentials of a business, while a business plan highlights every aspect of the business.
The business plan explains in details the steps needed to achieve the goals of your business model.
Another difference is that business plans are usually written at the beginning of a business or a business initiative, while a business model is relevant at any time, and can be written at any time.
Again, business models are less expensive to put together, and may represent a fictional future goal. As a goal, they may be both complete and entirely unprofitable or even infeasible, quite unlike your business plan.
A business model is centered around Value; while business plan is centered around Resources. The business plan thus lays out how to manage these resources over time to materialize the business model, grow and scale the business.
A model explains how you will make money: for example, by selling advertising, by earning a commission, by adding a markup to services, working with partners, selling direct, charging by the hour, with additional services, etc. While a business defines specific activities, it includes timeframes, budgets, owners, dependencies and impact.

Business Model vs Business Plan What’s the Difference?

Free Business Model Canvas Template

January 2, 2024

Business plan, business model, strategies, financial forecasts, and whatnot!

Starting a business means encountering new terms every day, but not exactly knowing when to use what!

Two such terms are business plan and business model. People often use them interchangeably, and it’s okay if you do too. Today we’ll change that so you know which to use when.

In this article, we’ll conduct a thorough business plan vs. business model comparison to understand their meanings and know their purpose.

So, let’s kick-start this journey now.

What is a business model?

A business model is a mechanism that directs how you create, deliver, and attain value in the market; it’s the profit-generating plan of your company.

This involves identifying your value proposition, targeting specific customer segments, defining revenue streams, leveraging key resources, and forming strategic partnerships.

Simply put, it’s how you sell your product to make money.

Components of a business model

The essential elements of a business model are:

Customer segments
Value proposition
Revenue streams
Customer relationships
Key activities
Key resources
Key partners
Cost structure

What is a business plan?

A business plan is a comprehensive document that outlines your entire business operations. It covers everything from launching products and setting milestones to planning an exit strategy, detailing every step of your business journey. A business plan describes what a company does, its vision & goals, and its strategies.

Essentially, a business plan serves as a roadmap for how your business will operate, grow, and achieve success.

Components of a business plan

Here are the core components of a business plan:

Executive summary
Company description
Products and services
Market analysis
Customers analysis
Competitors analysis
Marketing and sales plan
Operations plan
Financial plan

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Four key differences: business model vs. business plan

Now that you know the exact meaning of a business model and business plan, it’s time to understand the difference.

Your business model focuses on optimizing the internal and external company operations to earn maximum profits. It explains your relationship with dealers, distributors, service partners, customers, and target audience.

Conversely, your business plan focuses on how you set business goals, create strategies, make predictions, and manage labor to sustain and scale your business. It also outlines your relationship with your customers, competitors, industry, and the market.

2. Benefits

Adopting the right business model(s) help you:.

Gain a competitive edge

Incorporating a unique business model amazes your audience and attracts them to be your first-time customers. It also provides you with a competitive edge over other businesses in your industry.

Ensure sustainability and scalability

A business model pushes an entrepreneur to have monthly update meetings and plan what the next month should exactly look like. Many businesses shut down due to poor financial management, which is why a business model is required.

From economic storms to unexpected difficulties, a business model ensures both sustainability and scalability.

Inspires trust in investors

Investors know the failure rate of small businesses, which is why incorporating a clear business model provides a sense of security. They will also know that you have a strategy and what your profitability expectations are for the upcoming years.

Writing a good business plan helps you:

Test the viability of your business idea

A business plan defines the target customers and their willingness to pay for your product or service. This way, your business idea will be validated, helping you decide whether to move forward with it or not.

Acquire funding

If you want funds from banks, investors, or other parties, then you’ll require proper financial details like goals, plans, and projections. A good business plan will help you impress investors.

Plan for exit

A business plan includes strategies and a timeline to accomplish any task, which helps in planning your business’s exit too. While handing over your business or closing it directly, meeting the financial goals is also important—which are very specific in the business plan.

Other advantages of writing an ideal business plan include:

Identifying market gaps and threats
Organizing and planning business processes
Forecasting financial estimates and market trends
Creating strategies to achieve objectives

While adopting a business model

First, consider the scalability of your business, then measure the value you offer. List down your competitors, segment your customers, see the market potential, and then choose a business model.

Here are other points to consider:

Aim to receive validation from prospective customers
Modify assumptions to match customer preferences
Focus on the current financial position

While creating a business plan

Answer a few questions first, like where you think your business will be in 10–15 years, what’s your expected income, or what are your projections.

Aim to find factual information through research
Support assumptions through data from customer analysis
Focus on the current and future financial position

Business models

A business model outlines how a company creates, delivers, and captures value. Understanding different types of business models can help identify the best approach for their businesses, ensuring growth. Some of the types of business models are:

Subscription model
Freemium model
Ecommerce model
Advertising model
Franchise model

Business plans

Each type of business plan serves a unique role, whether it’s for a startup looking to enter the market, an existing business planning for growth, or a company looking to improve its operational efficiency. Here is an overview of the most common types of business plans:

Startup business plan
Lean business plan
Traditional business plan
Internal business plan

The bottom line

There’s no standard answer for business plan vs. business model; the choice entirely depends on your business’s specific needs and objectives.

Additionally, planning is an ongoing process. You can’t create a business plan or a business model and rely on that for years to come!

So, to keep your business model and business plan updated, explore a business plan app like Upmetrics . It has a business model canvas template, sample business plans, and an AI assistant to help you plan as many times as you need.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Can i write a business plan without a business model.

No, a business plan is like a roadmap for your business—but it also needs direction. This direction comes from a business model. A business model explains how you’ll make money by defining its target market, value proposition, revenue streams, cost structure, and distribution channels. So, writing a business plan after making a business model is advisable.

Is my business model enough to secure funding?

Well, no! For funding an investor would want to know everything about your business like the management team, competitive landscape, industry analysis, financial projections, and more. So, having a business plan for funding is necessary.

When should I create a business model and business plan?

Create a business model and a business plan when you’re starting a new business or launching a new product or service. However, you need to create or alter both documents if there are any shifts in the current business operations.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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What is the difference between Business Model and Business Plan?

It’s very common to make confusion on what’s the difference between Business Model and Business Plan. But, in fact, they are similar only in name. Their functions and purposes are quite different and, actually, complementary. While the business model refers to a one-page representation of how a company creates, delivers, and captures value, the business plan is an in-depth description on a long textual document form about how your company is structured and plan to achieve strategic and financial objectives. This business plan is a document that contains every data of the business – usually including its model. Let’s separate them both, to make it simple.

Business Model Definition

Your company’s business model is all about the way a company creates, delivers, and captures value. For example, a restaurant franchise is a business model. A Software-as-a-Service is another one. A razor-and-blade , a subscription company , a Freemium internet tool, a e-commerce marketplace . Each of that is a business model, with its own peculiarities. What it’s commonly mistaken with the business plan is not the business model itself. It’s, indeed, the business modeling tool . And this tool provides a base to design a business model. It’s, in fact, by modeling your business through this kind of tool that you’ll be able to identify your they main construction blocks of a business, who they relate to each other and combine to form a unique strategy. It’s with the business model tool that you may identify the key resources for your business to succeed, which key activities it must perform, who it has to interact with, and by which means and channels . Usually, this business model tool is a framework, made up of a single page, that allows you to recognize your own business under several perspectives. According to the type of business, you may take a look at different modeling options, such as Business Model Canvas , Value Propositions Canvas, Lean Canvas , and others. Each of them fits a different purpose. For example, if your business is brand new, the Business Model Canvas is likely to be the better option. On the other hand, for early validation of your startup, the Lean Canvas must be the most appropriate. And, to pivot your product, it’s a good idea to check the Value Proposition Canvas. In short, if you aim to understand your business better, from inside, or make predictions for growing your venture, then your need to work on your business model, not make a business plan. So, now, let’s check what the business plan is for.

Business Plan Definition

A business plan is a written document that contains detailed information of the business, product/service, market, and the entrepreneur vision for the company’s future. It is basically the most accurate portrait of the field, products and services, customers, competitors, suppliers, all the operational and financial goals of the company, its marketing and sales strategy. Its purpose is to display the strengths and weaknesses of the business and to project the gains and losses of the organizations, in order to identify the viability and sustainability of the idea. The business plan is often a long document, made up of several pages. In general, it contains:

Table of Contents;
Executive Summary;
Business and product/service description;
Market analysis;
Competitive Analysis;
Marketing Plan;
Operational and Management Plan;
Financial Plan;
Supporting data and documents.

The goal of the business plan is to determine whether your idea is sustainable or not. It also shows the weaknesses to be repaired, as well as the strengths to be potentialized. It is a kind of script, to reduce the chance of failure. The business plan is a core document if you are looking for partners, in order to demonstrate profitability. Its focus is, indeed, to provide executives, investors, and any other stakeholders a full overview of the business. So, it is especially important when you are seeking loans, sources of financing, and investments. It is the best way to demonstrate that your business is trustworthy and solid enough for credit.

Business Model vs Business Plan

the difference between Business Model and Business Plan lies in key points like how they should be developed, where should the focus be, how to organize ideas and what are their main objectives.

Business Models and Business Plans are important documents to help you plan and organize your business strategy. It can be either a document for early-stage companies that need to validate hypothesis or big companies that need to plan ahead, capture investment or even make an IPO .

difference between business model and business plan important elements

Whatever the case is, it is very important to understand that these are different terms, with different purposes and have different tools to develop them. To summarize here, the key terms that are commonly confused between each other:

difference between business model and business plan - key terms

Business model – provides a rationale for how a business creates, delivers and captures value, and examines how the business operates, its underlying foundations, and the exchange activities and financial flows upon which it can be successful. Business Plan – a formal document that typically describes the business and industry, market strategies, sales potential, and competitive analysis as well as the company’s long-term goals and objectives. Revenue Model – Outlines the ways in which your company will make money (e.g. revenue streams). Did you better understand the difference between Business Model and Business Plan? Comment below!

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Business Model Vs Business Plan: What’s The Difference

Sculpting success in the realm of commerce hinges on two critical blueprints: the business model and the business plan . As if peering through a dual-lens, one unveils the anatomy of value creation, while the other charts a course for achieving it. This isn’t about mere documents; it’s the lifeblood of strategic foresight and operational vision.

Here’s the crux: although they waltz together in strategic symbiosis, these entities each spin a unique narrative of your venture’s voyage. One sketches the architecture of your enterprise, laying bare the revenue streams and value proposition.

The other, a meticulous roadmap, presents meticulous market analysis, financial projections, and the operational plan set to navigate the turbulent tides of commerce.

By journey’s end, you’ll not just differentiate between the two but harness their combined power.

Delve into concepts like competitive advantage, customer segmentation, and scalability. Decode the mesmerizing narrative behind a robust strategic planning foundation. Sales forecasting, funding requirements, investor pitch decks.

The differences between business model vs business plan


	A framework for creating economic value and capturing a portion of that value.	A formal document detailing a business’s objectives, strategies, target market, and financial forecasts.
	To define how a company creates, delivers, and captures value in economic, social, cultural, or other contexts.	To guide management in running the business and to persuade external parties, like investors, to fund the business.
	– Value proposition – Customer segments – Channels – Revenue streams – Cost structure	– Executive summary – Market analysis – Organization and management plan – Sales strategies – Financial projections
	Typically more flexible, subject to adjustment as the company grows or market conditions change.	Tends to be a more rigid document, often used for a specific purpose, like seeking investment or a bank loan.
	Primarily internal; used by founders and management to understand and operate the business.	Both internal management and external stakeholders, including investors, banks, and potential partners.

The business model is the foundation of a company, while the business plan is the structure. So, a business model is the main idea of the business together with the description of how it is working.

The business plan goes into detail to show how this idea could work. A business model can also be considered the mechanism that a company has to generate profits. At the same time, the business plan also does its part in being the way a company can present its strategy. It is also used to show the financial performance that is expected for the near future.

Comparing how business models and business plans work to help you in different ways is important. A business model can help you be sure that the company is making money. It helps to identify services that customers value. It also shows the reciprocation of funds for the activity that a business renders to its customers.

Any business can have different ways of generating income, but the goals of the business model should aim to simplify the money process. It does this by focusing on the large income generators.

So, we now understood that a basic business model is a gateway to show how an organization is functioning. A business plan is a document that shows the strategy of an organization together with the expected performance details.

We can find the details of a company when we check its business plan. What it does is offer more info about the business model. It does this by explaining the teams needed to meet the demand of the business model. It explains the equipment needed, as well as resources that need to be obtained to start creating. Explaining the marketing goals , and how the business is going to attract and retain more customers over the competition , will be part of the model.

Another interesting thing when it comes to comparing business models and business plans is that they cannot function without each other. Just remember this, the business model is going to be the center of the business plan.

Business plan

When comparing using a business model versus a business plan, we also need to understand each one better to draw some final conclusions. One of the first goals of a company could be to define its business model.

The business plan is going to be the detailed part that includes all the information and steps like Mayple’s marketing plan template, organization, products or services, sales plan, business proposal for investors , and so on. Some useful questions that you can use when developing your business plan are:

What do we have now?
What do we want to have in the future?
What do we need in order to be there?

Business Model

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Business Plan VS Business Model: Key Difference

This is a major question people ask, they want to know the difference between a business plan and a business model.

Key to note is that your business plan is incomplete if it doesn’t have a business model section more so if you are a for-profit venture .

Business Plan VS Business Model: Key difference

So let’s dive in, business plan vs business model, what’s the difference. Let’s start by defining both.

There are many definitions of a business plan but put simply a business plan is a document that states your business objectives, where you intend to be and how you would get there. It has different sections such as:

Executive Summary
Problem Statement
Solution Statement
Market Size/Industry Analysis
Competition Analysis
Business Model
Marketing Plan
Management Team
Financial Projections

The sections of a business plan vary, some business plans have Operation Strategy, and some have Web Plan Summary etc. The nature of the business would determine the key sections to add and what to leave out .

So what then is a business model?

A business model is the operation of your business that has to do with revenue generation, simply put “how you make money.” This is one of the reasons investors pay keen attention to your business model even in a pitch deck !

Your model should show clearly the kind of business model you are operating. For example: Will you operate the commission based model like Uber ? Other questions your business model should answer include:

How much does your service or product cost?
What’s your profit margin?
How are you reselling or manufacturing the products?

If you remember I told you that a business model is usually part of a business plan. This doesn’t mean that you can’t have a document or one page dedicated to a business model.

Like you might have noticed, sometimes people use the word “revenue model” in place of “business model.”

Well, they are not exactly the same; a revenue model mainly states how you generate revenue without really making emphasis in other areas like profit margin etc.

A business model has several types, like the commission based model mentioned above, others are:

Subscription model

One of the key advantages of the subscription model is that it opens the door for recurring revenue. Usually, under this model, customers are billed daily, weekly, monthly or even yearly! Most software as a service model, come under the subscription model.

Freemium Model

The freemium model is simply giving out your service for free with the intent of generating revenue through some other means. Take for example Google or Facebook, they primarily don’t charge users for using their service, but then they make money from advertisements placed on their platforms.

Franchise Model

The franchise model is a quick way for a brand to scale and open several offices without having to spend to actualize this. Under the franchise model, the franchisee pays the franchisor a defined amount for using their brand.

Affiliate Model

The affiliate model is when a company or individual gives their product or services to affiliates to promote under certain conditions such as the affiliates get a commission for every sale that comes through their unique affiliate link.

Direct Sales Model

This is a model where the manufacturer of a product sells the product directly without using distributors. This happens for not so large manufactures, you probably have seen a bakery that has a showroom, right where they produce. So in the same spot where they produce they have an outlet where they sell.

In fact, there is one I know where you would literally see them baking right from where you are trying to make a purchase.

Well, I hope through this article, I have been able to help you understand business plan vs business model; the key difference! Just to recap, a business model and a business plan are not the same!

A business model does not have a business plan but a business plan has a business model. A business plan is incomplete if it doesn’t have a business model; stating how the business makes money.

Thank you for reading business plan vs. business model the key difference. Should you have any questions, please leave a comment below or send a mail to [email protected]

Emmanuel author

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The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

A business model is a company's core strategy for profitably doing business.
Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
The two levers of a business model are pricing and costs.
When evaluating a business model as an investor, consider whether the product being offered matches a true need in the market.

Investopedia / Laura Porter

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers a free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

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Microsoft. " Annual Report 2023 ."

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A complete Guide on Business Model vs Business Plan

August 19, 2020
Entrepreneurship Venture Capital Funding

Business Plan Examples , Business Model Canvas , Business Model , Business Plan , Business Model vs Business Plan

Introduction

Business Model and Business plan are interrelated to each other. Lets see a brief difference between business model vs business plan. Business Model acts as a centre for the business plan .

A business model is a framework used to design and depicts how a business might create and capture value. The business plan is a document explaining how a business might become profitable.

A business model is made to be tested while a business plan’s primary goal is to gain investments. If I talk about stages, designing a business model comes first, then we create a plan.

This plan describes strategies involved to build the business and match the plan with the business model.

In this blog, I will start with the difference then some key considerations involving why we should opt, how to write, and some examples of business models and business plans.

We would also be covering components of the business model that can be used while designing a business model canvas. The business model canvas is a tool which helps you to understand a business model in a clear and structured way.

What are the main differences between the business model and the business plan?

Most entrepreneurs start with a strong vision to work on a perfect ideal plan. Instead of chasing an ideal plan, begin with a written description. This description should include who you are, what your ideas are, and why you are in that particular business.

Let’s take an example: If you are selling jewellery online, e-commerce is your business model. Your business plan is to sell jewellery.

Business Plans can be long and time-consuming. So, we need to format the plan properly. A business plan is a document containing detailed future projections such as tactics, goals to cover.

Business Models are structured proposals of a business containing an outline that is easy and less time-consuming. A one-page business model explains how an organization is working with the main idea.

This makes a business model fast, concise, and portable. I will discuss the critical difference from two perspectives:

External resources including stakeholders, investors, and other parties
Internal resources including top management, owners, and shareholders

External Resources: Business model vs Business Plan?

If you want to attract investors and grow your business through external resources, a detailed plan is needed. This allows investors to understand the several parts of your business.

If I talk about the main ingredient of a business plan is a set of projections for three-five years. The interests of investors depend on whether your business model is scalable or not.

While investors will also want to know what kind of business model you want to build. The main idea is to show your business future projections and to address the kind of resources needed to get there through a business plan.

So, for external subjects to know about your business and invest in it, the business plan is the best tool.

Internal Resources: Business plan vs Business model?

To understand your business, a business model is one of the most effective. For instance, in a start-up phase, the business model canvas and the lean startup canvas are the most suited.

Each of those tools will help you to build a different kind of business. If you want to understand or design a business model that can help you grow, the business model frameworks are the most suited, vs business plan.

According to Alan Gleeson , who is the General Manager of Palo Alto Software, Ltd recently answered the difference between business model & business plan in a guest post on TechCrunch : –

“It is worth clarifying the business model vs business plan. A business plan details the business opportunity in a document whereas a business model represents a one-page visual representation or a simple verbal description”.

So if you are a technology-based startup who is looking to raise venture capital, then your business plan should focus on the Venture Capital with a PowerPoint slide deck and an executive summary.

However, if you are a coffee shop looking for a modest investment then the information should include a simple business plan.

Modern business planning is agile, flexible, concise, and more about goal setting than bound physical documents.

This planning process brings numerous benefits for the entrepreneur, such as an ability to look at the operations, to ensure internal focus and cash flow management.

Business Model Canvas vs Business Plan

Business Model Canvas and Business Plans are useful for an organization to grow. It depends on which stage of the project your company is working in.

Let us discuss the difference between the two and when they should be prepared for the growth of the business.

Business Model Canvas and Business Plan serve a very different purpose. If you are still checking and testing out different ways to roll out your business, BMC is the right place to start.

But, if you are looking for a loan from a bank or an investment for your business, a BMC is inadequate. Rather you should have a business plan. Business Model Canvas helps you, the founder, to figure out the business model and design it accordingly.

Business Plan is for an external stakeholder to analyze your business. The Business Model Canvas functions as a guide. It helps in quick communication between the owners of the business and its stakeholders.

So, let’s take an example of a startup business to understand it clearly. In the startup world, everything is highly changeable. Your business model or target audience can be changed in a month after you started.

And, can you imagine, you spent 3-5 weeks to write a full Business Plan & now you need to rewrite it again because some of the core points have changed? So, for a Startup business model canvas is highly preferred.

If you’re working on a project for more than one year and you’re thinking of asking for funding to an investor, you should work hard to write a great business plan, including an investor pitch.

Business Model
Purpose of Business Model

Business Models are necessary for the smooth functioning of every organization. They help in maintaining a close relationship with the customer.

Business Models focus on customer feedback that includes the problems and needs of the customers once the product or service is distributed to them.

How to write a Business Model?

A good Business Model describes the marketing, operations, and distribution strategies of a company. It also includes the analysis of the organizational structure and amending them to sustain a competitive edge.

1. Operational Outline- Design a pictorial view of business operations on a flip chart with circles and labels.

Define the interrelation between them to promote sales, distribute products, target customers, and revenue generation for your team as shown below.

2. Formatting Business Model – Format your business model on a template. You can include the details about different types of customers and how your products and services are valuable to them.

Prepare the total cost incurred for production, employees, and material. Further, prepare a list of suppliers and partners involved in your business.

3. Operational Business Model – Adopt the “Bricks and Mortar” Business Model to attract local customers who want to choose the products and services provided by your store.

If the customers are from different geographical regions, then target the audience through the Internet. Also, plan to utilize company resources and maintain business profits. Focus on getting new customers and potential risks or threats to the business.

4. Additional Add up Values – Recognize the different methods for serving your customers with products and services. Maintain customer relations based on various segments and target potential customers.

Business Model Example

Let us discuss the different Business Model Examples in different segments.

1. Advertising- Advertising model includes content creation and displaying it in the visual form of advertisement to the readers and viewers. Examples are YouTube, New York Times.

2. Affiliate- Affiliate model uses links embedded in the content through the internet. Examples are TopTenReviews.com, TheWireCutter.com.

3. Brokerage- Brokerage models are mainly used by real estate agencies that involve brokerage transaction fees levied either to the buyer or seller or both by the brokers. Examples are century 21, Orbitz.

4. Crowd sourcing- A large number of people are contributing content for your site in exchange for access to other content. Examples are YouTube, Dell.

5. Freemium- Freemium provides free primary services and charges for premium services. Examples are LinkedIn, Mail chimp.

6. Franchise- Franchise is selling a methodology for starting and running a business. Examples are McDonald’s, Allstate.

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Components of business model canvas.

There are different components and elements of a business model. These are known as the main building blocks of a business which provides information regarding customers, finance, infrastructure & offers related to business.

1. Customer Segments- It defines the customer according to the segment based on the products and services offered to them.

2. Value Propositions- These add up the value to the products and services offered to the customer based on their performance, brand status, design, costing, accessibility, and newness.

3. Distribution Channels – They act as a medium between the customer and the organization. A quick, easy, and the most efficient channel is always for the distribution of products and services.

4. Customer Relationships- It helps in maintaining customer relationships according to segments to achieve financial success and stability.

5. Revenue Streams – This strategy provides a way in which a company can engage its customers to buy its products and services.

6. Key Resources- Key resources such as human, financial, intellectual, and physical provide value to the customers.

7. Key Activities – Relevant Key activities are necessary for every business as they help in maintaining revenue streams to make an efficient business model.

8. Partnerships- Partnerships with high-quality suppliers and partners reduce the risks to maintain efficient and streamlined operations.

9. Cost Structure – Cost structure is the total cost that will be incurred for the establishment of a particular business.

Business Model Canvas

Business Model Canvas is a pictorial representation that provides a brief idea about your proposed business. They also include a visualizing description of business models and their values.

Business Model Canvas comprises all business components such as customer segments, value proposition, revenue streams, channels, Customer relationships, Key resources and activities, Partners, and Structure of Cost.

Business Plan

Purpose of the business plan.

The main purpose of a business plan is to focus on achieving business goals, secure outside financing, mapping growth, and including the right talent for the organization.

It acts as a blueprint for expanding and running a business in the right direction at every step. It also prepares for the future with clarity about the goals and achievements.

Every company should adopt a business plan as it acts as a decision-making tool by formatting the business goals and its intended audience.

How to write a business plan?

Business Plan provides a road map for the growth and success of every business. It also helps to find investors and business partners. It includes some components as

1. Executive Summary- It is the brief of the business plan that includes mission and statement, primary information, products and services, location, and employees.

2. Company Description- This includes detailed information about a company such as customers, business problems, nature of products, and services catered.

3. Market Analysis- It helps in understanding the target market, its trends, the potential for growth in the existing market.

4. Organization and Management- This depicts the organizational chart with vision and mission regarding the department and functioning of the company.

5. Marketing and Sales- Marketing involves different marketing strategies required in the business while the sales are responsible for covering the return on investments.

6. Funding Requests- Funding requests can be online or in a substantial manner.

7. Appendix and Glossary- Every business should provide appendix and glossary for the supporting documents and references to the data.

Business Plan Examples

Let us discuss some business plan examples in the different sections of the business.

Construction and Engineering
Travel and Transport sector
Hotels and Hospitality
Children’s Education
Computers and the Internet
Consulting, Health, and Beauty
Food and Farming, Medical and Healthcare
Personal Services, Non-Profit Organizations
Manufacturing and Online business.

For instance, let us consider a business plan for the Manufacturing sector. The manufacturing is mainly adopted by the companies who want to start new manufacturing, production, or fabrication business.

This plan helps in knowing the business profile and description, detailed investor information, risk factors involved. It also includes products, and services to be used, market research, sales and marketing strategies, operations, and financial analysis.

Types of Business Plan

There are various business plans adopted by organizations depending on their nature of business.

1. Startup Business Plan- It is for the enterprises that want to start their business. This mainly includes market evaluations, products and services provided, financial analysis, and projected management team.

2. Internal Business Plan- These plans describe the operational costs and profitability, the company’s actual position, marketing, hiring, and technical costs.

3. Strategic Business Plan- This plan includes the company’s goals in the form of implementation schedule, objectives, and critical success factors and how to achieve them.

4. Feasibility Business Plan- It consists of the description of products and services, required capital, and target demographics.

5. Operations Business Plan- They are part of internal plans that include the company’s main operations with employee responsibilities.

6. Growth Business Plan- This plan provides an in-depth description of the proposed growth plan and investment for its potential investors.

So, the difference between a Business Model and a Business Plan is that they are both parts of an effective Strategic Planning process. A business model is all about VALUE!

What value are you creating, whom are you creating this value for, how are you delivering this value to said target?A great business plan is contingent on RESOURCES – time, infrastructure, manpower, technology, competences & capital.

They both help a business to grow. Using the right one means that your company can have a clearer process and better products and services.

As I said above, the business model is like a destination, and the planning is how you will reach your destination. So, let me add that the planning I recommend isn’t just a map or a route; it’s a GPS, real-time traffic and weather information.

And in that analogy, the business model is the destination. Hence, having an effective Strategic Plan is a powerful business advantage that dramatically increases the odds of success.

Alcor private equity and Venture capital firm also empowers founders and businesses to grow their companies at all stages.

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The Differences Between a Business Plan & Business Model

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What is a strategic business plan, business plan vs. business model.

The Importance of a Business Plan
The Chief Elements of Business Models

Every successful business starts with a concept, a plan and a product or service that customers are willing to pay money to obtain. Business strategies are never conducted in a vacuum, however, and for a business to be successful, there must be a business plan and a business model generated. These two terms are unfortunately used interchangeably, but in reality, they are two very different documents that cannot exist without one another. It is essential that a business owner understand the use of a business model vs a business plan.

Business Plan vs. Business Model

At its simplest, a business plan is a written description of the future of a business. It's a document that not only gets a business concept on paper but also outlines the people and steps that will be involved to lead the business to success. The business plan is where you discuss the industry and the need for a particular product or service, the business structure and how you will achieve success.

The business plan also talks about the market in which the business will operate, lays out the competition and what the plans are to position the business as a leader. Lastly, the business plan lays out the ever-important financial plan, discussing things such as income and cash flow, loans and obligations and when and how investors can expect to see a return.

A business model, on the other hand, is a business's rationale and plan for making a profit. If the business plan is a road map that describes how much profit the business intends to make in a given period of time, the business model is the skeleton that explains how that money will be made. A model covers everything from how a company is valued within an industry to how it will interact with suppliers, clients and partners to generate profits.

There are several different kinds of business models. A software company, for instance, might be based on a subscription model, which generates revenue from customers that renew subscriptions annually for a license to use the software. An example of an accessories model would be a razor company or computer printer company that guarantees future income through the sale of razor blades and printer cartridges.

Interdependence

While it's true that a business plan and business model are two separate documents, the reality is that the business plan cannot live without the business model. While a business plan can describe the structure of a business's financial goals, the business model explains how the money will flow - from customer generation to marketing to sales, and finally, to customer retention. The business model must have room to grow and adapt. Consequently, if the business model changes, so must the business plan.

The Need to Adapt and Change

One of the most prominent examples of a business model changing is currently occurring in the computer software industry. About 10 years ago, the way to purchase software programs was to go to the store and buy a CD-ROM to download the application and license to your computer. Today, the advent of cloud-based subscription services makes it possible for customers to download software and renew licenses remotely over the internet.

This transition to the Software as a Service (SaaS) subscription model has caused many businesses to change their plans. Companies affected by this shift include computer companies that no longer need to build machines with CD-ROM drives in them and software companies that no longer need to make or sell software in physical form.

As a result, software companies have had to change their business plans, including costs and infrastructure costs for cloud storage and bandwidth, as well as maintain a cloud operations team 24 hours a day, seven days a week. These ongoing efforts can increase costs and reduce margins, but they're a necessary adaptation to changing customer needs and market technology with the new business model.

The Business Plan Shop: Business Model Vs. Business Plan
Wikipedia: Business Model
Harvard Business Review: What is a Business Model?
Entrepreneur: An Introduction to Business Plans

John began his 25-year career in the editorial business as a newspaper journalist in his native Connecticut before moving to Boston in 2012. He started fresh out of college as a weekly newspaper reporter and cut his teeth covering news, politics, police, and even a visit from a waterskiing squirrel. He went on to work in the newsrooms of several busy daily newspapers, and developed a love for detailed storytelling, focusing on the lives and diverse tales that all people have to offer. Moving on to the business arena later in his career, John worked as a managing editor for a healthcare publishing company and a technology software firm. He’s used his background in broadcast journalism as a webinar moderator, voice-over specialist, and podcast narrator. John also holds a master’s degree as an elementary school teacher and spent 10 years working with and tutoring students of various ages and backgrounds, including multilingual students and students with special needs of all ages.

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Business Plan vs. Business Model: What’s the Difference?

Posted by Baritechsol

Published: October 28, 2022

10 min read

Table Of Content

Discover What Separates a Business Plan from a Business Model of Your Business

For an entrepreneur or a businessperson, there are many factors to consider when starting a business. One of the elements foremost on their list is identifying the right customers, and finding the right strategy that helps them reach out to those customers. This entire exercise and several others taken by a businessperson are all designed to find ways to generate the desired revenue.

So, where in all this lies the business plan or business model? While business plan vs. business model does offer several differences, essentially, they are both used as guidelines to create and run a business successfully. So, we can say that in the grand scheme of things, they are both quite important to the success of a business.

Now, as an entrepreneur or a businessperson, you might be wondering – if a business plan and a business model are both useful to a business’s success, and they aren’t the same thing, then how are they different?

Let’s take a look at the differences that define a business plan and a business model distinctly, and understand how each of these two types of documents plays a role in the success of a company like a software outsourcing company .

Business Plan – What is it?

Let’s start with the business plan. Essentially, a business plan is a detailed formal document that outlines the strategy/s a specific business will use to generate revenue and achieve success. It outlines the goals of the business, along with the methodology and timelines designated to achieve those goals.

For a business owner, it acts as a roadmap that directs them how to succeed as a company, financially, with the required strategies and plans outlined clearly in it. That is why, a business plan often contains:

Background of the business/company
A detailed and structured marketing plan
A distinct and targeted sales plan
A well-defined organizational structure with the hierarchies addressed properly
The working of the individual offices/departments
A report of the existing finances and other assets
A plan on attracting and inviting investors
A framework to achieve the desired outcomes and milestones
The details of the target market
Risks and assumptions for your business and how you plan to overcome them

These are just some of the major points that are covered in detail in a company’s business plan. So if all of that is covered in a business plan, what role does the business model play? Let’s find out.

What is a Business Model?

A business model can be considered a framework that is used to run a business successfully. It addresses a variety of factors, both internal and external. These factors include social, economic, cultural, and a variety of other conditions that could affect the outcome of your efforts.

As a business framework, it defines processes and strategy for various business elements, such as the target customers, financing, offered value, sources of revenue, and much more. Essentially, we can say that it defines how the company is going to earn a profit.

Now, it does not mean that the profit would always be calculated in terms of monetary value. A company may use different business models at different times of its lifecycle. For example, an IT project outsourcing company in the beginning of its life may follow a growth-oriented business model. However, a few years down the line, and once they have a loyal following, they may start to follow a revenue-oriented business model.

What Constitutes a Business Model?

No matter the type of business model you follow, it should have three elements necessary to consider it a successful business model. A well-designed strategic model for a business addresses the following elements.

Should be Sustainable

Sustainability is the crux that defines how successful any framework or model is going to be, whether it is for a business, or for anything else. There are a number of factors that can affect the sustainability or the viability of your business model .

Competitive advantage is a great driver for sustainability. If your business model has a competitive advantage, then chances are that it will be sustainable.
Innovation is another great driver for sustainability, which allows your business to grow steadily.
Pitfall assessment can help you identify and navigate potential pitfalls for a more successful business.
Scalability can also affect a business’s sustainability, as it affects how easily a company can scale back or exit the market if the business requirements prove difficult to achieve due to change in the environmental factors.

Should Mention Monetization Strategies

A monetization plan in your business model is necessary as it identifies and outlines how your business would earn its revenue. And as every business in the world is ultimately there to earn a profit, a well-defined monetization strategy can help your business model succeed.

It usually consists of two elements:

A profit strategy defines how the business would generate a revenue stream, a necessary task that allows you to know where and how your money comes.
A series of marketing and sales plans and frameworks that help your company set up and maintain the revenues streams outlined in your profit strategy.

Relevance and Alignment With the Organization

Relevance of your business model is dependent on how well it aligns with your organization and its expectations. It doesn’t matter how good a marketing or production plan is, if it fails to adhere to the business guidelines of your organization. This alignment is usually checked by:

Your business’s unique value proposition. Basically, how well does your offering provide potential customers with the value they need?
How attractive is your offering for potential customers, when compared to the ones created by your competition?

These factors, and many others, are what define the business model. And if you follow the factors above, you too will be able to create and outline a successful business model easily.

Now, let’s take a look at the business plan vs. business model debate, and see how the two are different when compared side by side.

Business Plan vs. Business Model – How are They Different?

When we talk about business plan vs. business model, there is often a lot of confusion as to what each individual item entails. The reason for that is that both of these documents are often used in conjunction, which makes it quite difficult for people to identify the distinctive characteristics of each.

Let’s say there is a service-provider that offers a number of business process outsourcing services, like customer support, technical hiring, and more. We can say that outsourcing is their business model, while the way they outsource is their business plan.

Let’s take a look at how the both of them are different from each other.


It defines the structure of a company	It’s the foundation of a company
Business plan details how an idea would work, and what is the expected outcome	Business model ideates how the business would earn
A business plan can be considered a strategic document for the organization that defines the plan needed to achieve the expected outcome	It showcases how the organization is functioning, generating income, and identifying value for customers
Offers additional information needed to understand the business model	Needs business plan if it wants to be successful, as without the needed definition, it wont work.

Some Popular Business Model Examples

Now that you know the difference between a business plan vs. business model, let’s take a look at a few use cases of popular business models and how you can implement a robust business model for your company.

Production Model

The production business model is one of the most basic forms of business models. To put it simply, the company sells its own products and services, and must meet a benchmark number of sales to make a profit.

For example, let’s take the example of a software development firm. They specialize in creating custom software solutions for their customers, and need to ensure that they are able to fulfill the software project requirements and make a profit while keeping their prices competitive.

Advertising Model

The advertising model is an age-old business model, and relies on creating custom content that appeals to the customers’ sensibilities. That ensures that the customer wants to check out and engage with your content, making it less likely that they will be agitated or annoyed by ads.

Marketing Model

People have always been more partial towards buying items and services recommended by the people they know and trust. Essentially, recommendations are a great way to sell you offerings, if you can manage it.

It also depends on the product or service being sold. Gadgets are some of the most popular items where recommendations and reviews can affect the number of sales. And the multilevel marketing model is what helps this type of business thrive.

Franchise Model

The franchise business model is one of the oldest still being used nowadays. Essentially, you sell the rights to use your business name and symbol to someone who will use the goodwill they embody to sell products.

This business model is quite popular in the food business, where restaurants offering perks for businesspeople interested in franchising their business. This allows them better, and quicker reach to a larger pool of customers.

Affiliate Model

Affiliate business model is often found related to the advertising model. However, it is mostly used online, and links to pieces of content that are designed as advertisements, but made to look like they are adding value. Basically, we can say that they are the type of advertising that also cares for the needs of the readers, and offers them something of value in exchange for advertising products to them.

Different types of websites , especially the ones who offer digital services including marketing and branding services, often offer the affiliate-marketing model to promote the offerings of their customers.

In short, the business plan vs. business model debate has a lot of merit, and requires a deeper understanding of the roles that each document plays in the success of a business. Therefore, when you start out in creating your own company, you need to know what goes into each document. And that is easily possible if you understand the differences described above.

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The Difference Between a Business Model and a Business Plan

By Samantha Garner, GoForth Institute

When you’re getting ready to start your small business, you might have heard that you should start with a business plan, or a business model. That’s great! But what are they, exactly, and how are they different from one another?

Business model

The business model is a blueprint for the business, outlining how you’re going to run your business, and how you’re going to make money.

There are five components in a business model:

Business concept: A short description of an opportunity, including a description of your average customer; the benefit of your product or service to the customer; the product or service; and the way you’re going to get your product or service to the customer.
Value chain position: Your business’ position on the chain of activities through which products and services pass to get from you all the way to the end user.
Calculating customer value: An estimate of the value of the tangible benefits your customers will receive by purchasing your product or service.
Revenue sources and cost drivers: Identifying your sources of revenue, and activities that come at a cost.
Competitive advantage: The state when customers perceive your products or services to be superior to your competition.

Business plan

Where a business model is a blueprint, a business plan is a roadmap. A business plan is a formal written document that includes a description of the business you want to run, your business goals, and the plan for reaching those goals.

A business plan is a detailed document that contains sections such as: Marketing Plan, Startup Expenses and Capitalization, Management and Organization, Products and Services, and Operational Plan.

A business plan is usually developed around the answers to three common questions:

Where are we now?
Where do we want to be?
How are we going to get there?

And is usually written for one or more of these five reasons:

To test the feasibility of your business idea and work out any bugs on paper first.
To develop strategies ahead of time for marketing, finance, operation and human resources, instead of when you’re in the fast-paced start-up stage.
To get funding, such as a bank loan.
To attract investors.
To have a roadmap to follow for at least the first year in business.

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A business model and a business plan work in tandem. You need a good foundation and planning before you invest your time and money. To get started, check out our free One-Page Business Plan .

Samantha Garner is GoForth Institute's Director, Communications. Contact Samantha by email: [email protected]

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7 Organizational Structure Types (With Examples)

Updated: May 29, 2024, 5:39pm

7 Organizational Structure Types (With Examples)

What is an organizational structure, 4 common types of organizational structures, 3 alternative organizational structures, how to choose the best organizational structure, frequently asked questions (faqs).

Every company needs an organizational structure—whether they realize it or not. The organizational structure is how the company delegates roles, responsibilities, job functions, accountability and decision-making authority. The organizational structure often shows the “chain of command” and how information moves within the company. Having an organizational structure that aligns with your company’s goals and objectives is crucial. This article describes the various types of organizational structures, the benefits of creating one for your business and specific elements that should be included.

Employees want to understand their job responsibilities, whom they report to, what decisions they can and should make and how they interact with other people and teams within the company. An organizational structure creates this framework. Organizational structures can be centralized or decentralized, hierarchical or circular, flat or vertical.

Centralized vs. Decentralized

Many companies use the traditional model of a centralized organizational structure. With centralized leadership, there is a transparent chain of command and each role has well-defined responsibilities.

Conversely, with a decentralized organizational structure, teams have more autonomy to make decisions and there may be cross-collaboration between groups. Decentralized leadership can help companies remain agile and adapt to changing needs.

Hierarchical vs. Circular

A hierarchical organization structure is the pyramid-shaped organization chart many people are used to seeing. There is one role at the top of the pyramid and the chain of command moves down, with each level decreasing in responsibilities and authority.

On the other hand, a circular organization chart looks like concentric circles with company leadership in the center circle. Instead of information flowing down to the next “level,” information flows out to the next ring of management.

Vertical vs. Flat

A vertical organizational chart has a clear chain of command with a small group of leaders at the top—or in the center, in the case of a circular structure—and each subsequent tier has less authority and responsibility. As discussed below, functional, product-based, market-based and geographical organizational structures are vertical structures.

With a flat organization structure, a person may report to more than one person and there may be cross-department responsibilities and decision-making authority. The matrix organizational structure described below is an example of a flat structure.

Benefits of Creating an Organizational Structure

There are many benefits to creating an organizational structure that aligns with the company’s operations, goals and objectives. Clearly disseminating this information to employees:

Provides accountability
Clarifies expectations
Documents criteria for promotion
Designates decision-making authority
Creates efficiency
Fosters collaboration

Essential Elements of Clear Organizational Structure

Regardless of the special type of organizational structure you choose, it should have the following components:

Chain of command
Roles and responsibilities
Scope of control
Decision-making authority
Departments or teams within the organization

Functional/Role-Based Structure

A functional—or role-based—structure is one of the most common organizational structures. This structure has centralized leadership and the vertical, hierarchical structure has clearly defined roles, job functions, chains of command and decision-making authority. A functional structure facilitates specialization, scalability and accountability. It also establishes clear expectations and has a well-defined chain of command. However, this structure runs the risk of being too confining and it can impede employee growth. It also has the potential for a lack of cross-department communication and collaboration.

Product- or Market-Based Structure

Along with the functional structure, the product- or market-based structure is hierarchical, vertical and centralized. However, instead of being structured around typical roles and job functions, it is structured around the company’s products or markets. This kind of structure can benefit companies that have several product lines or markets, but it can be challenging to scale. It can also foster inefficiency if product or market teams have similar functions, and without good communication across teams, companies run the risk of incompatibility among various product/market teams.

Geographical Structure

The geographical structure is a good option for companies with a broad geographic footprint in an industry where it is essential to be close to their customers and suppliers. The geographical structure enables the company to create bespoke organizational structures that align with the location’s culture, language and professional systems. From a broad perspective, it appears very similar to the product-based structure above.

Process-Based Structure

Similar to the functional structure, the process-based structure is structured in a way that follows a product’s or service’s life cycle. For instance, the structure can be broken down into R&D, product creation, order fulfillment, billing and customer services. This structure can foster efficiency, teamwork and specialization, but it can also create barriers between the teams if communication isn’t prioritized.

Matrix Structure

With a matrix organizational structure, there are multiple reporting obligations. For instance, a marketing specialist may have reporting obligations within the marketing and product teams. A matrix structure offers flexibility, enables shared resources and fosters collaboration within the company. However, the organizational structure can be complex, so it can cause confusion about accountability and communication, especially among new employees.

Circular Structure

Similar to the functional and product-based structure, a circular structure is also centralized and hierarchical, but instead of responsibility and decision-making authority flowing down vertically, responsibility and decision-making authority flow out from the center. A circular structure can promote communication and collaboration but can also be confusing, especially for new employees, because there is no clear chain of command.

Organic Structure

Unlike vertical structures, this structure facilitates communication between and among all staff. It is the most complex, but it can also be the most productive. Although it can be challenging to know who has ultimate decision-making authority, it can also foster a positive company culture because employees don’t feel like they have “superiors.” This structure can also be more cost-efficient because it reduces the need for middle managers.

There is no one “right” organizational structure. When deciding which structure will work best for your company, consider the following:

Current roles and teams within the company. How are job functions currently organized? Does it foster communication and productivity? Does it impede or encourage employee growth?
Your strategic plan. What are your company’s goals for the short-term and long-term?
Feedback from employees, leadership and other stakeholders. What do those within your company say about how the company is structured? What feedback do you have from other stakeholders, such as customers and suppliers?
Alignment. What structure will best support your strategic plans and address any feedback received?

What is the most common organizational structure?

A functional organizational structure is one of the most common organizational structures. If you are still determining what kind of structure to use, this organizational structure can be an excellent place to start.

What is the difference between an organizational structure and an organizational chart?

An organizational chart is a graphic that depicts the organizational structure. The chart may include job titles or it can be personalized to include names and photos.

What are the four types of organizational structures?

A functional—or role-based—structure is one of the most common organizational structures. The second type—the product- or market-based structure—is also hierarchical, vertical and centralized. Similar to these is the third structure—the process-based structure—which is structured in a way that follows a product’s or service’s life cycle. Lastly, the geographical structure is suitable for businesses with a broad geographic footprint.

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About GitHub Copilot Individual

GitHub Copilot can help you code by offering autocomplete-style suggestions. You can learn how GitHub Copilot works, and what to consider while using GitHub Copilot.

About GitHub Copilot

GitHub Copilot is an AI pair programmer that offers autocomplete-style suggestions as you code. You can receive suggestions from GitHub Copilot either by starting to write the code you want to use, or by writing a natural language comment describing what you want the code to do. GitHub Copilot analyzes the context in the file you are editing, as well as related files, and offers suggestions from within your text editor. GitHub Copilot is powered by a generative AI model developed by GitHub, OpenAI, and Microsoft.

GitHub Copilot is trained on all languages that appear in public repositories. For each language, the quality of suggestions you receive may depend on the volume and diversity of training data for that language. For example, JavaScript is well-represented in public repositories and is one of GitHub Copilot's best supported languages. Languages with less representation in public repositories may produce fewer or less robust suggestions.

GitHub Copilot is available as an extension in Visual Studio Code, Visual Studio, Vim, Neovim, the JetBrains suite of IDEs, and Azure Data Studio. For more information on using GitHub Copilot in Visual Studio Code, Visual Studio, Vim, Neovim, and JetBrains, see " Using GitHub Copilot code suggestions in your editor ." For more information on using GitHub Copilot in Azure Data Studio, see GitHub Copilot extension in Microsoft Learn.

Understanding the differences between Copilot Individual, Copilot Business, and Copilot Enterprise

	Copilot Individual	Copilot Business	Copilot Enterprise
Pricing	$10 USD per month $100 USD per year	$19 USD per user per month	$39 USD per user per month
Types of GitHub accounts	Personal accounts	Organization or enterprise accounts	Enterprise accounts on GitHub Enterprise Cloud
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You can see real-world examples of GitHub Copilot in action. For more information, see the GitHub Copilot website.

GitHub Copilot offers suggestions from a model that OpenAI built from billions of lines of open source code. As a result, the training set for GitHub Copilot may contain insecure coding patterns, bugs, or references to outdated APIs or idioms. When GitHub Copilot produces suggestions based on this training data, those suggestions may also contain undesirable patterns.

You are responsible for ensuring the security and quality of your code. We recommend you take the same precautions when using code generated by GitHub Copilot that you would when using any code you didn't write yourself. These precautions include rigorous testing, IP scanning, and tracking for security vulnerabilities. GitHub provides a number of features to help you monitor and improve code quality, such as GitHub Actions, Dependabot, CodeQL and code scanning. All these features are free to use in public repositories. For more information, see " Understanding GitHub Actions " and " GitHub security features ."

GitHub Copilot uses filters to block offensive words in the prompts and avoid producing suggestions in sensitive contexts. We are committed to constantly improving the filter system to more intelligently detect and remove offensive suggestions generated by GitHub Copilot, including biased, discriminatory, or abusive outputs. If you see an offensive suggestion generated by GitHub Copilot, please report the suggestion directly to [email protected] so that we can improve our safeguards.

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Learn more about GitHub's data collection, retention, and processing for GitHub Copilot Individual.

What data does GitHub Copilot Individual collect?

GitHub Copilot Individual relies on file content and additional data to work. It collects data to provide the service, some of which is then retained for further analysis and product improvements. GitHub Copilot processes the following data for individual users.

User Engagement Data

When you use GitHub Copilot it will collect usage information about events generated when interacting with GitHub Copilot. These events include user edit actions like if Suggestions are accepted or dismissed, and error and general usage data to identify metrics like latency and features engagement. This information may include personal data, such as pseudonymous identifiers.

A Prompt is the collection of code and supporting contextual information GitHub Copilot sends to GitHub to generate Suggestions, including data you submit through a chat interface. GitHub Copilot in the code editor retains Prompts unless you have disabled code snippet collection in your settings. GitHub Copilot in the CLI and Copilot Chat in GitHub Mobile retain Prompts in order to provide the Service.

Suggestions

A Suggestion is the code, functions, or other output returned to you by GitHub Copilot after a Prompt is received and processed by the AI-model. GitHub Copilot in the code editor retains Suggestions unless you disable code snippet collection in your settings. GitHub Copilot in the CLI and Copilot Chat in GitHub Mobile retain Suggestions in order to provide the Service.

How is the data in GitHub Copilot Individual used and shared?

User Engagement Data, Prompts and Suggestions are used by GitHub and Microsoft to improve GitHub Copilot and related services and to conduct product and academic research.

Enhancing GitHub Copilot: The data collected is utilized to improve GitHub Copilot by evaluating different strategies for processing and predicting suggestions that users may find valuable.
Developing related developer products and services: The insights gained from the data help in the development and improvement of other developer tools and services offered by GitHub and Microsoft.
Detecting abuse and policy violations: The data is examined to investigate and identify any potential misuse or violation of the Acceptable Use Policies associated with GitHub Copilot.
Conducting experiments and research: The data is used for conducting experiments and research related to developers and their utilization of developer tools and services. This aids in gaining valuable insights into user behavior and preferences.
Evaluating GitHub Copilot: The impact of GitHub Copilot on users is assessed by measuring its positive effects and benefits.
Improving code generation models: The collected data is employed to refine and enhance the underlying models responsible for generating code. This is achieved by utilizing both positive and negative examples.
Fine-tuning ranking and sorting algorithms: The data helps in the optimization and improvement of algorithms used for ranking and sorting suggestions, thereby enhancing the overall user experience.

How is the transmitted Code Snippets data protected?

To ensure the protection of sensitive data such as user edit actions, source code snippets, and repository URLs/file paths, several protective measures are implemented. These measures include:

Encryption of transmitted data: All data is encrypted both during transit and while at rest, ensuring that it remains secure and inaccessible to unauthorized parties.
Named GitHub personnel working on the GitHub Copilot team or the GitHub platform health team.
Microsoft personnel involved with the GitHub Copilot team.
Role-based access controls and multi-factor authentication: People who require access to code snippet data must adhere to role-based access controls. Additionally, multi-factor authentication is implemented to add an extra layer of security, ensuring that only authorized individuals can access the data.

How can users of GitHub Copilot Individual control use of their Code Snippets Data?

GitHub Copilot gives you choices about how it uses the data it collects.

User Engagement Data: User Engagement Data, including pseudonymous identifiers and general usage data, is necessary for the proper functioning of GitHub Copilot. This data is collected, processed, and shared with Microsoft while you use GitHub Copilot.
Retention of Prompts and Suggestions: You have the option to decide whether Prompts and Suggestions, when using GitHub Copilot in your code editor, are retained by GitHub and shared with Microsoft. These preferences can be adjusted in the GitHub Copilot settings .
Requesting Deletion: If you wish to delete Prompts and Suggestions associated with your GitHub identity, contact us through the GitHub Support portal .

Will my private code be shared with other users?

No. We follow responsible practices in accordance with our Privacy Statement to ensure that your code snippets will not be used as suggested code for other users of GitHub Copilot.

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Agile project management

Program management vs. project management

How program and project management work together to improve organizational performance

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Programs and projects are at the heart of many business endeavors. To use a metaphor, projects are like trains operated by project managers, who help pull the work of a team to achieve goals and ultimately arrive with a finished good or service.

To continue with the metaphor, a program is like a collection of trains running on different tracks, yet headed to the same station, or goal. The program manager is the station conductor, directing the various project trains.

What is program management?

Program management is the process of managing programs mapped to business objectives that improve organizational performance. Program managers oversee and coordinate the various projects and other strategic initiatives throughout an organization.

Program managers also help to drive organizational change by helping with agile transformations, including helping to implement DevOps practices and principles. Program managers may align program management practices and processes with agile values such as collaboration, team autonomy and empowerment, delivering value to customers, and adapting to change in the moment. A program manager can bring agile and DevOps to life for teams across large programs or individual projects by tailoring programs to the specific requirements and opportunities of the business.

A program manager can bring agile and DevOps to life for teams across large programs or individual projects by tailoring programs to the specific requirements and opportunities of the business.

Portfolio management Portfolio optimization. Business goal alignment. Business value alignment. Program selection Program management Prioritizing and budgeting strategic initiatives. Managing interdependencies between projects. Ensuring resource capacity and availability Project management Delivery of product or service. Managing cost, schedule, and scope. Resource and budget management.

Program management is sometimes confused with project management. Project management is the process of leading a project performed by a team to achieve certain goals, such as building a new product.

A project represents a single, focused piece of work with a specific scope and defined output. Projects can run for several years, but their main focus remains the same. A project’s success can be measured by the delivery of artifacts and deliverables that roll up to a program’s larger goals.

Project management is the process of delivering value that incrementally moves a program forward. Despite the emphasis on artifacts and deliverables, project management still involves strategy and planning, since a project manager must determine how to meet the goals laid out at the beginning of the project. Once a project is underway, a project manager tracks progress, allocates resources, manages risks, communicates, and more.

Program management entails managing a program with multiple, related projects. Since programs are linked to strategic initiatives, they are often long-running and possibly permanent. Programs continue through organizational change, contribute to multiple goals, and contain many projects that deliver specific components of the larger strategic initiative.

At the highest level, a project generally focuses on outputs, while a program focuses on outcomes.

Projects have:

A set of tasks with a clear deliverable and a deadline for completion
Relates to creating, updating, or reviewing a particular document, process, outcome, or another single unit of work
A predefined scope that is limited to a specific output
Improves quality, efficiency, cost management, or customer satisfaction in a specific and predetermined way

Programs have:

Unknown or fluid deadlines due to the large scope and impact of the work that must be done continuously over a long period of time
Multiple deliverables with inter-related dependencies that may continue to evolve based on changing business needs
A series of deliverables completed together to increase efficiency, accuracy, reliability, or other business needs
The work enables the company to achieve a long-term business goal or initiative that will run in perpetuity
Success delivers long-term benefits or unlocks new capabilities for the organization

What does a program manager do?

Program Manager meeple in the middle with arrows pointing out to six bubbles with icons that have text below each one: Evaluate the portfolio, Manage risks, Run the program, Engage with stakeholders, Refine the operating model, Support decisions

Program managers need to balance delivering artifacts, engaging with strategic decisions, managing stakeholders, and mitigating risks across the program. In a fully empowered organizational program, program managers should be able to solve — or connect to people who can solve — and plan to mitigate any problem that impacts the strategic initiative they seek to achieve.

Because of the breadth of their responsibilities, program managers play a key enabling role in companies. The role is flexible by design to meet the different challenges that teams encounter while going to production.

On any given day a program manager may do any of the following tasks:

Evaluate the state of the portfolio

A program manager reviews and evaluates a portfolio by connecting with teams to identify any risk mitigation or improvement opportunities. These connections can be coffee chats or team meetings. The program manager’s goal is to stay connected and engaged enough to work in lockstep towards shared goals. This includes connecting with project teams to ensure the project managers are supported and unblocked.

Manage risks

Risk management is a key element of portfolio management. Risks include a project timeline slipping, changing requirements, or the discovery of additional stakeholders. A program manager should be aware of anything that could impact the progress or outcome of the program and related projects. Ideally, a program manager can take corrective actions to reduce or manage risks in the portfolio.

Run the program

Program managers are responsible for running the program, which includes:

Managing budgets and resources in cooperation with project managers
Defining the operating parameters and controls
Maintaining the core elements of the program that set the foundation from team charters and other establishing documents

Engage with stakeholders

A program manager connects with stakeholders to get a sense of the wider context that surrounds goals. These conversations provide key insights into the overall landscape. By partnering with stakeholders, a program manager can help guide project teams.

Refine the operating model

The operating model shapes how teams progress toward their goals. This can include establishing communication channels and reporting methods, identifying goals, establishing priorities across the entire program. During the course of a program, a program manager optimizes the operating model to increase the likelihood of success and reduce the impact of risks.

Support decisions

Decision-making takes many forms, from running a meeting with decision-makers, to compiling background information on what decisions are needed, or doing a comparative analysis of multiple options. Specific program managers may lean into different areas, depending on their strengths. The program manager reviews outcomes to identify opportunities for improvement in systems, processes, or results.

The focus and scope of each program manager shape the specifics of how they engage with these practices.

What does a project manager do?

A typical day for a project manager can include:

Checking on the status of a deliverable to determine whether it will be delivered on time and within budget
Reviewing a queue to identify new work, monitor existing tasks, and unblock specific elements for the project team
Create a plan for how to reach a specific milestone that describes the stakeholder management and communications opportunities
Ensure that project work meets the quality and reliability requirements established at the beginning of the project

As you can see, program and project managers work on highly related tasks. The primary difference between these two roles is scope and ambiguity:

Projects are scoped tightly and controlled from the beginning, while programs have a larger scope that may change over the course of the program.
Projects have limited ambiguity because success has been clearly defined at the start, while programs need to work through ambiguity to define what needs to be done and how to conceptualize “success” for the overall program.

Plans strategies

Provides advice to stakeholders

Review and advise on projects

Offers audits and QA

Mentorship to project teams

Plans projects

Tracks progress of projects

Allocates resources

Manage risks

Communicate

In conclusion...

The Program Management Institute notes that “organizations with mature program management are far more successful than those without it.” That’s because program management allows organizations to achieve better alignment with strategic goals, management of project interdependencies, better resource management, and more.

Jira Align provides program management features that connect business strategy to technical execution. Its program management features include visual program boards, forecasting and simulation, program tracking, multi-tiered roadmaps, dependency management, and more.

Learn more about Jira Align’s program management features . Also be sure to check out Jira’s advanced planning for strategic planning.

Laureli Mallek is a builder at heart who supports organizational effectiveness by removing blockers to fulfilling work. As a program manager and coach, she empowers teams to be more resilient, scalable, and human-centric by crafting tailored solutions that span process improvement, team practices, and leadership development. Laureli has spent much of her career in tech, where she focused on security and privacy at large and small companies.

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Business Model vs. Business Plan: What's the Difference?
By learning what exactly a business plan and business model are and how they work, you can gain a deeper understanding of the fundamentals of business operations. In this article, we explain the differences between a business model versus a business plan and provide common examples of business models.
Business Plan vs. Business Model: What is the Difference?
A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money. A business plan, on the other hand, is the business owner's plan to put that model into action. It's much more detailed and ...
Business Model Vs. Business Plan: What's the Difference?
A business model is the company's rationale and plans for making a profit. It explains how a company delivers value to its customers at a specific cost. A business model would include details about the company's products and services, its target market, and all expenses related to the operations and production.
Business model vs business plan: key differences explained
Ensuring coherence between the business model and business plan. Maintaining coherence between your business model and your business plan is necessary. For example, if a retail store decides to shift from a traditional brick-and-mortar model to an e-commerce model, this change of business model would need to be reflected in the business plan.
Business Model vs. Business Plan: Key Differences
A business model is a company's core framework for operating profitably and providing value to customers. They usually include the customer value proposition and pricing strategy. A business plan outlines your business goals and your strategies for achieving them. The two documents have a few critical differences, namely their structure and ...
Business Model Vs. Business Plan: When And How To Use Them
Aspect Business Model Business Plan; Definition: A Business Model is a strategic framework that outlines how a business creates, delivers, and captures value. It focuses on the core components of a business's operations and revenue generation. A Business Plan is a comprehensive document that outlines a company's goals, strategies, financial projections, and operational details.
Business Plan Vs Business Model Canvas Explained
How a business plan and business model canvas inform business strategy. Avoid the trap of using the two terms interchangeably. As we've shown, the two have different focuses and purposes. The business model canvas (or our one-page plan template) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as ...
Business Plan vs. Business Model: What's the Difference?
It's the foundation upon which a company is built, a reflection of its core identity. On the other hand, a Business Plan dives into the specifics, detailing the strategies, operations, financial projections, marketing approaches, and other key components necessary to bring the business model to life.
Business Model vs Business Plan
Business Model vs Business Plan: The difference. Understanding the difference between a business model vs business plan can help you more effectively communicate the core of your business to stakeholders and guide your strategic decisions. The business model focuses on the conceptual aspects of the business, showing the big picture of how value ...
Business Model vs. Business Plan [Updated 2024]
The truth is, they are different things with different purposes. The main difference between a business plan and business model is that a business plan outlines your goals and strategy to grow your company, while a business model shows you how to generate revenues. Read on to learn more about this subject, including what types of business ...
Business Model Vs Business Plan
A business model is centered around Value; while business plan is centered around Resources. The business plan thus lays out how to manage these resources over time to materialize the business model, grow and scale the business. A model explains how you will make money: for example, by selling advertising, by earning a commission, by adding a ...
Business Model vs Business Plan What's the Difference?
1. Focus. Your business model focuses on optimizing the internal and external company operations to earn maximum profits. It explains your relationship with dealers, distributors, service partners, customers, and target audience. Conversely, your business plan focuses on how you set business goals, create strategies, make predictions, and ...
What is the difference between Business Model and Business Plan?
Business model - provides a rationale for how a business creates, delivers and captures value, and examines how the business operates, its underlying foundations, and the exchange activities and financial flows upon which it can be successful.Business Plan - a formal document that typically describes the business and industry, market strategies, sales potential, and competitive analysis as ...
Business Model vs Business Plan: Key Differences Between Them
Business Plan Development: Once the business model has been validated, entrepreneurs can use it as a starting point to develop a detailed business plan. The plan will expand on the core elements ...
Business Model Vs Business Plan: What's The Difference
Both internal management and external stakeholders, including investors, banks, and potential partners. The business model is the foundation of a company, while the business plan is the structure. So, a business model is the main idea of the business together with the description of how it is working. The business plan goes into detail to show ...
Business Plan VS Business Model: Key Difference
A business model does not have a business plan but a business plan has a business model. A business plan is incomplete if it doesn't have a business model; stating how the business makes money. Thank you for reading business plan vs. business model the key difference. Should you have any questions, please leave a comment below or send a mail ...
What is a Business Model with Types and Examples
Business Model: A business model is a company's plan for how it will generate revenues and make a profit . It explains what products or services the business plans to manufacture and market, and ...
A complete Guide on Business Model vs Business Plan
Business Model acts as a centre for the business plan. A business model is a framework used to design and depicts how a business might create and capture value. The business plan is a document explaining how a business might become profitable. A business model is made to be tested while a business plan's primary goal is to gain investments.
The Differences Between a Business Plan & Business Model
A business model, on the other hand, is a business's rationale and plan for making a profit. If the business plan is a road map that describes how much profit the business intends to make in a ...
Business Plan vs. Business Model: What's the Difference?
Business plan details how an idea would work, and what is the expected outcome. Business model ideates how the business would earn. A business plan can be considered a strategic document for the organization that defines the plan needed to achieve the expected outcome. It showcases how the organization is functioning, generating income, and ...
How does a business plan differ from a business model canvas?
In simple terms, a business model is how a company makes money, and the business model canvas is a tool to help entrepreneurs find a coherent business model for their business (or for new products or services). A business model can be broken down into two parts: The first part deals with what a business is about.
Business model vs. business plan
If the business plan is a road map that describes how much profit the business intends to make in a given period of time, the business model is the vehicle that gets you there. A model covers ...
The Difference Between a Business Model and a Business Plan
Business plan. Where a business model is a blueprint, a business plan is a roadmap. A business plan is a formal written document that includes a description of the business you want to run, your business goals, and the plan for reaching those goals. A business plan is a detailed document that contains sections such as: Marketing Plan, Startup ...
What is Business Model Innovation? Definition, Framework, Examples and
1. Competitive Advantage. Business model innovation allows companies to differentiate themselves from competitors by offering unique value propositions, exploring untapped market segments, or leveraging emerging technology innovation. It enables businesses to gain a competitive edge and stay ahead in the market. 2.
7 Organizational Structure Types (With Examples)
Functional/Role-Based Structure. A functional—or role-based—structure is one of the most common organizational structures. This structure has centralized leadership and the vertical ...
Power BI: Pricing Plan
Learn more about available Power BI purchasing and licensing options. [2] A $10.00 per user/month add-on is available for users with Power BI Pro, Microsoft 365 E5, and Office 365 E5 licenses to step up to Power BI Premium per user. Learn more about purchasing Power BI Premium per user. [3] Power BI Pro license is required for all Power BI ...
What's the difference between Microsoft 365 plans for home or business
What's different. Get a branded email address for your business or bring an existing one. Create branded templates in Word, Excel, and PowerPoint. Let customers schedule appointments with you online and share calendars across individuals. Use a central location for all work files. Protect your business from threats and reduce risk after an ...
About GitHub Copilot Individual
About GitHub Copilot. GitHub Copilot is an AI pair programmer that offers autocomplete-style suggestions as you code. You can receive suggestions from GitHub Copilot either by starting to write the code you want to use, or by writing a natural language comment describing what you want the code to do.
Spotify Premium
Premium Family is a plan for up to 6 family members who live together. Compared with everyone having their own full-price Premium Individual account, it's also cheaper. We will ask for your address to ensure you live at the same address. You can invite members to the plan right after the purchase.
Program management vs. project management
Program management is sometimes confused with project management. Project management is the process of leading a project performed by a team to achieve certain goals, such as building a new product. A project represents a single, focused piece of work with a specific scope and defined output. Projects can run for several years, but their main ...

Business Plan vs. Business Model

Value Proposition

Key Activities

Cost Structure

Key Partners

Key Resources

Revenue Streams

Customer Segments

Customer Relationships

To Summarize

1. Executive Summary

2. Company Description/Overview

3. Products or Services Offered

4. Market Analysis

5. Marketing and Sales Strategies

6. Operations and Management

7. Financial Plan

8. Appendices

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In this blog...

Business Model Vs. Business Plan: What’s the Difference?

What is a Business Model?

Why is it necessary?

Types of Business Model

Creating a Business Model

What is a Business Plan?

Creating a Business Plan

Business Model vs. Business Plan: How to Use Them

Business Model vs. Business Plan: Key Differences

Business model vs. business plan: What’s the difference?

Financial projections

Operational details

4 examples of business models

1. Brick-and-mortar

2. Direct to consumer

3. Subscription

4. Freemium

What's in a business plan?

Business models vs. business plans FAQ

How can a company test and validate its business model before creating a business plan?

How often should a company review and update its business plan?

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