What is the difference between a business model and a business plan?
The concepts of business model and business plan are highly complementary and interdependent.
What is a business model?
Also called economic model, a company’s business model defines the way in which the company can generate profits and thus be profitable. The business model defines:
- The product/service offering and the needs it fulfills.
- The target group (individuals/professionals, age groups, geographical location, socio-professional categories).
- The profit expected by the company.
The business model therefore emphasizes the fundamental elements of your commercial and financial studies. It can be developed very easily thanks to the Canvas business model, a synthetic analysis grid that is widely used today to formalize the economic model of a company.
What is a business plan?
It is a file the purpose of which is to present a company’s creation or takeover project in its entirety.
We also talk about a business plan. It is very useful to explain your project to third parties (partners, collaborators, etc.) and essential for obtaining financing.
Thus, developing your company’s business model will help you develop your business plan. Indeed, many elements of your business model should be included in your business plan.
What are the parts of a business plan?
The business plan generally starts with a synthetic and engaging presentation of your business project: the summary. A one or two page summary is about making your readers want to go further in presenting the detailed elements that appear in the business plan.
If, strictly speaking, there is no model, the business plan consists of at least 3 parts:
- A presentation of the project leader and the structure to be created.
- The business model and commercial strategy.
- An inventory of the human and material needs necessary for the operation of the future company and a financial forecast.
1st part: the project leader and the company
In this part you can talk about what motivates you to start a business, but above all you should emphasize your strengths: education, skills, experience… You can also talk about your employees or partners if you are with several people begins. The legal status chosen to establish your business should also be stated in this section.
2nd part: the company’s commercial strategy and business model
This second part presents:
- Your product and service offering.
- An analysis of the market in which you want to position yourself (supply and demand, customers in your catchment area, competition in the market, developments and trends in the sector, etc.).
- Your positioning to gain market share (commercial strategy, communication and marketing, etc.).
3rd part: the financial forecast
This is the economic aspect of setting up your business. This last part is in fact much more framed and formalized than the previous one. It must contain:
- An initial financing plan that distinguishes sustainable needs (investment and working capital needs) from sustainable resources (equity or equity contribution, partner current accounts if needed, grants and loans for equipment).
- An expected income statement that shows expected expenses and income.
- A monthly cash flow plan.
- A financing plan for 3 years.
- The calculation of your break-even point that corresponds to the turnover level to make a profit.
3 tips for developing your business plan
A good business plan should be easy to read and enable the reader to quickly grasp the contours of your project. You should therefore create a neat and well-structured, concise, clear, accurate and selling document.
A neat and well-structured presentation
The presentation should be neat to arouse interest and keep your interlocutors moving forward. The business plan should be logically organized into parts and sub-parts. The titles should also be meaningful so that the business plan reader can quickly understand what they will find in each part. A simple and easy-to-understand style, without jargon or ambiguous expressions, will make the file easier to read.
A concise, yet comprehensive document
There are no specific rules regarding the number of pages in a business plan. However, think of your readers who won’t necessarily have a lot of time to devote to your project. You can combine all supporting documents in an extra file so as not to make the file too heavy. If necessary, your interlocutor can refer to it for more information.
An interesting file
Remember that your goal through the business plan is to convince your interlocutors. You should therefore present your project from the best angle, not forgetting to emphasize your strengths and your motivation to start or take over the company. You must put all odds on your side to promote the success of your business.
Good luck with your Business Plan
Would you like to be guided step by step in developing and monitoring your business plan? The CCI Nice Côte d’Azur offers you tailor-made support, including 1 “diagnosis” meeting to inventory your project and 7 individual meetings to validate all phases of your business plan.
This support can be provided face-to-face or remotely for a period of up to 6 months.