A business model is a holistic framework to design how a business might create and capture value. A business plan is a document explaining how a business might become viable. Where a business model is made to be tested, a business plan’s primary goal is to gain investments.
The key difference between a business model and a business plan
Indeed, while a strategy of an organization and its expected performance in a three to five years time frame.is a framework to understand the way an organization works, a business plan is a document that helps to understand the future
While in some cases, a business plan can also serve the purpose of better understanding your own business, and in some other cases, the business plan.can be comprised within the
Indeed, as an investor, I want to know exactly how your business works or how you think it will work in the future. Keeping a distinction between those tools is critical.
In particular, I want to focus on the critical difference from two perspectives:
- external (investors, stakeholders, and other parties)
- internal (owners, top management, shareholders)
External: business plan or business model?
If you’re looking for a tool whose aim is to show how attractive your business is, a business plan is the most suited for that.
Indeed, suppose you want to attract investors and grow your business via external resources.
In that case, a detailed business plan is the most effective way to allow those investors to understand the several parts of your business.
Also, the business plan is a way to show where you see the business in the future. Indeed, one key ingredient of a business plan is a set of projections for three-five years.
While investors will also want to know what kind of business model you want to build (depending on whether or not your will be scalable will make or break the interests of investors).
The primary tool to show where your business will be in the future and to address the kind of resources needed to get there is the business plan. In short, for external subjects to know about your business and invest in it, the business plan is the best tool.
Internal: business plan or business model?
Among the tools toon to understand your business, a is one of the most effective.
Indeed, the business model is a framework (usually a one-page) that allows you to understand how your business works from several perspectives.
Depending on what kind of business you’re trying to build or where you want to steer your organization, you might want to look at a few tools, such as:
- FourWeekMBA Busines Model
- Business Model Canvas
- Blitzscaling Business Model Innovation Canvas
- Value Proposition Canvas
- Lean Startup Canvas
Each of those tools will help you to build a different kind of business.
Instead, if you’re trying to blitzscale your business, the Blitzscaling Canvas will be your best companion.
In conclusion, if you’re looking for a way to understand better your business in the present or how to design a that can help you grow, the business model frameworks are the most suited to the business plan.
In some cases, though, a business plan might also work for that purpose, especially a one-page business plan.
Key takeaway and resources
A business plan is a tool that is most suited to shot external stakeholders where your business is headed and why they should finance or invest in its future.
The business model instead, is a framework that helps you assess how your business works from several angles and the kind of actions you can take in the now.
Below you can find an example on how to build a one-page business plan as well:
Connected Business Frameworks
Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF
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