A contributor from the Association for Consulting Expertise distinguishes between the two strategic road maps, and explains to a reader the value of each.
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Q: What is the difference between a business model and a business plan? Do I need both?
ACE Advises: A business plan is a document that details the organization’s strategy and expected financial performance for years to come. It is typically required by lending institutions, banks and investors to prove a business has a plan for profitability. A well-developed business plan lays out a map for marketing, financial planning and operations.
A business model describes how an organization creates, delivers and captures value in economic, social, cultural or other contexts. Business models help you develop strategies for customer acquisition, talent recruitment, key partnership alliances, and business development.
The business model and the business plan are both key elements to an organization’s development, growth and succession planning and decision making.
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 everything from ideal customers, customer relationships, value propositions, company activities and assets, and key partners that help you gain, maintain and retain your customers, employees and core values.
Developing strategic plans for your business is an investment. It will take time, energy, research, and commitment on the part of the leaders of the organization. Once developed, they should be referred to often, and updated as your business grows and adapts. When they are done well, your business will stay competitive, relevant, and profitable.
Priscilla Hansen Mahoney can be contacted at www.blazingtrailscoaching.com.