What is: O Business model is the set of analyzes and reflections on the very concept of the company. It is he who points out if that idea will have validity and if all the parts will complement each other correctly, forming a virtuous system. Already the business plan is a document that shows what is necessary for the company to achieve success.
Why do: A well-crafted Business Model helps you see how the business can operate and sustain itself, as well as its market strategy and its differentials. Have one Business model of course gives an understanding of how the "heart" of the company works - and evaluate strategically how to improve it.
Before starting any venture it is fundamental to elaborate a Model and a Business Plan. But do you know the difference between the two? For many people, both mean the same thing, but in fact, the two are completely different. To ensure the success of your business, it is critical to better understand what each one is and how they can influence your business.
The difference between the Model and Business Plan
The Business Plan is the set of information, calculations and analyzes that demonstrate the viability of the business. That is, this document should present describing how the business will be built, what steps, what investment needed, detailed cost sheet, steps, revenues, etc.
This document is one that will be delivered to a prospective investor to prove the viability and potentiality of your business. It is with you that you will reduce risk, better plan each step and investment, and correct problems before you get the idea out of paper.
Because they are interconnected, the two tools must be in tune. In this way, if the Business Model is changed, it will also be necessary to redo the Business Plan to fit the new ideals of the company.
What should be included in a Business Model
The Business Model should include information, calculations and analyzes that define the product or service delivered to customers, how the company works with suppliers, employees, customers, etc., and how it will profit.
In this way, developing the Business Model is the first step in the preparation of a company and precedes the creation of the Business Plan. Among the many tools and points to be analyzed when creating a Business Model, we separate some that deserve attention:
Business Model Evaluation
Once you have an understanding of how your business model works, you must submit it to an assessment that will analyze the quality of your business. Factors such as the scalability of your business, the ability to generate revenue, originality, the cost of change, the ability to create revenue and other characteristics must be taken into account.
Sources of revenue
Another interesting point to evaluate is how the company generates money. Checking the revenue stream type, as well as its sources, allows averages of calculations to be taken and define strategic values that can be directed to future plans of the company.
A cost structure defines the internal expenses necessary to keep your business running, as well as the frequency of these expenses. With these defined subtotals, you can gauge how much it costs to keep your business running and thus take the average values needed to maintain business stability and generate profit.
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