What is the difference between a Business Model and Business Plan?

Let’s look at the words one at a time:

  • Business: it is about making money
  • Model: A model of a system or process is a theoretical description that can help you understand how the system or process works, or how it might work. Collins Dictionary
  • Plan: It is commonly understood as a temporal set of intended actions through which one expects to achieve a goal. Wikipedia

So you create a model based on your assumptions, and that is your Business model. Then you use that model with the inputs needed for year 1, year 2, and year 3 (anything over 3 year is pure science-fiction) of your company and you have a good Business Plan. To finalise the business plan, you need to explain the model, why you made your assumptions and explanation of what is it that you sell.

Best book to create and present a Business Model is Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers (I get some money if you use the link, thanks)

comments powered by Disqus