Businessmen and other entrepreneurs should be aware of The difference between Business Model and Business Plan. Let’s through this article tackle and discuss this phrase Business Model vs Business Plan.
The business model describes how the company is positioned within its industry’s value chain, and how it organizes its relations with its suppliers, clients, and partners in order to generate profits.
Your small business’ business model ascertains how your business makes money. It identifies the services that your customers value and shows the reciprocation of funds for the services your small business renders to your customers. Of course, your small business may have more than one method of generating income. Still, the business model simplifies the money process by focusing on the largest income generator.
For instance, a grocery store sells many items. It may also provide additional services, such as lottery and check to cash. The business model only recognizes the majority income generator, which is the sale of grocery inventory. Therefore, the business model will reflect the sale of groceries to the customer, which generates income at the time of the customer’s purchase. The customer benefits from the wide selection of inventory and your small business enjoys the profits of the wide inventory selection. Types of Business Models
The manufacturer takes raw materials and creates a product. A manufacturer can also assemble pre-made components into a product. A manufacturer may sell its products directly to its customers, or it can outsource sales to another company. an example of this type is Dell Company.
The distributor is any business that purchases products directly from a manufacturer for resale either to retail outlets or directly to the public. The distributor’s main function is to route secondary, or high voltage, current from the ignition coil to the spark plugs in the correct firing order, and for the correct amount of time. an example of this type of Tupperware.
A plan explains why you’re in business. You might want to provide high-quality, affordable administrative services to small businesses. Or maybe you plan to operate a cafe that sells exotic coffee and tea blends to lunchtime patrons in a busy commercial district.
Plans often begin with an executive summary and mission statement. The summary is an abbreviated description of what your business does and how you plan to make it successful.
Business owners include an executive summary in their plans to give executives, investors and other interested parties a snapshot of their company. A one- or two-sentence mission statement describes your business philosophy. Your company’s name, type, location, and starting date make up one section of the business plan.
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing, and financial forecasts. A business plan helps you to:
- clarify your business idea.
- spot potential problems.
- set out your goals.
- measure your progress.
Business Plan is Important because:
- Provides a structured way of organizing your thoughts and clarifying your idea.
- Helps you set out your goals and spot any potential problems in achieving these goals.
- Gives you a clear strategy to follow when things get busy.