What’s the difference between a business model and a business plan? It depends on who you ask. Business plan means a lot of different things to different people, and so does business model. I’ve complained occasionally about confusing terminology, but I guess it’s just the way things are. There are similar problems with strategic plan, annual plan, etc.
What I really don’t like is people saying “don’t do a business plan; do a business model instead.” My favorite definition of the business model is the excellent book Business Model Generation, by Alexander Osterwalder and Yves Pigneur. And that’s very compatible with business planning. I’ve already incorporated the business model canvas into three business plans I’m working on right now, as a good framework for thinking. To me, the difference between business model and business plan is just the semantics. They are different words for the same thing. It’s a lot like the difference between business plan, strategic plan, operations plan, annual plan, etc: depends on who’s talking at the time.
So, because of so much confusion around this subject, I did this quick (three-minute) video explaining how I see them working together:
And, in case you don’t know the business model idea, here’s an even quicker (two minutes) video explaining that:
And, just in case you don’t see the two videos here, this are the links back to the source:
Business model canvas explained
Business model and business plan
[…] Challenge: Can You Tell a Business Model from a Business Plan? (timberry.bplans.com) […]
Thank you for posting these videos. When I first began writing business plan in toronto, they seemed quite complex. It wasn’t until I was able to compartmentalize the details into broader segments or topics, that it was simple to understand. I feel the second video really does a great job of illustrating the basics behind the business model.
Once again, thank you for sharing! By any chance are you planning any speaking engagements for Toronto in the near future?
Akeem Young, Business Development Strategist
Engage Worldwide Inc.