Difference Between A Business Plan And A Business Model

Difference Between A Business Plan And A Business Model | Business Model Vs Business Plan
Difference Between A Business Plan And A Business Model | Image Source: Pexels.com

A business plan and a business model are both different and similar. They’re largely said to be distinct, but are still a part of each other, making the clear meanings of both to become confusing to a lot of people.

Both a business plan and a business model encompass your marketing strategies, customer retention strategy, your revenue generation strategies, and overall, they both pay critical attention to the vision and the concept/company itself.

So what then differentiates a business plan from a business model and how can you make a clear distinction of both?

See Also: The Difference Between A Feasibility Study And A Business Plan


Business Model Vs Business Plan

What A Business Model Is

A business model is a key framework for summarising or highlighting the key elements of your business plan. It shows the destination of the business, how it is meant to work, and what it is meant to become.

The business model summarily simplifies and makes revenue-generation easy to understand by focusing on the key generator, highlights exactly how you intend to acquire, retain, and service your customers, and can be in different distinct models like:

  • Franchise model
  • Direct sales model
  • Advertising model
  • Subscription based model
  • Lowcost model
  • Freemium model
  • Affiliate model
  • Production model

And much more.

A business model is usually a simple verbal description of the business or a one-page visual representation of the business in the form of a business model canvas.

In essence, the way you deliver your products and/or services to your customers is what defines your business model.

See Also: The Difference Between Sales And Marketing


What A Business Plan Is

A business plan is like a GPS. It shows you the roadmap of how you intend to get to your destination, which then defines the business model. It highlights the market opportunities you want to take advantage of, the existing competition, the strength and experience of your team, a detailed description of the products and services you intend to offer, and a roadmap that shows exactly how you intend to execute your plans in the market.

The business plan pays close attention to your goals, projects the cash flow, profits or losses, and ultimately shows how long and what would be required to enable the business break-even.

A sample structure of a business plan is seen below:

  • Executive Summary
  • Business Description
  • Service or Product Line
  • Market Analysis & Strategies
  • Organization & Management
  • Funding Request
  • Financial Assumptions
  • Financial Projections
  • Appendix

See Also: The Difference Between A Business Plan And A Business Proposal


To Sum It Up

While a business plan shows the process, journey, and key elements that project how the business will be successful, the business model acts as the destination, by highlighting the key element that guarantees exactly how the business will generate sales, revenues, and ultimately retains customers.


What are your thoughts on the difference between a business plan and a business model? Let me know by leaving a comment below.


Stan Edom
Stan Edom
I'm an entrepreneur with expertise in supply chain management, international trade, small business development, e-commerce, internet startups, renewable energy, and agriculture. I'm also a network engineer, I.T security expert, and computer programmer. In my spare time when I'm not working out at the gym, I try to solve problems people face in their everyday lives with whatever means necessary.

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  1. thanks stan, when ask to write a business plan, is it advisable to start with our business model or should be included.

    • Hi Abdulwahab,

      The business model is more conclusive than procedural.

      You should have that after the business plan is complete.

      Thank you for asking.

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