Business model or business plan: What to do?
After having a good idea we are always in doubt in the structuring of the business plan or Business model. But which is better for a startup?
Business model or business plan: What to do?
As a common practice among people, whenever we have an idea and want to turn it into a business we are all advised to make a business plan or a business model. But many people do not know which one would be most suitable to work at that moment!
The two business plan ou business model are viable and present both good points and negative points. Depending on the current situation of your venture one will be more suitable than the other. To decide between a business model or a business plan, let's look at each of the options.
Business model or business plan: Differences
The business plan is much more used by entrepreneurs and better known among people than the business model. Himself SEBRAE always encouraged people to make a business plan before starting with investments and thus avoiding possible losses and failures. The big difference between the business plan and the business model is speed in which we can structure each of them.
The business plan, unlike the business model, can be understood as a document that represents the whole structure of the company, covering the smallest details. In the business plan, in addition to containing all the strategies to achieve the goals outlined, also has a strong footprint in the financial description. Describes cash flow, return on investment and others. It becomes an official document that the project managers must follow. Usually the business plan is done with the short, medium and long term goals. As much as you use a few words, it takes a lot of time to put together a business plan, because if you do not specify in detail, it will not advance the production of the plan.
But in order to gather this much-needed amount of information in the business plan, much time and dedication is required. Often entrepreneurs spend more time doing the business plan than actually thinking about the problem encountered by it and the solution it will develop for the market. In this sense, the business plan takes much longer to be elaborated than the business model. In addition, you will always have to renew each contracting different, which is not to say that the business model canva, which we indicate you use, you should not redo, in fact, you should always redo when you need, probably when your hiring changes a lot.
On the other hand, the business model is a much more dynamic and adaptable tool than the business plan. The business model has become widespread among people with the book Business Model Generation, written by the Dutchman Alex Osterwalder and other experts. In the business model the focus is not to structure all the variables with the maximum details, but rather to understand the market opportunity found and propose a viable solution, usually used in Startup. In this respect, the business model becomes much more agile to elaborate than the business plan.
In just a few hours, making a brainstorming, we can make a business model and take a broader view of the face of business. Meanwhile, the business plan takes months to be done, in some cases up to semesters.
The best of this model is that by building you generate new ideas and can completely change the focus you had when you start it. It makes your creativity sharpen. You will need just one sheet to build basically the same as in a business plan in a quicker and more specific way. It is useful for any company at any stage. The tool is used more in its daily life, so we affirm that it does not replace a business plan, but this map that will build will make your life easier, because if you want to change, or make some change in a certain category, just change the post it and proceed. For better visualization we indicate that you use different color for each element. If you want, you can virtually do the canva, these sites have tools that allow this option. Another very valid tip is to fill out the canvas business model with your team. The creativity of projects can exceed expectations.
The main points addressed by the business model are the following:
- Value offer: It serves to represent what the company can offer the customer and why it differs from its competitor. Be an example of advantages, alternatives that will make your client solve that problem and leave satisfied, always understand what is bothering your client and why he is not satisfied.
- Customer Segment: Your client's profile will be essential for you to understand what he or she wants to achieve. You will fill in how these people use your products, what they look for, all the characteristics of it, so you will know what to sell to each customer.
- Customer Relationship: All contracts and partnerships must have a good relationship for better production. Try to follow this step-by-step: Conquer customers, retain customers, and expand sales to them.
- Channels: Separate the channels. Proposals for values are taken to customers through communication, distribution and sales channels. This step is essential!
- Key Activities: . These are the processes you will use, such as developing software, marketing and production.
- Key Partners: Ehave become more and more common as a fundamental part of business models, creating partnerships to optimize business, reduce risk and even acquire resources is key.
- Cost Structure: You will organize the most important costs that involves your business. Fill in the fixed costs and variable costs so that after you know your cost structure you can calculate your revenue.
Business model or business plan: Conclusion
Both the business plan and the business model have their uses. From a perspective of building a new venture, the best alternative would be to use the business model in the first stage. With the business model you will be able to reflect on the key opportunities and challenges without spending more than a week to execute it. Once the business model is completed and the venture is in a slightly more advanced stage, we can choose to make a business plan, since this tool will be much more precise to avoid unpleasant surprises, predict cash flow and even persuade a potential investor !