The difference between a business plan and a business model

What is a Business Plan:

A business plan is a document that details the organization’s strategy and expected financial performance for years to come. It is typically required by lending institutions, banks, and investors to prove a business has a plan for profitability.

What is a Business Model:

A business model describes how an organization creates, delivers, and captures value in economic, social, cultural, or other contexts. Business models help you develop strategies for customer acquisition, talent recruitment, key partnership alliances, and business development.

Examples of Business Models:

  • The business model of production: relates to company sales of the products/services produced
  • Advertising: to focus on creating content that people want and showcasing it to them
  • Razor and blades: focuses on products that need to be replaced often
  • Affiliate: relates to the advertising model but is mainly used online, using links that are embedded in content forms that act as advertising visuals
  • Franchise: involves companies selling the rights to their business models in exchange for some percentage of the revenues

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