do not confuse these two concepts

Business plan, financial forecast, forecast balance sheet, business plan, business model, economic model, business model… Are you embarking on an entrepreneurial adventure? So you’ve probably heard of these terms before. And, it is clear that many project leaders confuse two of these important concepts. Here are the differences between the business plan and the business model.

The business model reflects how you will make money

The business model, which is also known as the “economic model”, corresponds to the way your company uses to earn money. The model you are going to set up depends on many parameters: target target, positioning adopted (price, quality, etc.), distribution channels used, cost structure, etc.

You will only find your business model after a more or less long process of reflection and analysis. You will probably be called upon to survey your market (data collection, establishment and distribution of questionnaires), to segment your target of potential customers and to find differentiating factors from your competitors.

A business model is not necessarily unique but it must be difficult to imitate. All the elements of your business project are important and they are intimately linked to each other. Their interactions (nature, intensity, etc.) will contribute to forming an inseparable whole that should turn to your advantage.

The business plan presents your business model and measures its performance

Your business model will fully integrate your business plan. It is, in fact, the central element. It must, on the one hand, be indirectly described in the economic part of this document. Indeed, in the latter, you must, in particular, present your idea of ​​creation, your product/service offer, your target, your team, your strategy, your action plan, etc.

The financial benefits of your business model will also be reflected in the second part of your business plan through the forecast turnover (which results from your sales) and the expenses (which depend on your cost structure). All this information will appear in the tables of your forecast and will feed the various financial indicators.

In conclusion, always keep in mind that you must first find and validate your business model before working on your business plan. And, afterwards, don’t forget to correct your business plan if you modify an element of your business model.

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Pierre Facon Pierre Facon is associate director of FCIC, a company specializing in online media publishing on the creation, management and takeover of businesses. He created and launched the website l…
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