The fact that 20% of small businesses fail within their first year is sad, but it's undeniably true. While this may shock and horrify you as someone who's currently in the process of starting up a business, there's nothing to fret over. You have control over many factors that will ensure that you don't become a part of this statistic.
Creating both a business plan and a business model is one of the most crucial ways that you can make sure your business succeeds.
Read on to learn more about the business plan vs business model distinction and why you need both in order to do well with company planning.
What's a Business Plan?
A business plan is, generally speaking, a document that explains why you're in business. If you're dedicated to providing SEO services to small businesses, that's what your business plan needs to be about. On the other hand, a Chinese restaurant that's opening up may have a business plan that discusses the types of sauces that they want to slather on their chicken dishes.
No matter what kind of organization you're opening, a business plan should have the same parts. These are as follows:
- An executive summary and mission statement
- Your company's name, location, and start date
- Your work experience and credentials
- Sources from which you plan to derive funding
How Do Business Models Work?
Business models are slightly different. A business model refers to how and where you run your company. One sort of business model is an online store that sells products to people remotely. A brick-and-mortar store that sells these same goods is a completely different type of business model.
These models generally incorporate the plan that the business has for turning a profit. It includes the rationale as to why your business should be conducted in the way that it is, which is important because it forces you to consider all the alternatives to what you're doing and go with the best possible option.
Business Plan vs Business Model: The Key Differences
According to the US Small Business Administration, a business plan is the foundation or your business. By contrast, they state that a business model is its structure.
It's important to have both a business plan and a business model because they work hand in hand to create your business strategy. The plan will have you selling goods and gaining access to resources, but if you haven't considered a business model, people aren't going to buy from you. For this reason, you need to consider both of these concepts before opening your doors (or your website.)
Get Started With Your Business!
Now that you know the distinction between a business plan vs business model and why you need both in order to be successful, it's time to get some more tips for startups like yours. Check out the rest of our business blog to learn more about a business plan vs business model and how to start a company successfully.