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A Comprehensive Guide to Business Continuity and Disaster Recovery Plan

If a disaster strikes, a disruption in normal business operations can have a vast web of consequences. This is why businesses need a comprehensive emergency management plan, which means formulating a blueprint for business continuity and disaster recovery.  

Consider the Colonial Pipeline ransomware attack of 2021 . Although the $4.4 million dollar ransom was quickly paid to the hackers of the major American oil pipeline system, it took just hours for the consequences to become an emergency. Gas shortages plagued the Southeast U.S., flights were canceled, and President Biden declared a state of emergency two days after the attack occurred.

While this critical event is a stand-out example of a worst-case disaster scenario, any disruptive event that threatens a business’ critical functions can have cascading consequences.  

Table of Contents Business Continuity vs Disaster Recovery – What’s the Difference What a Business Continuity Plan Includes Why Business Continuity Plans and Disaster Recovery Plans are Crucial How to Build a Strong Business Continuity and Disaster Recovery Plan Steps of Building a Business Continuity and Disaster Recovery Plan Business Continuity Plans and Disaster Recovery Plans DartPoints Can Help Ensure Your Business Continuity Plan and Disaster Recovery Plan is Effective

All About Business Continuity and Disaster Recovery Plan   

A business continuity and disaster recovery plan is more than just having a rough outline of protecting critical data and critical business functions during an emergency. Instead, it’s a complex and detailed crisis management guide that targets both proactive strategies and all aspects of an organization’s ability to retain critical processes and return to normal business functions as soon as possible.  

A complete business continuity and disaster recovery plan, therefore, has multiple moving parts that can include: 

• data loss prevention   
• data recovery   
• protection of IT infrastructure,   
• the continuation of essential operations,   
• and a communications plan for personnel, business leaders, and business partners.  

A solid plan considers how critical operations and more routine business functions will be affected by different disaster scenarios, such as a cyberattack, natural disaster, or even power outages. It also includes a risk assessment and contingency plans if a specific type of disaster occurs.  

An expert in business continuity and disaster recovery like DartPoints can be an invaluable resource for business leaders when crafting a concrete plan. Our expert team can ensure there are no gaps in disaster recovery and optimally maintain operations if a disaster strikes.  

In the meantime, however, it’s helpful to know the fundamentals of what a business continuity and disaster recovery plan entails. Therefore, you can get a head start on protecting your IT systems, critical business processes, and data and can return to normal operations as soon as possible while limiting downtime.   

Business continuity vs disaster recovery – what’s the difference?  

Business continuity and disaster recovery are two terms that are often used interchangeably. However, there are some key differences in the specifics of business continuity and disaster recovery.   

The following guide outlines these differences in business continuity vs disaster recovery and what each distinctive type of strategy entails.  

Business continuity vs disaster recovery – What a Business Continuity Plan includes  

Business continuity focuses on the steps that an organization will take to return to normal business functions after a disaster strikes. A solid business continuity strategy is a broad approach because while other types of disaster plans may focus on one or more distinctive aspects of recovery and prevention (such as after natural disasters or cyberattacks), a typical business continuity plan aims to ensure that an organization can face as many different disasters or potential threats as possible.  

Business continuity vs disaster recovery – What a Disaster Recovery Plan includes  

Disaster recovery focuses on the details, as disaster recovery involves guidelines for how organizations will protect their IT systems and critical data during a natural disaster or other emergency event. Disaster recovery strategies can vary, but they tend to examine the technical and functional backbones of a company that will allow an organization to continue operations in case of a catastrophic event. This can include safeguarding IT systems and ensuring data protection as proactive measures, as well as steps for data recovery via a backup system and/or other initiatives.   

Business Continuity and Disaster Recovery Working Together  

Optimally, a business continuity and disaster recovery plan will work hand in hand and will be crafted together via a business continuity management team. While business continuity and disaster recovery plans can be approached separately, there is a trend towards practicing the two disciplines together to ensure all business leaders are on the same page. In today’s age, there is no debate between business continuity vs disaster recovery, but rather, business continuity plans and disaster recovery plans work together to keep a business running.  

Why business continuity plans and disaster recovery plans are crucial  

Business continuity plans and disaster recovery plans are essential for many reasons. A handful of these far-reaching benefits are as follows:  

Shortens downtime  

When a disaster interrupts business functioning, it can have an overlapping range of adverse effects. An inability for an organization to remain operational can lead to long-term financial losses, reputational damage, and impacts on customers, vendors, and other third parties. Simply put, the longer it takes for an organization to resume operations, the higher the cost to the business and its partners – both literally and regarding brand reputation and loyalty.  

Ensures financial security

As stated, a disaster can have substantial financial impacts which can linger well after an emergency. According to IBM’s Cost of Data Breach Report, the average cost of a data breach was $4.45 million in 2023, which was a 15% increase since 2020. However, organizations with solid business continuity plans and disaster recovery plans can minimize these costs and increase customer and investor/third-party confidence.  

Avoids legal or regulatory issues  

Data breaches and data loss can result in hefty penalties when private or critical data is leaked, especially for industries that deal with sensitive information on a regular basis. The financial and healthcare sectors are especially vulnerable to potential legal and regulatory fallout when a disaster strikes, and these sectors are heavily targeted by bad actors simply because their stored data is so valuable. As a result, having a strong business continuity and disaster recovery plan isn’t just a good idea for organizations that deal with sensitive data – it is likely required by the state, federal, or other governmental agencies that oversee these industries.  

How to build a strong business continuity and disaster recovery plan  

There are many strategies when it comes to creating business continuity plans and disaster recovery plans, and building business resilience is often an individualized venture.   

For example, a large healthcare organization’s data loss prevention steps will likely be more robust than a smaller retail shop or non-profit organization that does not deal with an astronomical amount of sensitive data.   

In addition, the details of a business continuity and disaster recovery plan will depend on various internal and external factors. One organization may be more susceptible to natural disasters due to its geographic location.  Therefore, their crisis management details will likely focus on the impacts of natural disasters, like power outages that shut down IT systems and other business processes. Internally, an organization’s distinctive IT systems and IT infrastructure will dictate the steps that need to be taken to prevent data loss, minimize disruptions, and restore data as needed.   

With these individualized requirements in mind, a solid business continuity and disaster recovery plan includes the following two objectives:  

• Recovery time objective (RTO) – Recovery time objective refers to the amount of time it takes to restore business processes after an emergency or other disaster. Establishing a reasonable Recovery time objective is one of the first things businesses need to do when they are creating a business continuity and/or a disaster recovery plan  
• Recovery point objective (RPO) – The recovery point objective (RPO) refers to the amount of lost data that can safely occur without impacting business operations. Since data protection is a core requirement for many organizations, having a data backup system that is constantly updated is crucial.   

The first steps of building a business continuity and disaster recovery plan  

Step 1 – Start with a business impact analysis  

A business impact analysis allows organizations to have a better understanding of the various threats that can impact business operations and how likely it is that these various threats will come to fruition.   

Essentially, the purpose of a business impact analysis is twofold. For this reason, identify the probability of a potential threat becoming realized and identify the financial and associated costs if the worst-case scenario occurs.  

Step 2 – Create potential responses for each identified threat  

Once you have a concrete understanding of the potential threats and their likelihood of occurring, it’s time to find solutions to ensure organizational resilience. Different types of threats – like natural disasters or cyberattacks – will often require varying and multi-pronged responses, so it’s essential to spell out these solutions in far-reaching detail for each potential risk.   

Step 3 – Assign roles and responsibilities for your disaster recovery team  

When a disaster strikes, everyone in your organization is affected, so it’s important to outline roles and responsibilities ahead of time.   

Ensure you have a solid disaster recovery team in place that will do the heavy lifting or partner with a disaster recovery expert like DartPoints. Our team has established methods of communication in place to keep everyone on the same page.   

When it comes to business continuity management, communication is the thread that connects all affected parties. Have varying messages for your disaster team members, personnel, business partners or vendors, and customers, and have effective ways to relay these messages that won’t be impacted by power outages or other issues that could potentially shut down your IT systems.  

Step 4. Rehearse, revise, and review your disaster recovery plans and business continuity plans  

Business continuity plans and disaster recovery plans are not stagnant, one-time creations.   

When an organization creates a plan, it’s essentially a first draft, as disaster recovery planning and business continuity planning should be a continual enterprise.  

The business continuity planning and disaster recovery planning you conduct now will address risk assessments and disaster recovery steps for the identified threats of the current moment, but what about the future?   

To be truly effective, organizations need to take their disaster recovery planning and business continuity planning to the next plateau by doing the following:  

• Rehearse – Put your disaster recovery planning into practice by having a few test incidents to ensure that your procedures are effective and result in continual business operations.  
• Revise – After your test cases, revise your disaster recovery planning and business continuity planning as needed to fill in any gaps or minimize disruptions and downtime further.  
• Review – Create a set schedule for reviewing your disaster recovery plans and business continuity plans and changing your risk assessments and responses as needed. New threats are always emerging, especially when it comes to sophisticated cyberattacks, so disaster recovery planning and business continuity planning should be a constant practice for your business leaders.  

The best business continuity plans and disaster recovery plans start with an expert resource  

When it comes to creating a comprehensive business continuity and disaster recovery plan, the best thing an organization can do is to start with an expert in disaster recovery and backup solutions.    

It is completely understandable that most organizations – especially smaller companies without a deep, in-house IT team – may not have the internal resources required to protect all aspects of their IT infrastructure or ensure a fast disaster recovery if multiple IT systems are affected.   

However, resuming normal business operations as quickly and efficiently as possible is crucial when it comes to disaster recovery.  This can’t be accomplished with minimal resources and/or a small and overworked disaster recovery team.  

DartPoints can help ensure your business continuity plan and disaster recovery plan is effective   

Extensive disaster recovery and business continuity planning can benefit organizations of all sizes, and an expert in disaster recovery like DartPoints can craft concrete blueprints that will ensure ample protection and minimize disruptions as much as possible.  

When it comes to ensuring business operations, don’t wait until after a disaster strikes to seek expert and professional assistance. Instead, start a conversation with the security and disaster recovery experts at DartPoints today to get a proactive head start on business continuity and disaster planning. By taking steps now to protect your organization, you can ensure peace of mind for a successful future for many years ahead.   

Contact us today!  

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Kamala Harris has put the Democrats back in the race

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At the Democratic Convention, a Historic Nomination

What story did the democrats tell about kamala harris and will it be enough to win.

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

[BACKGROUND CHATTER]

I’m standing in a sea of people coming out of this vast convention. And people are holding signs, smiling. There’s confetti everywhere. There are balloons, white, red, and blue. And there’s a lot of excitement.

From “The New York Times,” I’m Sabrina Tavernise. And this is “The Daily” from inside the Democratic National Convention Hall, where Kamala Harris has just accepted her party’s nomination, becoming the first woman of color in US history to do so.

Today, the story this convention told about Harris and whether that story could be enough to win.

It’s Friday, August 23.

[SERENE MUSIC]

The work and prayers of centuries have brought us to this day. What shall our our legacy be? What will our children say? Let me in my heart, when my days are through, America, America, I gave my best to you.

On night one of the Democratic National Convention, the evening was really defined by this very emotional, quite bittersweet goodbye from President Biden.

And there’s nothing we cannot do when we do it together.

God bless you all. And may God protect our troops.

It was the closing of one chapter so that another could begin. It was Kamala Harris’s moment.

[UPBEAT JAZZ MUSIC]

So right now, it’s 7:40. We are on the floor at the Democratic National Convention. It is a crazy party atmosphere, which is like a massive understatement.

Day two kicked off with delegates gathering on the convention floor, casting their votes in a kind of symbolic way to make Harris the party’s nominee.

This giant festival of lights, people in cowboy hats, people with blinking bracelets, people with Christmas lights wrapped around their hats, heads, shoulders, people wearing donkey hats. I mean, it’s very, very, very celebratory in here.

We need to see that we’re moving on. We are turning a chapter in America.

How do you feel right now?

Awesome, excitement, energized. Ready to win this election.

I love it. I love it. People are just excited, electrified, and they’re just loving it, and they’re happy.

This has been the most electrifying event I’ve ever attended in my life. It’s my first convention. But what a convention to come for, right? To make history right now, as we charge forward to November 5, to elect the first female Black president. I’m excited.

So with Harris now the nominee, a new campaign slogan appeared everywhere. And that was, “A new way forward.” But in a campaign that’s just four weeks old, it was really an open question what “a new way forward” actually meant.

We’re not going back!

We’re not going back! We’re not going back!

And then over the course of the week, as speaker after speaker took the stage, we started to get an answer. The story of forward would be told through the story of Kamala Harris herself. And the question hanging over the week was really whether that story could appeal to a broad majority of Americans, voters outside of the convention hall who will ultimately decide the election.

[UPBEAT MUSIC]

Astead, welcome to the show.

Thank you for having me.

Again. The second time in a week. And I’m very excited for it.

So Astead, we had on the show on Monday to answer a question for us, that I think a lot of people have, which is, who is Kamala Harris? And you ended that conversation by saying that the Democratic Party also recognizes this reality, that for a lot of people, she is still this unknown quantity.

And that the party had a big task here at the convention this week, which was to find a way to finally tell her story. It does seem like they’ve tried to do that. Let’s walk through the case that they’re making for her. And what you’ve seen here in your reporting for your show, “The Run-Up.”

Yeah, I mean, I think that the Democrats have definitely laid out a case for her as a candidate, but also a story for her as a person. They have leaned into the different parts of her biography to really follow through on what, I think, is the best version of her campaign, which is a little bit for everybody. There is a story there about more moderate legislation, but pieces of progressive history. There’s different parts of her bio that speak to Black communities, immigrant communities.

Of course, the historic nature of her gender and the roles like that. And I really think it has followed through on what I expected for this week, which is that she seems to function politically as a mirror of some sort, where the party wants to position her as someone who basically, no matter what you’re looking for in terms of a vessel to beat Donald Trump, you can find it in this candidate.

Let’s dig into that more. Where did the convention start, that story?

Hello, Democrats!

Yeah, I think it really starts in her personal biography.

And I’m here tonight to tell you all about the Kamala Harris that I know.

They have told a story that she often tells about her being a first generation American.

Her mother moved here from India at 19.

And being a daughter of an immigrant mother who really raised two daughters in the Bay Area from working class roots. And that’s been a real thing that they’ve tried to own.

Kamala was not born into privilege. She had to work for what she’s got.

When she was young, she worked at McDonald’s.

They talk about her working at McDonald’s in college.

And she greeted every person without thousand watt smile and said, how can I help you?

I think it’s overall about trying to present this as someone who pulled himself up by bootstraps. It represents the American dream. And I think for Democrats, it really returns them back to the place they want to be. Democrats like thinking of themselves as a party who appeals to the diversity of America, both in racial ways, in gender ways, but also in class ways.

In Kamala Harris, we have a chance to elect a president who is for the middle class because she is from the middle class.

And I think they used other parts of her identity, specifically thinking about being the first Black woman to accept a major party’s nomination.

We know folks are going to do everything they can to distort her truth.

And I think Michelle Obama’s speech, specifically, spoke to the power and anxiety that sometimes that identity can bring.

My husband and I sadly know a little something about this.

For years, Donald Trump did everything in his power to try to make people fear us. See, his limited, narrow view of the world made him feel threatened by the existence of two hard-working, highly educated, successful people who happen to be Black.

And I would also say that it was an implicit response to what Republicans and others have been trying to say, talking about Kamala Harris as a DEI hire, someone who was only in their position because of their identity. But the way that Michelle Obama framed it was that those identities have power.

I want to know. I want to know. Who’s going to tell him, who’s going to tell him that the job he’s currently seeking might just be one of those Black jobs?

Just because someone the first to be in a position, does not mean that is the only reason in the position. But it also doesn’t make those identities meaningless. The fact that she is a Black woman should be seen as a strength, not as a weakness.

Is there a risk to that, though? I mean, by openly talking about race, is there a risk that goes too far and begins to alienate voters outside the convention out in the world who they need to win in November.

I mean, there’s always a risk. But I don’t really think so. Democrats have had increasing trouble with Black voters. There’s been a downturn in Black vote share all the way dating back to 2012.

In Biden’s now suspended candidacy, that was one of the things driving his polling weaknesses was kind of tepid reception from Black voters. A pitch to them is something that is a upside of the Kamala Harris campaign. And the hope that they could consolidate that community is where any Democratic nominee needs to be as a baseline.

We both got our start as young lawyers, helping children who were abused and neglected.

One thing I noticed that came up a lot during the speeches was her background as a prosecutor. How did the party present that part of her biography?

As a prosecutor, Kamala stood up for children who had been victims of sexual abuse.

She put rapists, child molesters, and murderers behind bars.

They talk about it in the way that I think fuels what they want to say is the reason she can take on Trump, that this is someone who has stood up to bullies before, who’s not going to be intimidated easily —

And Kamala is as tough as it comes.

— who’s tough, and who doesn’t shirk away from a challenge.

And she knows the best way to deal with a coward is to take him head on, because we all know cowards are weak. And Kamala Harris can smell weakness.

I think all of that adds up to say, you can trust this person to go up against Donald Trump. You can trust this person to go up against the Republican Party, because she’s not someone who is scared.

She never runs from a fight.

A woman, a fierce woman for the people.

But then, of course, we heard about another side of Kamala Harris, a more personal side.

Yeah, and I think this is the part of Kamala Harris where I think was kind of most missing in the presidential run. Frankly, it’s the part that she keeps most private. She is a warm family member and friend.

Hello to my big, beautiful blended family up there.

And I think what the speech from her husband did was really show and lay that out.

I got married, became a dad to Cole and Ella. Unfortunately, went through a divorce, but eventually started worrying about how I would make it all work. And that’s when something unexpected happened, I ended up with Kamala Harris’s phone number.

He talks about the kind of awkwardness of their first interaction.

I got Kamala’s voicemail, and I just started rambling. “Hey, it’s Doug.”

And I think you have a real kind of sense of their genuine connection to one another.

By the way, Kamala saved that voicemail. And she makes me listen to it on every anniversary.

Like, yes, this is someone who is tough, who is taking on corporations and cartels and all of that stuff by day. But this is someone who also makes a point to cook Sunday dinner for family every week.

And she makes a mean brisket for Passover.

And makes sure to really go close to his kids and is very close with her family.

That’s Kamala. She’s always been there for our children. And I know she’ll always be there for yours, too.

Going back to the last time the Democratic Party nominated a woman, Hillary Clinton, she had presented herself in a very different way. She kind of ran away from that stuff. She was saying, I don’t bake cookies, that’s not what I do. I’m kind of out there with the men, fighting.

And this convention and this candidate, Harris, is very different. She’s a newer generation. And she can do her career and bake cookies. Those things are not in conflict. This is a different type of woman leader.

This week we talked to Senator Elizabeth Warren on “The Run-Up,” and one of the things that she mentioned was she feels that there’s been a big change from 2016, even 2020 to now. Not just the amount of women in public office, but she said they don’t have to choose between sides of themselves. And I think that’s what diversity means.

Of course, Kamala Harris can be a tough politician and also bake cookies. Hillary Clinton did that, too. It was just that she was told that was not the way that she had to present herself. What Kamala Harris is benefiting from is there’s a greater space and ability to choose multiple things at once. And so particularly if others are going to talk more directly about gender or race or other things, that kind of frees her from having the burden of doing that herself.

And in fact, Hillary Clinton, herself, did speak, of course, on day one. She talked about that glass ceiling in the history that has led to now, including her own experience in 2016.

Yeah, I thought the Hillary Clinton speech was really powerful. I think a lot of the speakers put this moment in historical context, both politically and personally.

My mother, Dorothy, was born right here in Chicago before women had the right to vote. That changed 104 years ago yesterday. And since that day, every generation has carried the torch forward. In 1972, a fearless Black congresswoman named Shirley Chisholm —

— she ran for president. In 1984, I brought my daughter to see Geraldine Ferraro, the first woman nominated for vice president. And then there was 2016, when it was the honor of my life to accept our party’s nomination for president.

The last time I was here in my hometown was to memorialize my mother, the woman who showed me the power of my own voice. My mother volunteered at the local school.

I’m the proud granddaughter of a housekeeper, Sarah Daisy, who raised her three children in a one-bedroom apartment. It was her dream to work in government, to help people.

My grandmother, the woman who helped raise me as a child, a little old white lady born in a tiny town called Peru, Kansas.

I want to talk now about somebody who’s not with us tonight. Tessie Prevost Williams was born in New Orleans not long after the Supreme Court ruled that segregated public schools were unconstitutional. That was in 1954, same year I was born. Parents pulled their kids out of the school.

There was a way that I think the candidacy and the person was placed in a long legacy, both about gender identity and racial identity that kind of teed up this Thursday as a culminating moment, both politically and I think, in a broader historical context.

Together, we put a lot of cracks in the highest, hardest glass ceiling. And you know what? On the other side of that glass ceiling is Kamala Harris raising her hand and taking the oath of office as our 47th president of the United States!

I wish my mother and Kamala’s mother could see us. They would say, keep going. Shirley and Jerry would say, keep going!

I think you can do a lot to set up a candidate to be in a good position. All of this stuff adds up to some part of the puzzle, but the biggest piece is the candidate themself. At the end of the day, they have to close the deal. And I think this moment is her chance to tell her own story in a way that sometimes she has not decided to. And that’s still what this whole convention success and failure will ride on.

We’re going to watch tonight. We’re going to watch with our colleague, Reid Epstein. And you are going to have a great episode of “The Run-Up” on Friday. We will all be tuning in.

Thank you. I appreciate you doing this, Sabrina.

Really thanks a lot, Astead.

Are you a delegate?

Sorry, we caught you mid French fry eating. What’s your feeling about Kamala and what her story has been? Are you getting to know her this week? Are there things you’ve learned about her this week?

Yeah, I’m learning more and more as we go along. The more and more I learn about her, the more I’m impressed with her. I mean, she worked at McDonald’s when she was going to college to try to pay her way through.

Her very small beginnings. Not a trust fund baby type of thing. I relate to that. Like, I was on food stamps this year. So it’s like if she can do it with that background, it gives everybody hope.

Hillary was my girl. When Hillary ran, I championed her as well. But I didn’t feel this way as I feel about Harris. I’m like, do I want to run for office? If she can do it, I can. She looks just like me, right? She represents, she works at McDonald’s. She paid for every. It’s relatable. And that’s what everybody needs.

We’re going to break that glass ceiling. I’m getting teary, teary in my eyes. And it just means so much to be inclusive.

[WHIMSICAL MUSIC]

What does it mean to you that Kamala Harris is a woman? What does it mean to you that she’s a Black woman?

To have a Black woman become the president of the United States, and for her to turn the world upside down in 30 days, to know that I’m in the midst of this miraculous history is phenomenal.

One delegate who really stood out to us was Beverly Hatcher, a 76-year-old Black woman from Texas.

I was raised by a wonderful Baptist mama. I just lost her. But I am who I am because of my mother. We were always pushed to do whatever we wanted to do. I’ll never forget. I wanted to be a majorette. I taught myself, because we had no money for, what is it called, lessons

And a majorette is like the baton twirler, right?

Yes. And when I did finally try out in my 11th grade, I won right off. And my classmates, who were predominantly white, as years have gone by, have told me at class reunions and stuff, Beverly, the sleepy town of Wellington woke up.

Oh, my god, we got a Black girl getting ready to be the head majorette. But it happened because I had the drive and the will. My mother and my family stood behind me, and didn’t miss a parade, or a football game, or a basketball game.

And you see that in Harris?

Beverly, what would your mom say if she saw this?

My sisters have been telling me every day how proud my mom is. And I’m just happy. I’m happy to make her happy. Yeah.

We women, who have had mothers like Kamala, like Michelle, I remember Hillary’s mother, we women value their strength and their wisdom. And we’re just glad that they gave us a legacy to pass it on.

Thank you very much.

We’ll be right back.

Reid, hello.

OK. Kamala Harris just wrapped up her acceptance speech. Before we talk about what she said and the case she presented, tell us how her campaign was thinking about the stakes of this moment.

Sabrina, this evening was one of two opportunities, along with the debate next month, for her to speak to tens of millions of people at once. And so for that, the stakes were really high.

Her goal was to present herself as a serious person and a serious candidate, who was not the candidate who flamed out in 2019 or the unsteady vice president from the beginning of her term. She had to show that she had the gravitas to be the commander in chief, the political aptitude to reach out to the middle, and also to progressives in her party all at the same time.

A very tall order. Tell us how she went about doing that.

Good evening, everyone. Good evening.

Well, she started talking around 9:30 Chicago time to a packed United Center with 14,000 or 15,000 people, many, many wearing all white, the color of the suffragettes, a color that makes a statement just by wearing it. And when Harris took the stage —

— they erupted in a cheer that forced her for a couple of minutes to wait before she could start talking.

Thank you. OK, let’s get to business. Let’s get to business. All right.

And what did she finally say once she started talking?

She told the story of her life.

The path that led me here in recent weeks was, no doubt, unexpected. But I’m no stranger to unlikely journeys.

My mother, our mother, Shyamala Harris, had one of her own. And I miss her every day, and especially right now.

She talked about the influence of her mother, who raised her and her sister.

And she also taught us, “And never do anything half-assed.” And that is a direct quote. [LAUGHS]

She spoke about her family’s humble beginnings in Oakland.

Before she could finally afford to buy a home, she rented a small apartment in the East Bay.

Then she started talking about her career as a prosecutor.

In the courtroom, I stood proudly before a judge and I said five words.

She brought back one of the lines that she used in her 2020 campaign about how when she stood up in a courtroom, she began with the same words.

Kamala Harris for the people.

And she said she would bring that same philosophy to the White House, that she was not working for specific individuals, but for the people at large.

And so on behalf of the people —

Eventually she did a bigger wind up to formally accepting the nomination.

— on behalf of every American, regardless of party, race, gender, or the language your grandmother speaks —

And listed the people on whose behalf she did so.

— on behalf of everyone whose story could only be written in the greatest nation on Earth —

It was really a kind of a feat of speech writing to build up to this big emotional moment.

— I accept your nomination to be president of the United States of America.

And what did you make of that, how she was doing that?

It was building up this speech to be a serious political document and present her as a serious figure in this moment. And so she still has to prove to people that she is capable of being the commander in chief and running the country.

And how does she try to prove that she’s capable of being a commander in chief?

What she did was try to draw the distinction between herself and Donald Trump.

In many ways, Donald Trump is an unserious man. But the consequences, but the consequences of putting Donald Trump back in the White House are extremely serious.

And she warns that Trump would not have guardrails on him if he were elected to a second term.

Just imagine Donald Trump with no guardrails.

And how he would use the immense powers of the presidency of the United States not to improve your life, not to strengthen our national security, but to serve the only client he has ever had, himself.

The speech was very clear-eyed about the stakes of the election.

They know Trump won’t hold autocrats accountable because he wants to be an autocrat himself.

There was a whole section in the middle of the speech where she ticked through, one by one, a whole series of warnings about things that Trump would do to the country if he were back in the White House.

Get this, he plans to create a national anti-abortion coordinator and force states to report on women’s miscarriages and abortions.

Simply put, they are out of their minds.

What else stuck out to you?

It was remarkable, the section of the speech where she talked about Gaza.

President Biden and I are working around the clock, because now is the time to get a hostage deal and a ceasefire deal done.

She did not veer too far to the left.

I will always stand up for Israel’s right to defend itself.

She managed to say things that would be appealing to both sides.

President Biden and I are working to end this war, such that Israel is secure, the hostages are released, the suffering in Gaza ends, and the Palestinian people can realize their right to dignity, security, freedom, and self-determination.

It was a remarkable moment to hear the arena erupt at the end of that section, to hear her support for both the Israelis and the Palestinians reveal that kind of enthusiasm, after the party has been really ripped apart for months about how to handle the situation.

Fellow Americans, I love our country with all my heart.

She ended this speech with a paean to patriotism.

We are the heirs to the greatest democracy in the history of the world.

She dove headlong into the American exceptionalism argument that is native to Republicans and to older generations of politicians, like Joe Biden.

It is now our turn to do what generations before us have done. Guided by optimism and faith to fight for this country we love. To fight —

But is not something you always hear from younger Democrats, who are a little less comfortable with some of the flag waving.

Let’s vote for it. And together, let us write the next great chapter in the most extraordinary story ever told. Thank you. God bless you and may God bless the United States of America. Thank you all.

She seemed to really be taking aim at this criticism of her, which is that she’s this radical California liberal and she can’t be trusted with the keys to the country.

I mean, that was one of the tasks that she had tonight, was to make the argument, particularly to voters in the middle, the suburban voters that used to vote for Republicans, but have been repelled by Trump and driven to Democrats in the last several years, that they can vote for her without worrying that she’s some kind of Bernie Sanders acolyte.

And some of that is based on the way she ran her last presidential campaign. Some of it, frankly, is because she’s a Black woman from California. And that the voters who will determine this election are voters in less diverse states, for the most part.

So Reid stepping back here, it feels worth remembering just where we were at the end of the Republican National Convention that was just over a month ago. Things couldn’t have felt more different. The GOP was on top of the world, while the Democrats were in disarray over Biden’s refusal to leave the race.

And now here we are. And it feels like things couldn’t be better for the Democrats. At least that’s the feeling I’m having coming out of this convention.

I mean, the whole race has turned upside down from where it was when we left Milwaukee. And Democrats are upbeat. They are confident. It is a party that is remarkably united behind their candidate.

But you have to remember, this election will be very close. It is, indeed, a game of inches in the key battleground states. And what she was trying to do was to present herself as someone who can be trusted as commander in chief to win over the tiny slices of the electorate that will determine the winner in places like Wisconsin, and Michigan, and Pennsylvania, Georgia, and Arizona.

And those are the states that will determine the election. And they have made a calculated decision that those voters needed to see her as a commander in chief, something they had not seen from her before. And we will see in the coming days and weeks whether she’s accomplished that in a way that brings enough of those people on board for her to win a term as president.

Reid, thank you.

Thank you, Sabrina. [WHIMSICAL MUSIC]

Here’s what else you should know today. On Thursday, the Supreme Court allowed Arizona Republicans, for now, to impose tougher voting requirements, including a new rule that people registering to vote there before the coming election must show proof of citizenship.

As a result, Arizonans newly registering to vote for this year’s presidential election must provide copies of one of several documents, such as a birth certificate or a passport, in order to prove that they are US citizens. Democrats have denounced the new rule as an attempt to prevent legal immigrants from voting.

And US Health officials have approved the latest slate of annual COVID vaccines, clearing the way for Americans six months and older to receive updated shots in the coming days. The approvals come amid a prolonged surge of COVID infections, which have risen all summer.

Remember to catch a new episode of “The Interview” right here tomorrow. This week, Lulu Garcia-Navarro talks with Jenna Ortega, the star of the Netflix series “Wednesday,” and the new “Bettlejuice” sequel, about her head-spinning success over the past few years.

One day I just I woke up in somebody else’s shoes. I felt like I had entered somebody else’s life. And I didn’t know how to get back to mine.

Today’s episode was produced by Lynsea Garrison, Rob Szypko, Jessica Cheung, Asthaa Chaturvedi, and Shannon Lin. It was edited by Rachel Quester, contains original music by Rowan Niemisto, Dan Powell, Diane Wong, and Marion Lozano, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

[THEME MUSIC]

That’s it for “The Daily.” I’m Sabrina Tavernise. See you on Monday.

• Apple Podcasts
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Hosted by Sabrina Tavernise

Featuring Astead W. Herndon and Reid J. Epstein

Produced by Lynsea Garrison Rob Szypko Jessica Cheung Asthaa Chaturvedi and Shannon Lin

Edited by Rachel Quester

Original music by Rowan Niemisto Marion Lozano Dan Powell and Diane Wong

Engineered by Chris Wood

Listen and follow ‘The Daily’ Apple Podcasts | Spotify | Amazon Music | YouTube | iHeartRadio

Last night, at the Democratic National Convention, Vice President Kamala Harris accepted her party’s nomination, becoming the first woman of color in U.S. history to do so.

Astead W. Herndon and Reid J. Epstein, who cover politics for The Times, discuss the story this convention told about Ms. Harris — and whether that story could be enough to win the presidential election.

On today’s episode

Astead W. Herndon , a national politics reporter and the host of the politics podcast “ The Run-Up ” for The New York Times.

Reid J. Epstein , who covers politics for The New York Times.

Background reading

Kamala Harris promised to chart a “new way forward” as she accepted the nomination.

“The Run-Up”: It’s her party now. What’s different?

There are a lot of ways to listen to The Daily. Here’s how.

We aim to make transcripts available the next workday after an episode’s publication. You can find them at the top of the page.

The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Michael Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly. Special thanks to Sam Dolnick, Paula Szuchman, Lisa Tobin, Larissa Anderson, Julia Simon, Sofia Milan, Mahima Chablani, Elizabeth Davis-Moorer, Jeffrey Miranda, Maddy Masiello, Isabella Anderson, Nina Lassam and Nick Pitman.

Astead W. Herndon is a national politics reporter and the host of the politics podcast “The Run-Up.” More about Astead W. Herndon

Reid J. Epstein covers campaigns and elections from Washington. Before joining The Times in 2019, he worked at The Wall Street Journal, Politico, Newsday and The Milwaukee Journal Sentinel. More about Reid J. Epstein

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Business Strategy vs Business Model

Learn about the differences

What is Business Strategy vs Business Model?

Setting up and successfully running a business involves differentiating between business strategy vs business model. To reach their goals and achieve success, owners need to adopt the right strategy for their business. Strategic thinking involves selecting among several business models and, sometimes, switching to a new model whenever required.

What is Business Strategy?

A business strategy is a complete contingent plan of action that a business uses to achieve its goals in the market. It lists out the various possible situations a business is likely to find itself in and specifies the set of actions that it should take in each of the situations in order to achieve its goals in the market.

A business strategy allows business owners to make decisions related to manufacturing, operations, and finances. It also helps the business manage risks effectively. It is not concerned with choosing specific goals in the market but only with how to achieve goals once they’ve been set.

After coming up with a business idea and setting targets for the business, an entrepreneur must formulate a suitable business strategy to efficiently and effectively achieve the targets. They include, but are not limited to, the following:

• Sourcing new opportunities and utilizing existing opportunities effectively.
• Ensuring efficient resource allocation and resource management.
• Managing risks and effectively hedging against future market disruption.

What is a Business Model?

A business model is a structural model of how a business is going to operate in the market and how it is going to make money. It provides a detailed description of all relevant business processes and describes how the business will interact with other market participants.

A business model is essentially a blueprint of how the business will add value and make money in the existing market environment. Most business models can be separated into three distinct parts: planning and manufacture, sales and marketing, and revenue management.

Types of Business Models

1. hard manufacturer.

The business creates value by transforming raw inputs into a finished output. Examples of hard manufacturers include mining and agriculture.

2. Soft manufacturer

The business creates value by transforming raw inputs and other outputs into a finished product. Examples of soft manufacturers include automobile manufacturers such as General Motors and Volkswagen.

3. Aggregator

The business creates value by bringing together different products and services. Examples of aggregators include retail businesses such as supermarkets and department stores.

4. Franchise-based

The business creates value by providing a uniform service across different locations. Examples include fast-food restaurants and cinemas.

Related Readings

Thank you for reading CFI’s guide to business strategy vs business model. CFI is the official provider of the Financial Modeling and Valuation Analyst (FMVA)™ certification program, designed to transform anyone into a world-class financial analyst.

To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below:

• Business Plan
• Doing Business As (DBA)
• Mission Statement
• Profit Model
• Value of Risk
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Business Model vs. Business Plan: Key Differences

A business model is your core framework for operating profitably and providing value to customers; a business plan outlines how you’ll execute your goals.

“A goal without a plan is just a wish,” wrote famed French author and aviator Antoine de Saint-Exupéry. These words ring especially true in modern business planning. As an entrepreneur, planning is a skill that can help ensure your success.

Business models and business plans are both integral aspects of starting a business. But what are the similarities and differences between the two, and when is the right time to think about each for your company? Here’s a breakdown.

Business model vs. business plan: What’s the difference?

A business model is a company’s core framework for operating profitably and providing value to customers. They usually include the customer value proposition and pricing strategy. A business plan outlines your business goals and your strategies for achieving them.

The two documents have a few critical differences, namely their structure and application. But the topics they deal with—such as a company’s finances, goals, and operational framework—are largely the same.

Financial projections

• How they’re similar: Both business models and business plans provide an in-depth description for how a company will generate profits.
• How they’re different: A business plan includes financial performance details relevant to both internal and external stakeholders, such as investors, lenders, or potential business partners. Alternatively, a business model describes your value proposition —what product or service a business will offer and why customers should buy it—as well as the target market .

Operational details

• How they’re similar: Both business models and business plans include overarching information about how a company plans to operate, including components such as distribution channels and management structure.
• How they’re different: Business models explain the fundamental structure of a company, such as how it plans to create and deliver value to customers, while business plans get into the actionable details of how to achieve a company’s operational goals.
• How they’re similar: Business models and business plans are used to outline the goals, strategies, and operations of a business.
• How they’re different: A business plan generally incorporates a business model, explaining how the model should be implemented and executed to achieve the business's goals.

4 examples of business models

• Brick-and-mortar
• Direct to consumer
• Subscription

There are dozens of different templates that you, as a business owner, can draw from when building out your operation. Here are four examples of basic business models:

1. Brick-and-mortar

One of the most common retail business models, brick-and-mortar , includes a traditional physical storefront (or a pop-up shop ) selling either business to business (B2B), in the form of wholesale goods, or business-to-consumer (B2C). Although overhead such as rent is a consideration in this model, physical locations offer the competitive advantage of tapping in-person customers and building brand awareness through exposure.

2. Direct to consumer

Direct to consumer (D2C or DTC) is a retail model that allows your business to sell straight to customers, rather than going through a third-party retailer such as Amazon. There are numerous benefits to D2C, including higher profit margins because you don’t have an intermediary taking a cut. However, the main disadvantage of D2C is that you have to develop your own customer base without the help of an established platform.

3. Subscription

Projections indicate that the subscription ecommerce market has boomed in recent years and is set to hit nearly $900 billion in 2026. The subscription business model includes charging customers a recurring fee for a good or service—anything from home-delivery meal kits to media streaming. Subscription services are dependent on customer relationships and customer loyalty , but they can offer businesses a more predictable revenue stream.

4. Freemium

Under a so-called freemium model, consumers can access part of the business’s goods or services free of charge, but must pay to receive unlimited access to everything the company has to offer. Examples include many media organizations, such as The New York Times, which offers several free articles before requiring a subscription, or audio streaming service Spotify, which has a free version with ads, as well as a paid version without.

What's in a business plan?

A comprehensive business plan details many aspects of your company, including everything from marketing strategies to finances to the legal ownership structure. Here are a few key sections to include when writing your business plan.

• Executive summary . The executive summary includes your mission statement , an explanation of your core values and goals, a brief company history, and descriptions of the products or services you plan to provide to a potential or existing market.
• Organizational structure. Management hierarchy, as well as their roles and responsibilities, would be included in this section.
• Marketing and sales. How do you plan to market your offerings? Who is your target market? What is your pricing strategy and how does it compare to that of your competitors? How do you plan to acquire and retain customers? All these questions should be answered in this section.
• Expected financial performance. This includes projected revenue streams,  cash flow management , cost structure, expenses, and anticipated profitability. It typically covers from one to five years in the future.
• Business operations. This section covers everything about the day-to-day running of your business, including your storefront (if you have one), inventory management , supply chain, and production.

Business models vs. business plans FAQ

Which comes first, a business model or business plan.

A business model typically comes before a business plan . Business plans often include the business model, and then explain in detail how you plan to achieve the goals set out in a model.

How can a company test and validate its business model before creating a business plan?

Market research, financial modeling, and even seeking out expert advice or consulting are all ways to review and validate your operation’s business model before developing a business plan.

How often should a company review and update its business plan?

A business should be prepared to update its business plan dynamically, based on changes in the market, shifts within the operation, or new investment or opportunities. Many businesses update their plans annually

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Business Plan vs. Business Model: What's the Difference?

Dive into the nuances of Business Plans & Models. Uncover their key differences, applications, and tips for strategic growth. Master your business journey today!

November 28, 2023

In the world of business, two terms often emerge as foundational elements to startup founders, seasoned entrepreneurs, and everyone in between: the Business Plan and the Business Model. Both are crucial, yet their roles, purposes, and impacts are distinct, and understanding these differences can mean the difference between the success and failure of an enterprise.

In a landscape where innovation is rampant and industries are constantly evolving, having clarity about one's business direction is indispensable. It's akin to a sailor knowing the direction of the wind and having a map. While the wind's direction can be equated to the broader strategy of the sailor (the Business Model), the map which plots out the course in detail is akin to the Business Plan.

Yet, with these tools being so pivotal, it's alarming how often they are misunderstood or used interchangeably. Some entrepreneurs pour weeks into crafting the perfect business plan, only to realize they haven’t clarified their fundamental business model. Others sketch out a brilliant business model on the back of a napkin but falter when asked for the detailed strategy and projections that a business plan requires.

This guide aims to dissect the nuances between a Business Plan and a Business Model, highlighting their unique roles in the entrepreneurial journey and offering insight into how each can be harnessed most effectively. By the end of this exploration, readers will have a clear roadmap (pun intended!) for their own business endeavors, understanding when, why, and how to leverage each tool.

Definition of Key Terms - Understanding Business Plan and Business Model

In order to delve deep into the distinctions between a Business Plan and a Business Model, it's imperative that we first lay down clear definitions for each term. This ensures that as we progress, we're aligned in understanding and can avoid any ambiguities. So, let's start by putting these cornerstone concepts under the microscope.

Business Plan

A Business Plan can be envisioned as a detailed blueprint for setting up a business and ensuring its success. It's a comprehensive document that articulates what a business intends to achieve and the strategies it will deploy to make those aspirations a reality. Let's break down the typical components:

• Executive Summary: A snapshot of your business, providing a concise overview of what the business is about, its mission, and how it stands out in the market.
• Company Description: An in-depth look at the company, detailing its formation, mission, objectives, and overarching goals.
• Market Analysis: A study of the industry landscape, understanding potential competitors, target audience, market trends, and opportunities.
• Organizational Structure: A delineation of the company's hierarchy, roles, responsibilities, and the dynamics of how operations will be conducted.
• Product or Service Line: A detailed description of the product or service the company offers, its benefits, lifecycle, and relevance in the market.
• Marketing and Sales Strategies: Outlining the approach for promoting the product/service, attracting customers, and the strategies for sales conversion.
• Funding Requirements: If seeking external investment, a clear layout of the capital needed, the reasons, and the strategy for effective utilization.
• Financial Projections: Forecasts for the business, including projected income statements, balance sheets, cash flow statements, and break-even analysis.

Business Model

A Business Model is akin to the conceptual foundation of a business. It succinctly defines how a company plans to generate revenue, make a profit, and ensure sustainability in a competitive market. Core components of a business model include:

• Value Proposition: What makes the company’s offering unique and desirable? How does it solve a problem or fill a need in the market?
• Customer Segments: Who are the primary target customers? What are their needs and how will the business cater to them?
• Channels: Through which avenues will the product/service be delivered to the customers?
• Customer Relationships: How does the business intend to interact with its customers, ensuring retention and loyalty?
• Revenue Streams: The avenues through which the company will make money. This can include sales, subscriptions, licensing, and other revenue models.
• Key Resources: Assets required to run the business, which can be physical, intellectual, human, or financial.
• Key Activities: The main operations and tasks that need to be performed to ensure the business runs smoothly.
• Key Partnerships: Collaborations, alliances, and affiliations that will be essential in supporting the business operations.
• Cost Structure: A clear breakdown of the business’s expenses and financial obligations.

With these definitions at our fingertips, it becomes easier to discern the distinct role each plays in the grand scheme of establishing and running a business. As we progress further, we will delve into how these elements differ in scope, objective, and application.

Main Differences - Navigating the Nuances Between Business Plan and Business Model

Having delineated clear definitions for both a Business Plan and a Business Model, it's now time to pinpoint their distinctive differences. While both tools are essential to a business's success, they serve varied purposes and are used at different stages of the entrepreneurial journey. Let's explore the primary differences between the two:

• Business Model: This represents the broader concept of the business's structure and its fundamental modus operandi. It's an overview of how the business plans to function at its core, capturing, delivering, and creating value.
• Business Plan: This is a comprehensive document that dives deep into the strategy required to make the vision (often illustrated by the business model) a reality. It details everything from operations, marketing, sales, and finances to ensure the business is on the right track.
• Business Model: Its primary aim is to define the method through which the company creates, delivers, and captures value. It's about answering the "What, Why, and For Whom" of the business.
• Business Plan: This seeks to showcase the feasibility of the business model, detailing how the business will operate, generate revenue, manage costs, and expand. The business plan is more about the "How, When, and Where."
• Business Model: While it is primarily crafted for internal stakeholders to align their vision and operations, it also serves as an overview for potential investors, partners, and other external parties who are interested in understanding the company's foundational strategy.
• Business Plan: This is a tool tailored for both internal decision-makers and external stakeholders. When seeking investments, partnerships, or loans, a well-drafted business plan becomes indispensable. It provides the detailed insight that external parties often require before committing resources or capital.

Flexibility

• Business Model: Given its higher-level perspective, the business model is often more adaptable. As market conditions change, customer preferences evolve, or new opportunities emerge, the business model can be adjusted to pivot or capitalize on these shifts.
• Business Plan: Though not rigid, a business plan is more static compared to a business model. While it should be periodically updated as milestones are achieved, market conditions change, or business goals evolve, it typically requires a more formal revision process.

In essence, while the business model is about conceptualizing the heart and soul of the enterprise, the business plan is about putting flesh to that skeleton, bringing it to life with details, strategies, and actionable steps. Grasping these nuanced differences is vital for entrepreneurs as they chart the course of their business journey.

When to Use Which - The Strategic Application of Business Plan and Business Model

The distinctions between a Business Plan and a Business Model are clear, but knowing when to deploy each can be equally as crucial. Their application at the right junctures can enhance clarity, attract resources, and drive effective implementation. Here's a guide on when to use which:

Starting Up a Business

• Business Model: Before any detailed planning commences, it's pivotal for entrepreneurs to draft a Business Model. This helps in conceptualizing the very essence of the business: what value it offers, who it caters to, and how it will generate revenue. Using tools like the Business Model Canvas can provide a visual and concise representation of this.
• Business Plan: Once the fundamental business concept is clear, the Business Plan comes into play. This document will map out the strategy to realize the business model, offering detailed steps, financial projections, marketing strategies, and more. It's a roadmap for how the business will operate and grow.

Seeking Investments

• Business Model: Investors will want a snapshot of your business's core. They want to know why your business exists and how it stands out. Thus, presenting a clear business model is paramount.
• Business Plan: Alongside understanding your business's essence, investors also need reassurance on its feasibility and growth potential. This is where the Business Plan becomes crucial. It offers detailed projections, strategies, and plans that can instill confidence in potential investors, showing them the roadmap to returns on their investment.

Iterating on Business Ideas

• Business Model: In rapidly changing industries or for startups practicing the lean startup methodology, frequent iterations might be needed. Every time there's a significant pivot or change in direction, the Business Model should be revisited and possibly adjusted.
• Business Plan: While the Business Model might be revised more frequently, it's not always necessary to overhaul the entire Business Plan. However, if the pivot is significant enough to alter operations, marketing strategies, or financial forecasts, then a revision of the Business Plan is warranted.

Periodic Review and Expansion

• Business Model: While the core of a business might remain steady, it's beneficial to revisit the Business Model periodically, especially when considering expansion into new markets, launching new products, or diversifying revenue streams.
• Business Plan: As businesses hit milestones, they should update their Business Plan. This could be done annually or during strategic inflection points like mergers, acquisitions, or significant market shifts. A current Business Plan is also invaluable when seeking further investments, opening new branches, or exploring partnerships.

In summation, while the Business Model encapsulates the very soul of the enterprise, the Business Plan serves as the detailed blueprint for bringing that vision to fruition. Knowing when to focus on each, and how to leverage them effectively, can guide businesses through their initial setup, growth, challenges, and expansions. Both tools, when used strategically, are the compass and map guiding a business towards its envisioned success.

Real-world Examples - Illustrating the Nuances of Business Plan and Business Model

A theoretical understanding of the distinction between Business Plans and Business Models is one thing, but observing them in practice can offer an invaluable perspective. Let’s explore some real-world examples that showcase these tools in action:

• Business Model: At its core, Airbnb’s model is about connecting people with spaces to rent to those looking for accommodations. Their value proposition revolves around offering unique, homely, and affordable accommodations compared to traditional hotels. Their primary revenue stream comes from charging hosts a commission on each booking.
• Business Plan: When Airbnb sought investments, they presented a detailed startup business plan that included their marketing strategy, growth projections, financial details, and expansion plans into new markets. This plan articulated how they intended to move from their foundational model to a global powerhouse in the hospitality industry.
• Business Model: Uber’s primary model is a platform connecting drivers with passengers. Their value proposition is offering a convenient, affordable, and reliable alternative to traditional taxis. Revenue primarily comes from taking a cut from each ride a driver completes.
• Business Plan: Uber’s rapid expansion into cities worldwide didn’t happen by chance. It was part of a strategic plan that included targeted marketing campaigns, strategies to onboard drivers, handling regulatory challenges, and financial projections for each new market.
• Business Model: Netflix started as a DVD rental-by-mail service, pivoting to streaming as technology and consumer preferences evolved. Their value proposition revolves around offering an extensive library of content for a fixed monthly price, without ads. Revenue comes from monthly subscriptions.
• Business Plan: When Netflix decided to pivot from DVD rentals to streaming, and later into producing original content, it would have required detailed planning. Their business plan would outline content acquisition strategies, technological infrastructure needs, financial forecasts for the new ventures, and a marketing strategy to promote their evolving services.
• Business Model: Dropbox’s model is based on providing cloud storage solutions for individuals and businesses. Their value proposition is offering a simple, reliable, and accessible means to store digital content. They employ a freemium model where basic services are free, but advanced features come at a cost.
• Business Plan: As Dropbox sought to grow, especially in the competitive cloud storage market, they needed a comprehensive plan. This would include strategies for user acquisition, scaling their technological backend, partnerships with other software providers, and financial plans for managing their freemium model efficiently.

In essence, these examples vividly illustrate how the foundational concept of a business (Business Model) is different from the detailed strategy for its operation and growth (Business Plan). While the model captures the essence, the plan dives into specifics. Both are integral at different stages, and as seen with companies like Netflix, they need to be revisited and revised as the company evolves.

Navigating the Business Landscape with Precision

Throughout this exploration of Business Plans and Business Models, one thing remains abundantly clear: both are indispensable tools in the toolkit of every entrepreneur and business leader. However, understanding the nuanced differences between the two and knowing how to deploy each effectively can significantly impact a company's success.

A Business Model provides the visionary blueprint of a company – it's the big picture that showcases what the company stands for, its primary methods of generating revenue, and how it intends to deliver value to its target market. It’s the foundation upon which a company is built, a reflection of its core identity.

On the other hand, a Business Plan dives into the specifics, detailing the strategies, operations, financial projections, marketing approaches, and other key components necessary to bring the business model to life. It's the roadmap, detailing the route a business needs to take to achieve its goals.

In the rapidly changing world of business, where consumer preferences evolve, technologies disrupt traditional operations, and markets are continually in flux, having a robust business model is crucial. But it’s the detailed business plan that allows businesses to navigate these complexities with precision, foresight, and strategic acumen.

Drawing inspiration from real-world examples, we've seen how giants like Netflix and Uber have effectively utilized both these tools. They've conceptualized innovative business models and then deployed detailed business plans to capture market share, adapt to changes, and remain at the pinnacle of their respective industries.

In conclusion, as an entrepreneur or business leader, think of the business model as your compass, giving direction and purpose. The business plan is your map, detailing the terrain and showing the path forward. With both in hand, you're not only set for the journey but also equipped to tackle the challenges and capitalize on the opportunities that lie ahead.

Key Takeaways

Foundational Differences: A Business Model provides an overview of how a company creates, delivers, and captures value, whereas a Business Plan delves into the detailed strategies, operations, and financial projections for realizing the model.

Strategic Application: The Business Model sets the core vision and foundation for a business, while the Business Plan acts as a roadmap, detailing steps for achieving business goals and milestones.

Real-world Applications: Successful companies, such as Airbnb, Uber, Netflix, and Dropbox, have effectively conceptualized innovative business models and employed comprehensive business plans for strategic execution and growth.

Necessity for Adaptation: Both the business model and business plan should be revisited and revised periodically to ensure alignment with evolving market realities and business objectives.

Call to Action: Entrepreneurs and businesses should constantly reflect on, refine, and update their models and plans, engage with experts, commit to continuous learning, and actively share insights to ensure sustained success.

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What is the difference between Business Model and Business Plan?

It’s very common to make confusion on what’s the difference between Business Model and Business Plan. But, in fact, they are similar only in name. Their functions and purposes are quite different and, actually, complementary. While the business model refers to a one-page representation of how a company creates, delivers, and captures value, the business plan is an in-depth description on a long textual document form about how your company is structured and plan to achieve strategic and financial objectives. This business plan is a document that contains every data of the business – usually including its model. Let’s separate them both, to make it simple.

Business Model Definition

Your company’s business model is all about the way a company creates, delivers, and captures value. For example, a restaurant franchise is a business model. A Software-as-a-Service is another one. A razor-and-blade , a subscription company , a Freemium internet tool, a e-commerce marketplace . Each of that is a business model, with its own peculiarities. What it’s commonly mistaken with the business plan is not the business model itself. It’s, indeed, the business modeling tool . And this tool provides a base to design a business model. It’s, in fact, by modeling your business through this kind of tool that you’ll be able to identify your they main construction blocks of a business, who they relate to each other and combine to form a unique strategy. It’s with the business model tool that you may identify the key resources for your business to succeed, which key activities it must perform, who it has to interact with, and by which means and channels . Usually, this business model tool is a framework, made up of a single page, that allows you to recognize your own business under several perspectives. According to the type of business, you may take a look at different modeling options, such as Business Model Canvas , Value Propositions Canvas, Lean Canvas , and others. Each of them fits a different purpose. For example, if your business is brand new, the Business Model Canvas is likely to be the better option. On the other hand, for early validation of your startup, the Lean Canvas must be the most appropriate. And, to pivot your product, it’s a good idea to check the Value Proposition Canvas. In short, if you aim to understand your business better, from inside, or make predictions for growing your venture, then your need to work on your business model, not make a business plan. So, now, let’s check what the business plan is for.

Business Plan Definition

A business plan is a written document that contains detailed information of the business, product/service, market, and the entrepreneur vision for the company’s future. It is basically the most accurate portrait of the field, products and services, customers, competitors, suppliers, all the operational and financial goals of the company, its marketing and sales strategy. Its purpose is to display the strengths and weaknesses of the business and to project the gains and losses of the organizations, in order to identify the viability and sustainability of the idea. The business plan is often a long document, made up of several pages. In general, it contains:

• Table of Contents;
• Executive Summary;
• Business and product/service description;
• Market analysis;
• Competitive Analysis;
• Marketing Plan;
• Operational and Management Plan;
• Financial Plan;
• Supporting data and documents.

The goal of the business plan is to determine whether your idea is sustainable or not. It also shows the weaknesses to be repaired, as well as the strengths to be potentialized. It is a kind of script, to reduce the chance of failure. The business plan is a core document if you are looking for partners, in order to demonstrate profitability. Its focus is, indeed, to provide executives, investors, and any other stakeholders a full overview of the business. So, it is especially important when you are seeking loans, sources of financing, and investments. It is the best way to demonstrate that your business is trustworthy and solid enough for credit.

Business Model vs Business Plan

the difference between Business Model and Business Plan lies in key points like how they should be developed, where should the focus be, how to organize ideas and what are their main objectives.

Business Models and Business Plans are important documents to help you plan and organize your business strategy. It can be either a document for early-stage companies that need to validate hypothesis or big companies that need to plan ahead, capture investment or even make an IPO .

Whatever the case is, it is very important to understand that these are different terms, with different purposes and have different tools to develop them. To summarize here, the key terms that are commonly confused between each other:

Business model – provides a rationale for how a business creates, delivers and captures value, and examines how the business operates, its underlying foundations, and the exchange activities and financial flows upon which it can be successful. Business Plan – a formal document that typically describes the business and industry, market strategies, sales potential, and competitive analysis as well as the company’s long-term goals and objectives. Revenue Model – Outlines the ways in which your company will make money (e.g. revenue streams). Did you better understand the difference between Business Model and Business Plan? Comment below!

Who is Daniel Pereira ?

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Business Model Vs Business Plan: What’s The Difference

Sculpting success in the realm of commerce hinges on two critical blueprints:  the business model and the business plan . As if peering through a dual-lens, one unveils the anatomy of value creation, while the other charts a course for achieving it. This isn’t about mere documents; it’s the lifeblood of strategic foresight and operational vision.

Here’s the crux: although they waltz together in strategic symbiosis, these entities each spin a unique narrative of your venture’s voyage. One sketches the architecture of your enterprise, laying bare the revenue streams and value proposition.

The other, a meticulous roadmap, presents meticulous market analysis, financial projections, and the operational plan set to navigate the turbulent tides of commerce.

By journey’s end, you’ll not just differentiate between the two but harness their combined power.

Delve into concepts like competitive advantage, customer segmentation, and scalability. Decode the mesmerizing narrative behind a robust strategic planning foundation. Sales forecasting, funding requirements, investor pitch decks.

The differences between business model vs business plan

The business model is the foundation of a company, while the business plan is the structure. So, a business model is the main idea of the business together with the description of how it is working.

The business plan goes into detail to show how this idea could work. A business model can also be considered the mechanism that a company has to generate profits. At the same time, the business plan also does its part in being the way a company can present its strategy. It is also used to show the financial performance that is expected for the near future.

Comparing how business models and business plans work to help you in different ways is important. A business model can help you be sure that the company is making money. It helps to identify services that customers value. It also shows the reciprocation of funds for the activity that a business renders to its customers.

Any business can have different ways of generating income, but the goals of the business model should aim to simplify the money process. It does this by focusing on the large income generators.

So, we now understood that a basic business model is a gateway to show how an organization is functioning. A business plan is a document that shows the strategy of an organization together with the expected performance details.

We can find the details of a company when we check its business plan. What it does is offer more info about the business model. It does this by explaining the teams needed to meet the demand of the business model. It explains the equipment needed, as well as resources that need to be obtained to start creating. Explaining the marketing goals, and how the business is going to attract and retain more customers over the competition , will be part of the model.

Another interesting thing when it comes to comparing business models and business plans is that they cannot function without each other. Just remember this, the business model is going to be the center of the business plan.

Business plan

When comparing using a business model versus a business plan, we also need to understand each one better to draw some final conclusions. One of the first goals of a company could be to define its business model.

The business plan is going to be the detailed part that includes all the information and steps like Mayple’s marketing plan template, organization, products or services, sales plan, business proposal for investors , and so on. Some useful questions that you can use when developing your business plan are:

• What do we have now?
• What do we want to have in the future?
• What do we need in order to be there?

Business Model

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Business Plan vs Business Model Canvas Explained

6 min. read

Updated July 29, 2024

It might be stating the obvious, but planning and preparation are keys to success in business.

After all, entrepreneurs put in hard work to develop their product, understand the market they plan to serve, assess their competitive landscape and funding needs, and much more.

Successful business owners also take time to document their strategies for guiding the growth of their companies. They use these strategies to take advantage of new opportunities and pivot away from threats.

Two common frameworks for documenting strategies – the business model canvas and the business plan – are also among the easiest to get confused.

Though they can complement each other, a business model canvas and a business plan are different in ways worth understanding for any entrepreneur who’s refining their business concept and strategy.

Let’s start by digging deeper into what a business model canvas is. 

• What is a business model canvas?

You may have heard the term “business model” before. Every company has one. 

Your business model is just a description of how your business will generate revenue. In other words, it’s a snapshot of the ways your business will be profitable.

Writing a business plan is one way of explaining a company’s business model. The business model canvas takes a different approach.

A business model canvas is a one-page template that explains your business model and provides an overview of your:

• Relationships with key partners
• Financial structure
• And more…

While the business model is a statement of fact, the business model canvas is a strategic process—a method for either documenting or determining your business model.

It’s meant to be quickly and easily updated as a business better understands what it needs to be successful over time. This makes it especially useful for startups and newer businesses that are still trying to determine their business model.

You can think of a business model canvas as a condensed, summarized, and simplified version of a business plan. It’s a great way to quickly document an idea and get started on the planning process.

The business plan is a way to expand on the ideas from the canvas and flesh out more details on strategy and implementation.

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Components of a Business Model Canvas

The simplest way to think about your business model canvas is to map it out visually. A business model canvas covers nine key areas:

• Value proposition : A company’s unique offering in the market and why it will be successful.
• Key activities: The actions that a company takes to achieve its value proposition.
• Customer segments : The types of people or businesses that are likely to want a company’s products or services.
• Channels : How a company reaches customers through marketing and distribution efforts.
• Customer relationships: How a company interacts with customers and maintains important relationships.
• Revenue streams: The ways in which a company makes money.
• Key resources: The assets such as property, equipment and staffing that a company needs to perform its key activities.
• Key partners: The relationships with suppliers, vendors, customers and other stakeholders a company must maintain in order to be successful.
• Cost structure: The major drivers of company expenses that will need to be tracked and managed.

[Want an even simpler alternative? Try downloading our free one-page plan template and start building your plan in less than 30 minutes.]

To get a better sense of how a business model canvas documents business strategy, consider a company like Netflix. The streaming company’s business model is based on generating subscription revenue through its content library and exclusive content.

If Netflix executives were to create a business model canvas, it would map out how the company leverages key resources, partnerships, and activities to achieve its value proposition and drive profitability. The business model is the destination.

The great thing about a business model canvas is that you can quickly document business ideas and see how a business might work at a high level. As you do more research, you’ll quickly refine your canvas until you have a business idea you think will work.

From there, you expand into a full business plan.

• What is a business plan?

If a business model canvas captures what a company looks like when it’s operating successfully, then a business plan is a more detailed version along with a company’s blueprint for getting there.

Think of your business plan as a process of laying out your goals and your strategies for achieving them.

The business plan is more detailed, and changes over time. It examines each aspect of your business, from operations to marketing and financials.

The plan often includes forward-looking forecasts of a company’s projected financial performance. These are always educated guesses. But these forecasts can also be used as a management tool for any growing business.

Comparing actual results to the forecast can be a valuable reality check, telling a business if they’re on track to meet their goals or if they need to adjust their plan.

Using an investor-approved business plan template is also a must for companies hoping to receive a bank loan , SBA loan , or other form of outside investment . Anyone putting up funds to help you grow will want to see you’ve done your homework.

So a business plan is how you not only prepare yourself, but also show your audience that you’re prepared.

Components of a business plan

While there are several different types of business plans meant for different uses, well-written plans will cover these common areas:

• Executive summary : A brief (1-2 pages) overview of your business.
• Products and services : Detailed descriptions of what you’re selling and how it fills a need in the market.
• Market analysis : Assessing the size of your market, and information about your customers such as demographics (age, income level) and psychographics (interests, values).
• Competitive analysis : Documenting existing businesses and solutions your target customers are finding in the market.
• Marketing and sales plan : Your strategies for positioning your product or service in the market, and developing a customer base.  
• Operations plan : Describing how you will run the business from day to day, including how you will manage inventory, equipment, and staff.
• Organization and management team: Detailing the legal structure of the business, as well as key members, their backgrounds and qualifications.
• Financial Plans : Business financials that measure a company’s performance and health, including profit & loss statements, cash flow statements and balance sheets. Effective financial plans also include forward-looking sales forecasts and expense budgets.

How a business plan and business model canvas inform business strategy

Avoid the trap of using the two terms interchangeably. As we’ve shown, the two have different focuses and purposes. 

The business model canvas (or our one-page plan template ) is a great starting point for mapping out your initial strategy. Both are easy to iterate on as you test ideas and determine what’s feasible.

Once you have a clearer sense of your idea, you can expand the canvas or one-page plan into a business plan that digs into details like your operations plan, marketing strategy, and financial forecast.

When you understand how – and when – to use each, you can speed up the entire planning process. That’s because the business model canvas lays out the foundation of your venture’s feasibility and potential, while the business plan provides a roadmap for getting there.

The work of business planning is about connecting the dots between the potential and the process.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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What Is The Difference Between A Business Model And A Business Strategy?

A business strategy is a deliberate vision to get toward a desired long-term goal. A business model is a great tool to execute a business strategy .

Yet while achieving a long-term goal a business strategy set a vision, mission, and value proposition that can be executed through several possible business models .

When one of the drafted business models encounters the favor of the market that is when a business strategy becomes successful!

Table of Contents

A background story of how I got to business modeling and business strategy

For years I’ve been studying businesses with different emphasis and perspectives.

When I was around seventeen, I got interested in the stock market, so I wanted to understand how companies worked.

Thus, I did what seemed most logical to me. I looked at their stock prices and how they moved over time.

Analysts would call this technical analysis. While the technical analysis does have some usefulness for investing, you might use it without knowing much about the business and look at the price patterns that form over time.

In the years that followed I learned how to look at other aspects of a business, from its organizational structure to its products and how the company invested its money.

Later on, during my MBA I started to have a more strategic understanding of businesses by looking at the way they structured their operations, developed their product or service, and what kind of monetization they used.

However, when I later worked as a financial analyst, my focus went primarily on the company’s balance sheets. I followed the money, how it moved from one account to the other and what logic is followed. I realized I could “extract” a company’s strategy by looking at its financials.

There was still a piece missing though.

While numbers are great to have an understanding of how the company moved and what motivated it in the short-term it was hard to have a long-term vision.

Thus, I looked for other frameworks I could use, and I could integrate them to have a complete theory of firms. That is where business modeling came in handy.

I could look at a few key elements to have a current picture of a business. Business model theories and frameworks are primarily rooted in the digital transformation era.

When companies realized the importance of the web not just as a new channel, but as a business world for its own sake.

I studied several tools, and theories, from the academic to the tools put together by practitioners. Integrating financial analysis with business modeling gave me a better framework to formulate and gain a better understanding of any company. That is how I moved from financial analysis to business strategy .

Today, I built a new discipline, which I like to call Business Engineering , but it has little to do with the way it’s usually conceived. 

Business Engineering , combines business modeling , design thinking, and scaling but it brings them to a new level, to be able to map the business context in which you are operating. 

Business strategy vs. business modeling

Put shortly; a business model allows you to capture the present picture of an organization . Or it helps you design how you want a company to look in the future .

Thus, to find an analogy a business model is more like a picture or a painting.

A picture in the case of a company that has an existing business model  which turned out successfully in the marketplace.

And more like a painting in the case of a company for which you’re designing a whole new  business model .

A business strategy is a way to get there .

You know where you want to be, you have a mission and a vision, and you crafted a unique value proposition , and a deliberate plan to get where you want to be.

For that matter, a business model is a great tool to apply a business strategy . In this case, the business strategy sets up the value proposition , which is the foundation of any business model .

A value proposition can change over time as it needs to adapt to the market and meet the real value for your potential customers.

Thus, where a business model is the painting, the business strategy is the hand that draws that painting.

As an HBR working paper entitled “From Strategy to Business Models and to Tactics” pointed out:

Put succinctly, business model refers to the logic of the firm, the way it operates and how it creates value for its stakeholders. Strategy refers to the choice of business model through which the firm will compete in the marketplace. Tactics refers to the residual choices open to a firm by virtue of the business model that it employs.

Business strategy to reduce noise and set a clear direction

Understanding a company’s framework and how it “behaved” in the marketplace has become critical. I want to remark that companies are not people.

Companies are made of many moving parts. And even though I’m referring to companies as “behaving” in a certain way, I’m not conveying this is a scientific methodology.

I see business strategy more as an art than a science. And it’s not even a technological issue.

Progress in machine learning or artificial intelligence probably won’t do any good to business strategy . Indeed, while machine learning is pretty good in detecting patterns in the real, physical world.

When it comes to the more fluid business world, things get messy.

So messy indeed, that the level of noise might be higher than the actual signal. In that respect what we call instinct or gut feelings might be more suited than a machine learning tool for understanding the future.

That is why I seek straightforward thinking tools to analyze the business world.

It’s important not to get bogged down in too complex analyses, but be very wary of the kind of data or metrics we use to track our business success.

For that matter a useful business strategy thinking tool has to have three main features, I believe:

• No frills : for instance, instead of adding complexity it reduced it. Thus, instead of having to have complicated infrastructure anything that you can hold on top of your mind is a great business thinking tool
• Profound yet straightforward : in many cases, one page is all we need to make significant decisions
• Short but exhaustive : the result of a useful business thinking tool has to come up with a concise insight that can be fitted in maximum of two lines of text summarizing the current scenario

Summary and conclusions

Where a business model is a possible way to get to a desired strategic long-term outcome. A business strategy is what sets things in motion and what keeps a long-term focus.

A good business strategy – in my opinion – has to be straightforward, it has to reduce the noise, and even though a bit simplified it needs to be exhaustive and profound!

Business Engineering is a way to look at the business world, to understand how the context changes and how business playbooks need to adapt to newly formed business contexts. 

Key Highlights

Key Highlights:

• Business Strategy and Business Model: A business strategy is a deliberate vision aimed at achieving long-term goals, while a business model is a tool used to execute that strategy effectively.
• Components of Business Strategy: A business strategy encompasses a vision, mission, and value proposition that guide the organization towards its desired goals. These elements are executed through various possible business models.
• Success of a Business Strategy: A business strategy is considered successful when one of the proposed business models gains favor in the market.
• Background Story: The author’s journey from studying businesses from different perspectives, including stock market analysis, organizational structure, product development, and financial analysis, led to a focus on business modeling and strategy .
• Business Engineering: Business Engineering combines business modeling , design thinking, and scaling to provide a framework for understanding and mapping the business context in which an organization operates.
• Business Model vs. Business Strategy: A business model captures the current state or envisions a future state of an organization, while a business strategy defines the path to achieve that future state. The business model is like a picture or painting, and the business strategy is the guiding hand that draws it.
• Value Proposition: The value proposition is a crucial component that underlies both business models and strategies, adapting to market needs and customer values.
• Business Strategy as an Art: Business strategy is seen as more of an art than a science, and it involves understanding how a company behaves in the marketplace. It relies on straightforward thinking tools rather than complex analyses.
• Useful Business Strategy Thinking Tool: Effective business strategy thinking tools should be simple, profound, and concise. They should reduce complexity, provide valuable insights, and help in decision-making.
• Business Engineering and Adaptation: Business Engineering is a way to understand how the business context evolves and how business playbooks must adapt to changing circumstances.

Case Studies

• Business Strategy: Apple’s strategy revolves around innovation, premium product offerings, and ecosystem lock-in. They focus on creating groundbreaking products, building a strong brand, and providing a seamless user experience.
• Business Model: Apple’s business model involves selling hardware (iPhone, Mac, iPad), software (iOS, macOS), services (Apple Music, iCloud), and digital content (iTunes, App Store). They generate revenue through product sales, services, and digital content, executing their strategic vision.
• Business Strategy: Netflix’s strategy is to dominate the streaming industry by producing high-quality original content and expanding globally. They aim to become the go-to platform for entertainment.
• Business Model: Netflix’s business model primarily relies on subscription-based revenue from streaming. They create and license content, offer it to subscribers, and earn revenue through monthly subscriptions, aligning with their strategic goal.
• Business Strategy: Tesla’s strategy centers on electric vehicles (EVs), sustainable energy, and autonomy. They aim to accelerate the world’s transition to sustainable energy by producing EVs, solar products, and energy storage solutions.
• Business Model: Tesla’s business model involves selling electric cars, solar panels, and energy storage systems. They also generate revenue through autonomous driving features. The business model aligns with their strategic mission of sustainability and innovation.
• Business Strategy: Amazon’s strategy combines e-commerce dominance, cloud computing (AWS), and logistics excellence. They prioritize customer-centricity, innovation, and global expansion.
• Business Model: Amazon’s business model includes revenue from online sales, AWS cloud services, and third-party seller services. They execute their strategic vision by offering diverse products and services to customers and businesses.
• Business Strategy: Walmart’s strategy is built on cost leadership, supply chain efficiency, and retail expansion. They aim to offer everyday low prices and expand their presence in various markets.
• Business Model: Walmart’s business model focuses on selling a wide range of products in physical retail stores and online. They generate revenue through product sales, aligning with their strategic goal of cost-effectiveness and market expansion.
• Business Strategy: Uber’s strategy is based on disrupting the traditional taxi industry by providing on-demand ridesharing services. They aim to expand globally, diversify into various transportation modes (e.g., UberEats), and leverage technology for convenient rides.
• Business Model: Uber’s business model is primarily centered around connecting drivers with riders through a mobile app. They generate revenue by taking a commission from driver earnings, surge pricing, and delivery fees (for UberEats). This model aligns with their strategic goal of revolutionizing transportation.
• Business Strategy: Airbnb’s strategy revolves around the sharing economy and offering unique lodging experiences worldwide. They focus on community building, trust, and global expansion.
• Business Model: Airbnb’s business model involves hosting platforms for property owners to rent their homes or spaces to travelers. They earn revenue through host service fees and guest booking fees. Their model aligns with their strategic vision of providing alternative accommodations and fostering a sense of belonging.
• Business Strategy: McDonald’s strategy centers on fast-food convenience, global brand recognition, and menu diversification. They aim to maintain their position as a leading fast-food chain and adapt to changing consumer preferences.
• Business Model: McDonald’s business model includes selling a wide range of fast-food items through franchised and company-owned restaurants. They generate revenue through food sales, franchising fees, and rental income from franchisees. This aligns with their strategic goal of delivering convenient meals worldwide.
• Business Strategy: Facebook’s strategy focuses on connecting people globally through social networking. They prioritize user engagement, data-driven advertising, and platform expansion (e.g., Instagram, WhatsApp).
• Business Model: Facebook’s business model primarily relies on advertising revenue. They offer an advertising platform to businesses and charge for ad placement. Their model aligns with their strategic vision of connecting users and businesses through their platform.
• Business Strategy: Coca-Cola’s strategy centers on brand recognition, global distribution, and product diversification. They aim to maintain their status as a leading beverage company and expand their product offerings.
• Business Model: Coca-Cola’s business model involves manufacturing and distributing a wide range of non-alcoholic beverages. They generate revenue through sales of beverages, licensing agreements, and marketing partnerships. This aligns with their strategic goal of quenching consumer thirst worldwide.

Related Innovation Frameworks

Business Model Innovation

Innovation Theory

Types of Innovation

Continuous Innovation

Disruptive Innovation

Business Competition

Technological Modeling

Diffusion of Innovation

Frugal Innovation

Constructive Disruption

Growth Matrix

Innovation Funnel

Idea Generation

Design Thinking

FourWeekMBA Business Toolbox

Business Engineering

Tech Business Model Template

Web3 Business Model Template

Asymmetric Business Models

Transitional Business Models

Minimum Viable Audience

Business Scaling

Market Expansion Theory

Speed-Reversibility

Asymmetric Betting

Revenue Streams Matrix

Revenue Modeling

Pricing Strategies

Other resources and business thinking tools: 

• Business Strategy: Definition, Examples, And Case Studies
• Successful Types of Business Models You Need to Know
• What Is a Business Model Canvas? Business Model Canvas Explained
• Blitzscaling Business Model Innovation Canvas In A Nutshell
• What Is a Value Proposition? Value Proposition Canvas Explained
• What Is a Lean Startup Canvas? Lean Startup Canvas Explained
• How to Write a One-Page Business Plan
• The Rise of the Subscription Economy
• How to Build a Great Business Plan According to Peter Thiel
• What Is The Most Profitable Business Model?
• The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet
• How To Create A Business Model
• What Is Business Model Innovation And Why It Matters
• What Is Blitzscaling And Why It Matters
• Business Model Vs Business Plan: When And How To Use Them
• The Five Key Factors That Lead To Successful Tech Startups
• Business Model Tools for Small Businesses and Startups
• How To Use A Freemium Business Model To Scale Up Your Business

More Resources

About The Author

Gennaro Cuofano

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What is the difference between a business plan and a strategic plan.

It is not uncommon that the terms ‘strategic plan’ and ‘business plan’ get confused in the business world. While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting. Before beginning your strategic planning process or strategy implementation, look at the article below to learn the key difference between a business vs strategic plan and how each are important to your organization.

Definition of a business plan vs. a strategic plan

A strategic plan is essential for already established organizations looking for a way to manage and implement their strategic direction and future growth. Strategic planning is future-focused and serves as a roadmap to outline where the organization is going over the next 3-5 years (or more) and the steps it will take to get there.

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A strategic plan serves 6 functions for an organization that is striving to reach the next level of their growth:.

• Defines the purpose of the organization.
• Builds on an organization’s competitive advantages.
• Communicates the strategy to the staff.
• Prioritizes the financial needs of the organization.
• Directs the team to move from plan to action.
• Creates long-term sustainability and growth impact

Alternatively, a business plan is used by new businesses or organizations trying to get off the ground. The fundamentals of a business plan focus on setting the foundation for the business or organization. While it looks towards the future, the focus is set more on the immediate future (>1 year). Some of the functions of a business plan may overlap with a strategic plan. However, the focus and intentions diverge in a few key areas.

A business plan for new businesses, projects, or organizations serves these 5 functions:

• Simplifies or explains the objectives and goals of your organization.
• Coordinates human resource management and determines operational requirements.
• Secures funding for your organization.
• Evaluates potential business prospects.
• Creates a framework for conceptualizing ideas.

In other words, a strategic plan is utilized to direct the momentum and growth of an established company or organization. In contrast, a business plan is meant to set the foundation of a newly (or not quite) developed company by setting up its operational teams, strategizing ways to enter a new market, and obtaining funding.

A strategic plan focuses on long-term growth and the organization’s impact on the market and its customers. Meanwhile, a business plan must focus more on the short-term, day-to-day operational functions. Often, new businesses don’t have the capacity or resources to create a strategic plan, though developing a business plan with strategy elements is never a bad idea.

Business and strategic plans ultimately differ in several key areas–timeframe, target audience, focus, resource allocation, nature, and scalability.

While both a strategic and business plan is forward-facing and focused on future success, a business plan is focused on the more immediate future. A business plan normally looks ahead no further than one year. A business plan is set up to measure success within a 3- to 12-month timeframe and determines what steps a business owner needs to take now to succeed.

A strategic plan generally covers the organizational plan over 3 to 5+ years. It is set with future expansion and development in mind and sets up roadmaps for how the organization will reach its desired future state.

Pro Tip: While a vision statement could benefit a business plan, it is essential to a strategic plan.

Target Audience

A strategic plan is for established companies, businesses, organizations, and owners serious about growing their organizations. A strategic plan communicates the organization’s direction to the staff and stakeholders. The strategic plan is communicated to the essential change makers in the organization who will have a hand in making the progress happen.

A business plan could be for new businesses and entrepreneurs who are start-ups. The target audience for the business plan could also be stakeholders, partners, or investors. However, a business plan generally presents the entrepreneur’s ideas to a bank. It is meant to get the necessary people onboard to obtain the funding needed for the project.

A strategic plan provides focus, direction, and action to move the organization from where they are now to where they want to go. A strategic plan may consist of several months of studies, analyses, and other processes to gauge an organization’s current state. The strategy officers may conduct an internal and external analysis, determine competitive advantages, and create a strategy roadmap. They may take the time to redefine their mission, vision, and values statements.

Alternatively, a business plan provides a structure for ideas to define the business initially. It maps out the more tactical beginning stages of the plan.

Pro Tip: A mission statement is useful for business and strategic plans as it helps further define the enterprise’s value and purpose. If an organization never set its mission statement at the beginning stages of its business plan, it can create one for its strategic plan.

A strategic plan is critical to prioritizing resources (time, money, and people) to grow the revenue and increase the return on investment. The strategic plan may start with reallocating current financial resources already being utilized more strategically.

A business plan will focus on the resources the business still needs to obtain, such as vendors, investors, staff, and funding. A business plan is critical if new companies seek funding from banks or investors. It will add accountability and transparency for the organization and tell the funding channels how they plan to grow their business operations and ROI in the first year of the business.

The scalability of a business plan vs. strategic plan

Another way to grasp the difference is by understanding the difference in ‘scale’ between strategic and business plans. Larger organizations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental and marketing plans that work from the Strategic Plan.

Smaller and start-up companies typically use only a business plan to develop all aspects of operations of the business on paper, obtain funding and then start the business.

Why understanding the differences between a business plan vs a strategic plan matters

It is important to know the key differences between the two terms, despite often being used interchangeably. But here’s a simple final explanation:

A business plan explains how a new business will get off the ground. A strategic plan answers where an established organization is going in the future and how they intend to reach that future state.

A strategic plan also focuses on building a sustainable competitive advantage and is futuristic. A business plan is used to assess the viability of a business opportunity and is more tactical.

10 Comments

I agree with your analysis about small companies, but they should do a strategic plan. Just check out how many of the INC 500 companies have an active strategic planning process and they started small. Its about 78%,

Strategic management is a key role of any organization even if belong to small business. it help in growth and also to steam line your values. im agree with kristin.

I agree with what you said, without strategic planning no organization can survive whether it is big or small. Without a clear strategic plan, it is like walking in the darkness.. Best Regards..

Vision, Mission in Business Plan VS Strategic Plan ?

you made a good analysis on strategic plan and Business plan the difference is quite clear now. But on the other hand, it seems that strategic plan and strategic management are similar which I think not correct. Please can you tell us the difference between these two?. Thanks

Thank you. I get points to work on it

super answer Thanking you

Hi. I went through all the discussions, comments and replies. Thanks! I got a very preliminary idea about functions and necessity of Strategic Planning in Business. But currently I am looking for a brief nice, flowery, juicy definition of “Business Strategic Planning” as a whole, which will give anyone a fun and interesting way to understand. Can anyone help me out please? Awaiting replies…… 🙂

that was easy to understand,

Developing a strategic plan either big or small company or organization mostly can’t achieve its goal. A strategic plan or formulation is the first stage of the strategic management plan, therefore, we should be encouraged to develop a strategic management plan. We can develop the best strategic plan but without a clear plan of implementation and evaluation, it will be difficult to achieve goals.

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Business Model Vs. Strategy

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• The Differences Between a Business Plan & Business Model
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Your business strategy is a plan for how your company will make money. Business models, ​ Harvard Business Review ​ says, have also been described as plans for making money, but models and strategy are not the same thing. One way to explain business model vs. strategy is that your model explains how you business earns money; strategy explains how you earn more than your competition.

Choosing a business model is like choosing between an all-terrain vehicle and a luxury limo — which is best suited for the situation you're driving into? A strategy is figuring out how you're going to get to your destination, when you should stop for gas, and what you need to pack.

So What's a Business Model?

Strategy is a concept most people are familiar with from games and sports. A business model is a more recent concept, credited to a 1994 article by management consultant Peter Drucker. Though the article doesn't use the term "model," it does talk about how companies orient themselves around a set of assumptions. These assumptions define who their customers are, what the company does and what its strengths and weaknesses are.

Drucker uses IBM as an example. For a long time, IBM's assumptions were that it sold or leased business machines; in the computer era, it sold computer hardware. This business model worked well for decades. Eventually, however, software became king, and IBM didn't adapt. It kept focusing on hardware and lost ground to newer, more flexible companies until it changed its assumptions.

The Corporate Finance Institute gives several examples of business models. A manufacturing model involves taking raw materials and turning them into finished products. A franchise company assumes it can make money by providing uniform services in store after store. Stores such as Target or Publix bring together a variety of products and offer them for sale.

For a long time, models had to be developed after the fact. Disney's business model didn't include theme parks until after Walt Disney came up with the idea for the company's first, Disneyland. With personal computers, spreadsheets and marketing research it's now possible to design a model from the ground up, then build your business to fit. You can test out multiple assumptions, see which ones are most likely to work, and incorporate them into your model.

Business Model vs. Strategy

A basic difference between business strategy and business model is that modeling assumptions describe how the business works and what it does. Business strategy is a set of assumptions about how your company can outperform the competition. First you set your goals, and then you come up with a strategy to achieve them. A given company's strategy can be built around reducing risk, running lean or trying radical, unconventional approaches, for example.

Suppose you're an established restaurant built on a business model of providing quality food in an attractive setting. If other restaurants open using the same model, you need a strategy to compete. This could involve a loyalty program, lower costs, acquiring a liquor license or upgrading your marketing game.

When you're drawing up plans for your business, you can play with both strategy and modeling. Your strategy for competing with established companies could be "develop a superior model." Alternatively, you could take an established model and move it into a new industry. Amazon started by selling books. During the pandemic, it redefined itself as a company that delivers groceries to those who were social distancing. Changing its model proved an effective strategy.

Another difference between business strategy and business model is that models don't change as rapidly. They're a more fundamental set of assumptions about how your business is run. The risk for any business owner is that at some point the model stops working. Then you have to make the strategic decision to change the model. If customers are leaving and your model doesn't offer a solution, the model needs to change.

Modeling and Strategizing

The Center for Management Organization & Effectiveness (CMOE) says that ideally, your business model and your strategy would be identical. Part of strategy would be developing an effective business model; the model you choose would incorporate business strategies among its core assumptions. In a world where you're constantly competing with other companies, even if you achieved that ideal, you might have to change it as conditions changed.

​ Entrepreneur ​ says one of the first steps in creating your business model is to define your target market. A grocery could target consumers willing to pay for quality organic food, who want spices and ingredients for ethnic cuisines or who want large quantities of food cheap. Your assumptions about your market will shape your strategy to reach them. Other modeling elements include your branding, your resources and your business activities.

You can think of your model as a matter of making choices. Policy choices include where you locate your plants or stores, whether you use union workers, and whether you try to go carbon-neutral. Asset choices involves your equipment and technology. Governance choices are about who can make policy and asset decisions. Do you want a centralized model where you make all decisions or should your management team have flexibility to make some of those calls?

Strategizing and Modeling

Modeling may also include initial ideas for your business strategies. In the real world, it's rarely a conflict of business model vs. strategy; they work together, and some elements overlap. There's a good chance you'll develop both at the same time. Strategic thinking often involves thinking about your model.

One example of overlap is what's called the blue ocean strategy. The typical marketplace is a red ocean, filled with fierce competition; in a blue ocean, you sail alone. You get there by offering a new kind of product or service or shifting your old business model to a new environment. Netflix, for example, found success with a model offering a familiar service – DVD rentals – online.

A common approach to strategy is to balance quality vs. cost. You can offer cheap services or goods to a wide customer base, offer more expensive goods by providing a great customer experience, or prioritize expensive quality and service to a smaller group of customers. The strategy then influences your business model. Another approach to strategy is to look at what the competition is doing and calculate, precisely, how to counter and defeat them.

Both business strategy and business modeling are based on assumptions, projections and sometimes guesswork. It's important to leave room for innovation down the road. Your model may not work. Your competitors may neutralize your strategy. Review your original model and strategy regularly and see if they're still working. If not, make changes before the problem becomes critical.

• Harvard Business Review: What Is a Business Model?
• Corporate Finance Institute: Business Strategy vs Business Model
• Center for Management & Organization Effectiveness: Business Model vs. Strategy: What’s the Difference?
• Entrepreneur: The 7 Elements of a Strong Business Model

Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs.

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Business Model vs. Strategy: What’s the Difference?

How is a business model different from a strategy.

Military strategy is thousands of years old but the field of business strategy has only been around for about fifty years . Because this field is so new, there’s still a lot of disagreement about how business strategy and business models should be defined—and often among those who write about these topics the most!

Given these challenges, is it even possible to answer the question, “What is the difference between a business model and business strategy?” We believe the answer is “yes,” and we have chosen to stand by definitions of those terms that are similar to the position of professors at Harvard Business School.

This discussion will help you understand the difference between business models and strategies and how founders choose strategies that become the models for their business. Use these ideas to think about how you can approach your own role in the business more strategically.

What Is a Business Strategy?

A foundational business strategy is a carefully chosen response to a business environment. It takes the form of a set of decisions about the direction the business should go.

Think of strategy as the plan you make before you go on a drive. In this analogy, the business environment would be the weather conditions and your strategy would be the decision you need to make between having a night out in the city, going off-roading in the mountains, or going on another type of trip.

Strategy includes all the choices you make about where you’re going, what you’ll do when you get there, what you need to take with you, how you’ll prepare for the conditions you’ll meet along the way, and which vehicle you will take. The choices you make are designed to accomplish certain goals.

Similarly, before a company is started, founders carefully assess the current business environment (the markets, customers, competition, and so on) and try to forecast the future. They choose a mission and goals. Then, they create a plan for how the company will work toward those goals and fulfill that mission.

This process creates the overarching strategy at the core of a company, which defines why the company exists. A business strategy might include the following:

• A focus on customers who are eager for a solution
• A value proposition for those customers
• An inventory of the resources and capabilities needed to deliver that value
• An effective business model that will consistently deliver that value

Another powerful part of an effective business strategy is contingency planning. Contingency plans are “if, then” scenarios and might sound like, “If this competitor does this, we will do that,” “If the market shifts in this direction, we will pursue such and such activity,” and “If our customers don’t respond to this offer, we will focus on that offer instead.”

Contingency plans are important because the founding strategy is much like a hypothesis; the start of the business is a series of experiments, and adjustments must be made as the business learns more and matures over time.

What Is a Business Model?

Let’s go back to the analogy of planning a trip. The strategy includes assessing the weather, choosing and perhaps even modifying a car, and making other preparations.

In that analogy, the business model would be represented by choosing the correct car for the conditions and goals of the trip. It could be a rugged jeep with off-roading options or a luxury sedan with leather seats and a state-of-the-art sound system.

A business model is a system that consists of cycles of activity which fulfill the mission and goals of the company. It is the expression of a high-level strategy. It can be expressed very simply by a term such as

• Subscription
• Pay as you go
• Standardization
• Crowdsourcing
• Product to service

A list of 19 models is available from Harvard Business Review . However, a complete business model might include details such as a company’s

• Strengths and weaknesses
• Customers and customer segments
• Customer relationships
• Competitors
• Supply chain
• Important resources and activities in its value chain
• Revenue streams
• Cost structures
• Cost-control methods
• Employee-payment policies
• Marketing campaigns
• Governance framework
• Vertical-integration practices

Not every car would be appropriate for every type of trip. Similarly, certain business models do a better job of expressing a particular business strategy than others.

Business Model vs Strategy

You may still wonder what the true difference is between a business model and a strategy , and you may also be wondering why we need to define the differences at all. The simple answer is that in a perfect world, we wouldn’t need to. The business model would be a perfect expression of the ideal strategy and the model would continuously make the founders a great profit.

However, in the real world, technology, changing demands, and other factors can make a business model obsolete or ineffective. Founders and managers may need to tweak the business model in order to continue to progress toward their goals. They might even scrap their current model completely and adopt an entirely new one.

Strategic thinking includes choosing between different business models and sometimes switching to a new model to achieve the mission and goals of the strategy, just like a driver might change to snow tires in a storm or even buy a new car when an old one no longer serves the driver’s needs.

Founders must decide which model would most effectively serve their customers based on the products, services, and value they are offering and the resources that are available in the current business environment.

How Do Founders Choose a Strategy?

Thinking about how a high-level strategy is chosen can be useful even if your job is to plan and/or execute annual strategies rather than create core business strategies.

If you understand the core strategy of your company, you can think about how to contribute to it more directly. That might mean focusing more on innovation, competition, or another key concept.

Four ways founders come up with their high-level strategies can be found below. See if one of these approaches seems to describe your company and think about how you might apply the concepts to your own role.

1. Seeking a Blue Ocean

The best-selling book Blue Ocean Strategy uses the analogy of a red ocean to represent a market environment in which companies fiercely compete. In contrast, a “blue ocean” describes a situation in which a company creates a new category of product or service that can be sold without competition.

Cirque du Soleil, for example , stripped away many of the classic elements of a circus and offered a new type of show at a higher price to theater-going audiences instead of offering this style of entertainment at a low price to audiences sitting outdoors in tents.

Blue ocean strategy requires innovation, leadership, and the imagination to sometimes serve customers who don’t yet understand why they need what you are offering.

2. Choosing Between Cost and Differentiation

A lecture at the University at Albany stated that founders can choose between cost and differentiation to arrive at five different types of strategies:

• Cost leadership: Using efficient, low-cost business practices to offer the lowest, most-attractive prices to a mass customer base
• Differentiation: Using great customer service, special features, innovation, and more to offer high-value products or services to a mass market without competing on price
• Focused low cost: Focusing on cost leadership and marketing only to a relatively small group of customers
• Focused differentiation: Competing through differentiation and marketing only to a relatively small customer base
• Integrated low-cost and differentiation: Marketing to a mass audience using both differentiated features and low prices

3. The Chess Master

Some founders approach strategy like a game of chess. They carefully assess the current market situation, all the pieces they have available, and where the competition has placed their pieces on the board. They choose a goal they’re passionate about and then plan many moves ahead, seeking to outmaneuver the competition and anticipate every adverse circumstance.

If founders and managers are able to create plans that are detailed enough and anticipate their business moves well enough, they may have the satisfaction of seeing their ideas work as expected and their company reaching its goals despite competition and difficult circumstances.

4. Strategizing about Strategy

Your Strategy Needs a Strategy advocates using a system to choose between categories of strategies. The first step is to assess the strategic situation by rating the unpredictability of the markets, the changeability of the situation, and the difficulty or ease of current problems.

Then, a founder uses what he or she learns from this assessment to choose between five strategy types :

• Classical: simply analyzing, planning, and executing in a stable environment
• Adaptive: in an unpredictable environment, running a series of experiments and codifying and extending those that perform best
• Visionary: creating new markets and innovations in a predictable yet changeable environment
• Shaping: setting up a platform for other businesses to connect in a changeable, unpredictable environment
• Renewal: revamping a business model because of the imminent failure of a corporation

Continue Learning How to Think Strategically

We hope this discussion helps answer the question, “What is the difference between a business model and a strategy?” and gives you a deeper way of thinking about strategy that can help you in your role.

The more you practice strategic thinking, the more valuable you will be to your company. Good strategy can guide a company through difficult situations and may even contribute to changing a business model for the good of the entire company. To learn more about thinking and leading strategically in your organization, contact CMOE .

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Business Model vs. Strategy

What's the difference.

A business model and strategy are two interconnected concepts that are essential for the success of any organization. A business model refers to the framework that outlines how a company creates, delivers, and captures value. It encompasses the overall structure, revenue streams, and cost structure of a business. On the other hand, a strategy refers to the plan of action that a company adopts to achieve its long-term goals and objectives. It involves making decisions on how to allocate resources, compete in the market, and differentiate from competitors. While a business model provides the foundation for a company's operations, a strategy guides the direction and choices made within that framework. In essence, a business model defines the "what" of a business, while a strategy focuses on the "how" to achieve success.

Further Detail

Introduction.

In the world of business, two key concepts play a crucial role in determining the success and sustainability of an organization: business model and strategy. While these terms are often used interchangeably, they represent distinct aspects of a company's operations and decision-making processes. In this article, we will explore the attributes of both business models and strategies, highlighting their differences and showcasing their importance in achieving organizational goals.

Understanding Business Models

A business model serves as the foundation upon which an organization operates and generates value. It encompasses the core elements of how a company creates, delivers, and captures value in the market. A business model outlines the key components of a company's operations, including its target customers, value proposition, revenue streams, cost structure, and key partnerships. It provides a holistic view of how a company intends to generate revenue and sustain its operations over the long term.

Business models can vary significantly across industries and companies. For instance, an e-commerce business model relies on online platforms to connect buyers and sellers, while a subscription-based business model offers customers ongoing access to products or services for a recurring fee. The choice of a business model depends on various factors, including the nature of the industry, customer preferences, and competitive dynamics.

Exploring Strategies

While a business model defines the overall framework of an organization, a strategy focuses on the specific actions and decisions taken to achieve the company's objectives within that framework. Strategy involves making choices about how to allocate resources, compete in the market, and differentiate from competitors. It is a roadmap that guides the organization towards its desired outcomes.

Strategies can be formulated at different levels within an organization, ranging from corporate-level strategies that shape the overall direction of the company, to business-level strategies that focus on specific business units or product lines, and functional-level strategies that address specific operational areas such as marketing or human resources. Strategies are dynamic and need to adapt to changing market conditions, customer preferences, and competitive landscapes.

Key Attributes of Business Models

Business models possess several key attributes that distinguish them from strategies:

• Value Proposition: A business model defines the unique value a company offers to its customers. It outlines the products or services that address customer needs and differentiate the company from competitors.
• Revenue Streams: Business models identify the various sources of revenue for a company. This could include sales of products, subscription fees, licensing, advertising, or other revenue-generating activities.
• Cost Structure: A business model outlines the costs associated with delivering the value proposition and generating revenue. It includes both fixed and variable costs, such as production costs, marketing expenses, and overhead costs.
• Customer Segments: Business models define the target customers or market segments that a company aims to serve. It helps in understanding customer needs, preferences, and behaviors to tailor the value proposition accordingly.
• Key Partnerships: Business models identify the strategic alliances and partnerships that are crucial for the success of the company. These partnerships can help in accessing key resources, reaching new markets, or enhancing the value proposition.

Key Attributes of Strategies

Strategies possess distinct attributes that differentiate them from business models:

• Competitive Advantage: Strategies aim to create a sustainable competitive advantage for the organization. This involves identifying unique strengths, such as superior technology, cost leadership, or differentiation, and leveraging them to outperform competitors.
• Resource Allocation: Strategies involve making decisions about how to allocate resources effectively to achieve organizational goals. This includes financial resources, human capital, technology, and other assets.
• Market Positioning: Strategies determine how a company positions itself in the market relative to competitors. This includes identifying target market segments, understanding customer needs, and developing a compelling value proposition.
• Risk Management: Strategies involve assessing and managing risks associated with business operations. This includes identifying potential threats, such as changes in market dynamics or regulatory environments, and developing contingency plans to mitigate those risks.
• Long-term Vision: Strategies provide a long-term vision for the organization, outlining the desired future state and the steps required to reach that state. They consider market trends, technological advancements, and customer expectations to shape the organization's direction.

Interplay between Business Models and Strategies

While business models and strategies are distinct concepts, they are closely interconnected and influence each other:

A well-defined business model provides the foundation for developing effective strategies. It helps in understanding the value proposition, target customers, and revenue streams, which are essential inputs for formulating strategies. For example, a company with a business model focused on low-cost production may develop a strategy to achieve cost leadership by optimizing its supply chain and operational efficiencies.

On the other hand, strategies shape and refine the business model over time. As market conditions change, strategies may require adjustments to the value proposition, target customers, or revenue streams. For instance, a company operating in the retail industry may shift its business model from brick-and-mortar stores to an online marketplace in response to changing consumer behavior and increased competition.

Furthermore, business models and strategies need to align with each other to ensure organizational coherence and effectiveness. A misalignment between the business model and strategy can lead to inefficiencies, missed opportunities, and ultimately, the failure of the organization. Therefore, it is crucial for companies to regularly evaluate and adjust both their business models and strategies to stay competitive in dynamic markets.

In conclusion, business models and strategies are two essential concepts that play distinct but interconnected roles in the success of an organization. While a business model provides the overall framework for value creation and revenue generation, strategies guide the specific actions and decisions taken to achieve organizational goals. Understanding the attributes of both business models and strategies is crucial for companies to effectively navigate the complexities of the business landscape, adapt to changing market conditions, and stay ahead of the competition.

Comparisons may contain inaccurate information about people, places, or facts. Please report any issues.

Business Model vs Business Plan – What Is The No. 1 Difference

• by IdeaBuddy Team
• April 19, 2024
• 6 minute read

Table of Contents Hide

What should your business model include , the importance of choosing the right business model, what is a business plan , what should your business plan include , business model vs business plan: the difference, business model vs business plan: conclusion.

Whether you are new to the world of entrepreneurship and business or you already have solid experience dealing with business terminology, there is no harm in refreshing your knowledge and making sure you know how to differentiate between a business model vs business plan .

Although both are essential, they serve different purposes and contain distinct information that can determine the success of your business, so in this article we will aim to cover everything you should know about these two terms that stand behind business model vs business plan syntax so you can cross them off from your entrepreneurial to-do list!

So, is there a winner in the business model vs business plan race, or are they simply complementary parts of every business? Let’s find out and explain these two ingredients needed to kick off your business.

What is a business model?

When thinking about what stands between a business model vs business plan, you probably already know that the characteristic of business models is that there are multiple models that can be used in a business, and they always depend on the type of the product a company has.

Some of the most common business models are affiliate , product as a service , subscription model , franchise , and others.

A business model is basically the strategic blueprint that defines how your company creates, delivers, and, most importantly, how it is going to make profit in the future.

In simpler terms, it outlines how your business plans to make money and achieve its goals , describing what products or services it will offer, the target market it aims to capture, and the expected expenses and revenues.

Remember: a clear and detailed business model is the foundation of every successful venture. It’s not just about having a great idea, but about carefully mapping out how you’ll bring that idea to life and create value.

Your business model should include a compelling value proposition that determines your offerings and makes clear why customers should prefer them. You need to define your customer segments to tailor your approaches effectively, ensuring you understand who you’re serving and what they truly need.

Channels describe how you’ll reach your customers, while customer relationships detail the type of interactions you intend to maintain with them, whether through personalized service, automated systems, or community engagement.

Revenue streams outline how your business will earn money, be it through direct sales, subscriptions, or other creative monetization strategies. In your business plan, you should also provide clarity on key activities (what actions are crucial to deliver on your promise), key resources (what you need to operate), and key partnerships (who you’ll ally with to enhance your capabilities).

Finally, a thorough understanding of your cost structure will ensure that your business model is not only viable but also financially sustainable. Each of these elements works together to provide a comprehensive overview that will guide your business from startup to success.

Your business model sets the stage for introducing a structured, detailed business plan. So, let’s see how choosing the right business model for your business actually helps you:

Selecting the right business model is critical to the success of your business, as it defines the framework through which your business will operate and flourish. Here’s why the strategic choice of the right business model is fundamental:

• It gives you a competitive advantage : by adopting a business model that matches your business’s strengths and market needs, your business can distinguish itself from competitors.
• Enhances flexibility and resilience : The right business model provides a structure that supports growth and facilitates quick adaptation to market changes or internal demands.
• Helps you attract investment : A well-created business model can help demonstrating to investors that your business has a clear plan for revenue generation and long-term viability.

Now that we have a better understanding of the basics of the business model, it’s time to examine the other business ingredient – the business plan. You will learn in more depth the correlation between business model vs business plan, and understand how they overlap.

Just as there are various business models to suit different types of products and services, there are also multiple frameworks for business plans tailored to diverse business objectives. Common types of business plans include traditional , lean startup , and operations plans , each serving different strategic purposes.

A business plan is essentially a comprehensive document that details how your company plans to achieve its goals . It goes beyond the strategic outline provided by your business model to specify the operational steps, financial projections, and marketing strategies your business will employ. It describes in detail what your business will do, who your customers will be, and how you plan to succeed financially .

In simpler terms, a business plan not only maps out the products or services you will offer but also elaborates on the target market, the business structure, the team that will lead your venture, and the financial investments involved. It helps you anticipate any potential challenges and elaborate a plan on how you would address them, ensuring your business navigates towards its strategic goals effectively.

Remember: a clear and well-thought-out business plan is indispensable for translating the vision of your business model into a roadmap that guides every aspect of your business. It’s not just about having an innovative idea, but about methodically planning how to bring that idea into reality and secure its success in the marketplace.

As we mentioned before, a good business plan is a must if you are looking to turning your strategic vision into actionable steps! Here are some key components that your business plan should contain:

• Executive Summary : The summary should capture the main aspects of your business, such as mission statement, business model, key products or services, leadership team, and a brief financial overview. 
• Company Description : Provide detailed information about your business, the problems it aims to solve, and the market needs it addresses.
• Market Analysis : Demonstrate a thorough understanding of your industry, market trends, demographics, and competition.
• Organisation and Management : Describe your company’s organisational structure, including details of the ownership, profiles of your management team, and the qualifications of your board of directors.
• Services or Products List : Explain what you’re selling or what service you’re offering.
• Marketing and Sales Strategy : Outline how you plan to attract and retain customers.
• Funding : If you are seeking financing, you should specify the amount of funding needed over the next five years and give a brief explanation on how you plan to use these funds.
• Financial Plan : Introducing the financial data, such as profit and loss, cash flow forecast, balance sheet and other projections can help both you and potential investors get a clear view on the direction and resources needed to succeed.

Each of these components need to work together to provide a comprehensive and detailed overview of your business.

As you develop your business plan, consider using tools like IdeaBuddy to streamline the process and ensure that every aspect of your plan is well-crafted and aligned with your business goals.

Understanding the difference between a business model vs business plan can help you more effectively communicate the core of your business to stakeholders and guide your strategic decisions. The business model focuses on the conceptual aspects of the business, showing the big picture of how value is created and delivered, while the business plan details the operational and financial specifics needed to achieve those goals.

Here’s why understanding the difference matters:

• Focus and Clarity : While the business model offers a high-level view of your strategic direction, the business plan provides the details of exactly how you’ll achieve this.
• Execution vs. Strategy : The business model is your strategy for how you’ll succeed, while the business plan is about execution—how you turn your strategic visions into operational realities.
• Adaptability and Scalability : With a well-defined business model, you can adapt to changes without losing sight of your core objectives. The business plan allows you to scale these efforts, detailing specific actions, timelines, and resources needed as you grow.

We hope that now you understand the distinction and importance that stand behind the business model vs business plan buzzword. Let’s recap one more time: while the business model outlines the strategic blueprint for how your company will create, deliver, and capture value, the business plan details the specific steps and resources necessary to execute and achieve the goals set forth by your business model.

We hope this helps. For more information about the business model vs business plan topic, read the following articles:

Suggested read: What is a business model?

Suggested Read: Why do you need a business plan?

For those ready to dive deeper into the topic of business model vs business plan, or perhaps start a business from scratch, we have crafted an in-depth guide for all the steps of the way as you build your business – check it out here! 💡

IdeaBuddy Team

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The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help companies attract investment, recruit talent, and motivate management and staff.

Businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors to evaluate companies that interest them and employees to understand the future of a company they may aspire to join.

Key Takeaways

• A business model is a company's core strategy for profitably doing business.
• Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
• The two levers of a business model are pricing and costs.
• A business model should be periodically revised to make sure it still reflects the business environment and customer demands.
• Analysts and investors often look at a company's gross profit to evaluate the success of a business model.

Investopedia / Laura Porter

A business model is a high-level plan for profitably operating a business in a specific marketplace. This plan helps the company to identify the best way to go about doing its business while also serving to attract investors and talent.

A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients; it should ideally be stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. And they are subject to change. Many businesses revise their business models periodically to reflect changing business environments and market demand .

Investors and Business Models

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Fortunately, it's not hard to find. Most companies outline their business model on their website and in their annual reports .

Admittedly, the business model may not tell you everything about a company's prospects. Investors need to fill in the blanks, look beyond the sales pitch, and recognize that sensitive information or any flouting of rules of ethics to gain an advantage won't be mentioned. The investor who understands the business model, even on a basic level, can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs up to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS) . Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income —that is, gross profit minus operating expenses, which is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit.

Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. In that case, if expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money—not just what it sells but how it sells it. That's the company's business model.

Types of Business Models

There isn't one type of business model. Not all companies are the same and each has different ways of making money. Business models can vary considerably. An aerospace company such as Boeing, for example, may operate similarly to a peer such as Airbus but won't share much in common in terms of how it makes money with, say, a shoe store or bar.

Direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass-produced products and can sell what it makes to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of becoming an upgraded member.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers a free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces receive compensation for hosting a platform for business to be conducted. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component needed to use that product. Also referred to as the " razor and blade model ", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development and freight.

Example: Re/Max

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps someone can take to create a plan:

• Identify your audience : Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will reflect who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
• Define the problem : In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need that creates demand for your services or products, your business may struggle to find its footing.
• Understand your offerings : With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
• Document your needs : With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
• Find key partners : Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
• Set monetization solutions : A business model isn't complete until it identifies how the company will make money and turn a profit. This includes selecting the strategy or strategies laid out in the business model types section above.
• Test your model : When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review , suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits.

Complicated business models can put off investors and hinder a company's growth. People are less eager to invest in a company they don't understand. Moreover, some business models can be less profitable and at risk of being compromised. What works one year, isn't guaranteed to continue doing so in the future.

Take the airline industry. For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

• Productivity and business processes : Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based on product usage (i.e. the amount of data being uploaded to SharePoint).
• Intelligent cloud : Microsoft offers server products and cloud services for a subscription.
• Personal computing : Microsoft sells the Windows operating system as well as physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retailers may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

There are various types of business models. Examples include subscription models, bundling, and franchising. Business models can sometimes also be loosely defined by industry. For example, manufacturers produce their own goods and may or may not sell them directly to the public, whereas retailers buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to make a profit. After building a business model, a company should have a stronger direction on how it wants to operate and what its financial future appears to be.

U.S. Federal Trade Commission. " Tying the Sale of Two Products ."

Harvard Business Review. " Why Business Models Matter ."

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Business Model Vs. Business Plan: What’s the Difference?

There’s a big misconception about the whole business model vs. business plan debate because both terms have been wrongly used. Today, we’ll look into what they’re really for and why they’re needed for the business.

Strategy has always been a building block of business. In the ever-competitive and highly volatile industry, you have to come up with a sustainable advantage over your competitors. Few lucky entrepreneurs successfully start on the right foot, but luck often runs out while keeping a great momentum. This is where a solid business strategy comes to play.

You can’t just launch your startup without establishing where it’s heading. You need a business strategy to identify which direction you’ll operate towards. This is why a business plan and a business model are essential factors in a company’s success. But because they seemingly have a similar purpose, they’re mistakenly used interchangeably. The truth is, one cannot exist without the other.

To truly understand the difference between a business model vs. a business plan, we’ll need to define what they are and what they’re used for. 

What is a Business Model?

A business model is the company’s rationale and plans for making a profit. It explains how a company delivers value to its customers at a specific cost. A business model would include details about the company’s products and services, its target market, and all expenses related to the operations and production.

Why is it necessary?

It’s considered a roadmap for a business to achieve its financial goal in a given period. It maps out how you can sustain the value you deliver to your customers. Entrepreneurs use it as a tool to study, test, and estimate cost and revenue streams.

They can make quick hypothetical changes to the business model to determine how a financial decision can impact their long-term operations . This allows business owners to anticipate and adapt to trends and challenges in their industry.  

Consequently, a strong business model also helps attract investors, recruit talent, and motivate employees. The management and staff are often motivated by how well a company adheres to the business model.  

Types of Business Model

When it comes to different kinds of business models, there are several options for a company. For example, a software company might go with a subscription model because it’s easier to sell their product through a license subscription. On the other hand, retail companies might go for the accessories model because it’s more straightforward.

In determining which type of business model to use, companies choose the style that best suits their operations and industry. A growing method is using a combination of business models to create a hybrid system for the business.

The following are some of the most widely used types of business models:

• Subscription
• Transactional
• Retail sales

Creating a Business Model

Now that we’ve established what a business model is, it’s time to learn how to create one for your startup. Your business model has to answer all the critical questions about your business.

Here are the key components you must include in your business model:

• Key Objectives
• Target Market
• Product Value
• Product Pricing
• Required Funding
• Growth Opportunity

Keep in mind, the business model has to be updated regularly to fit your goals. All companies undergo a stage of maturity that directly affects the business model it follows. 

For early-stage startups, the business model would ideally be simple and straightforward. Most business owners would even opt for a flat organization where staff could communicate their concerns directly to the owner. This, of course, will change as the company expands.

Now that we’ve learned what a business model is, it’s time to move on to the next part of the business model vs. business plan discussion. So, let’s discuss what is a business plan.

What is a Business Plan?

A business plan is a written document that details a company’s goals and its strategies to achieve them . It’s considered the “blueprint of the business” because it summarizes all the essential aspects of the company such as finance, marketing, and operations.

It serves as a reference for the company owner and the management in making major business decisions. It can also be presented to investors when the owner is raising capital. It’s beneficial for startups who have no proven track record since a business plan can pitch its full potential.     

A business plan is not only helpful to a business in its early stage, but it also helps it pivot during unforeseen circumstances. In a volatile industry, a company needs to adapt quickly and efficiently. Hence, update the goals and methods should accordingly.

Creating a Business Plan

So, what should a business plan include?

Business plans vary according to industry, but there is a general format for writing a business plan. You can expand or shorten this template based on long-term goals.  

• Executive Summary
• Business Description
• Market Analysis
• Product Development
• Marketing Strategies
• Operations and Management
• Financial Plans

You can choose from a wide selection of business plan templates when it comes to the actual writing. Remember to keep it concise and avoid jargon in the content. You will present your business plans to investors and stakeholders; hence, they need to get a clear idea of it in one reading.

Business Model vs. Business Plan: How to Use Them 

At this point, we’ve established that both a business model and a business plan are essential to success. However, both can only take your business so far. How well you execute and follow them is a whole other story. It’s challenging to start a startup , let alone maintain it.

If you want to avoid common startup mistakes , you need to build your business on a strong foundation. Hire the best people, invest in reliable tools, and sign up for mentoring.

Speaking of mentors, Full Scale founders Matt DeCoursey and Matt Watson are incredibly passionate about helping entrepreneurs succeed. They’ve created Full Scale to assist startup owners in launching and managing their companies.

Full Scale is an offshore software development company that offers a wide array of services for startups. We offer the best talent and resources needed to begin your entrepreneurial journey.

We have seasoned project managers, marketing specialists, and technology experts at your service. We’ll take care of all the hassles out of your daily operations so you can focus on your core competencies.

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Business Plan vs. Business Model

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on August 18, 2024

If you’re starting a business , you have a business model, whether you know it or not. A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money. 

A business plan , on the other hand, is the business owner’s plan to put that model into action. It’s much more detailed and includes financial projections, objectives, management decisions and further steps. 

Still unsure? Have no fear, this handy guide lays out the differences between a business plan and a business model so that you know exactly what you and your business need to succeed.  

• Business Model

In simple terms, a business model is how the business will make money. Selling ice to eskimos, for instance, is a bad business model. Selling team jerseys to rabbit sports fans, on the other hand, is a solid business model. 

The components of a business model are best illustrated by Swiss entrepreneur Alexander Osterwalder’s Business Model Canvas, which is a visual representation with nine sections. Four sections represent internal elements of a business that enable it to function and are related to costs. 

Four other sections represent external elements that enable the business to bring in revenue and are related to the customer. The ninth section is the business’ value proposition. 

Value Proposition

The value proposition is at the heart of your business model. Your value proposition, which should be no more than two sentences long, needs to answer the following questions:

• What are you offering
• Whose problem does it solve
• What problem does it solve
• What benefits does it provide
• How is it better than competitor products

Key Activities

Key activities are all the activities required to run the business and create the proposed value. These can include product development and distribution and any other necessary activities.  

Cost Structure

The cost structure is a sum of all you’ll need to spend to make the business function. It’s the costs you’ll incur to run the business and bring in revenue. 

Key Partners

Key partners are external partners involved in delivering value, such as vendors and suppliers, or maybe a bank. 

Key Resources

Key resources are any necessary practical elements that come with a cost. These might include your office space, employees, and equipment like computers. 

Revenue Streams

Revenue streams are the ways in which you receive payment from customers. You may have more than one revenue stream, such as via direct sales and subscriptions.

Customer Segments

Customer segments are the groups of people to whom you provide goods or services. In other words, your target market. Maybe your products are aimed at younger women, for instance, or older men. Whatever your target segments, you should build customer personas of each group so that you know how and where to reach them with your marketing.

Customer Relationships

Customer relationships refer to how you interact with your customers to deliver value. Your interactions may be online only, by phone, in-person, or all of the above. 

Channels refer to how you reach your customers, such as social media, internet search, direct sales calls, trade shows, and so on. 

To Summarize

If you’re just starting a business, the Business Model Canvas is a great way to understand and examine your business model. One thing to remember is that the elements you put in your Canvas will be based on assumptions that will at some point be tested in the market and adapted as needed. 

Another thing to remember is that you do not need to do a Business Model Canvas. It’s merely an exercise that can help provide insight into your business model.  

• Business Plan

A business plan is a detailed document that describes how the business will function in all facets. The key is in the “plan” part of the name. It will specify how you’ll launch your business, gain customers, operate your company, and make money. A business plan, however, is not a static document . 

The initial version will be based largely on assumptions, supported by research. As you run your business you’ll constantly learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy. 

You’ll present your business plan to potential backers, though in recent years some investors have begun to embrace the Business Model Canvas as a tool to assess a business’ potential. 

A strong business plan includes eight essential components .

1. Executive Summary 

The executive summary is the initial section of your business plan , written last, summarizing its key points. Crucial for capturing investors’ and lenders’ interest, it underscores your business’s uniqueness and potential for success. It’s vital to keep it concise, engaging, and no more than two pages.

2. Company Description/Overview

This section provides a history of your company, including its inception, milestones, and achievements. It features both mission (short-term goals and driving force) and vision statements (long-term growth aspirations). Objectives, such as product development timelines or hiring goals, outline specific, short-term targets for the business.

3. Products or Services Offered

Detail the product or service you’re offering, its uniqueness, and its solution to market problems. Explain its source or development process and your sales strategy, including pricing and distribution channels. Essentially, this section outlines what you’re selling and your revenue model.

4. Market Analysis 

• Industry Analysis : Research your industry’s growth rate, market size, trends, and future predictions. Identify your company’s niche or sub-industry and discuss adapting to industry changes.
• Competitor Analysis : Examine main competitors , their unique selling points, and weaknesses. Highlight your competitive advantages and strategies for maintaining them.
• Target Market Analysis : Define your target market , their demographics, needs, and wants. Discuss how and where you’ll reach them and the potential for market shifts based on customer feedback.
• SWOT Analysis : Break down your company’s strengths, weaknesses, opportunities, and threats. Detail your unique attributes, potential challenges, market opportunities, and external risks, along with strategies to address them.

5. Marketing and Sales Strategies

• Marketing and Advertising Plan : Use insights from your target market analysis to decide advertising channels, emphasizing platforms that best reach your audience, like TikTok over Instagram. Develop a concise value proposition to be central to all marketing, detailing how your product addresses specific needs.
• Sales Strategy and Tactics : Define where and how you’ll sell, such as online, in-store, or through direct sales calls. Sales tactics should highlight the customer’s needs, presenting your solution without overly aggressive promotion.
• Pricing Strategy : Decide on pricing based on market positioning, whether you aim to be a discount or luxury option. Ensure prices cover costs and yield profit, and position your product in a manner that aligns with the chosen price range. Justify your chosen pricing strategy in this section.

6. Operations and Management 

• Operational Plan : Outline daily, weekly, and monthly operations, specifying roles, tasks, and quality assurance methods. Include supplier details and order schedules, ensuring clarity on key business functions and responsibilities.
• Technology Plan : For tech-based products, detail the development plan, milestones, and staffing. For non-tech companies, describe the technology tools and software you’ll employ for business efficiency.
• Management and Organizational Structure : Define who’s in charge, their roles, and their backgrounds. Discuss your management strategy and forecast the development of your organizational hierarchy.
• Personnel Plan : List current and future hires, specifying their roles and the qualifications necessary for each position. Highlight the significance of each role in the business’s operations.

7. Financial Plan 

• Startup Costs : Clearly detail every anticipated cost before starting operations. This will be vital for understanding the initial investment required to get the business off the ground.
• Sales Projections : Estimate monthly sales for the first year, with an annual forecast for the next two years.
• Profit and Loss Statement : An overview of revenue minus costs, resulting in either a profit or loss.
• Cash Flow Statement : Provides clarity on the business’s liquidity by showing cash inflows and outflows over a specific period.
• Balance Sheet : Displays the company’s net worth by detailing its assets and liabilities.
• Break-even Analysis : Understand at which point revenues will cover costs, helping to predict when the business will start making a profit.
• Funding Requirements and Sources : Enumerate the required capital and the sources of this funding. This should also include the purpose for which these funds will be used at different stages.
• Key Performance Indicators (KPIs) : Identify the metrics vital for measuring the company’s performance. Use these indicators to spot challenges, understand where improvements can be made, and pivot strategies as necessary. Ensure that each KPI aligns with the business’s objectives and offers actionable insights for growth.

Remember, although the financial section might seem daunting, it is pivotal for understanding the economic feasibility of your business. Proper financial planning helps in making informed decisions, attracting investors, and ensuring long-term sustainability. Don’t hesitate to engage financial experts or utilize tools and software to ensure accuracy and comprehensiveness in this section.

8. Appendices

The appendices section of a business plan is a repository for detailed information too extensive for the main document. This can include resumes of key personnel, full market research data, legal documents, and product designs or mockups. By placing this data in the appendices, it keeps the main plan concise while allowing stakeholders access to deeper insights when needed. Always ensure each item is clearly labeled and referenced at the relevant point in the main document.

As you can see, business models and business plans have some similarities, but in the main they are quite different. Your business model explains the foundational concept behind your business, while a business plan lays out how you’ll put that model into action and build a business. 

When you’re starting a business, it’s best to have both, as the work of getting them done involves learning about your business from every angle. The knowledge you’ll gain is likely to be invaluable, and could even be the difference between success and failure. 

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