Business Plans

Is this the best approach for today


Business plans were once the most important tool when embarking on a new venture. Today, they’re barely worth the paper they’re written on.


Is there a difference?

Business Plans versus Business Models

Is there a difference?

Business Plans versus Business Models

According to the Startup Owner's Manual, "the difference between a static business plan and a dynamic model could well be the difference between flameout and success."  But what is the difference between a business plan and a business model?

A business plan is a document, usually created for the sake of investors, that allows entrepreneurs to list hypotheses about their business including:

  • The size of an opportunity
  • Target customers
  • Distribution channels
  • Demand creation
  • Revenue, expenses and profit

While a business plan is needed in order to get financing, the content is based purely on speculation.  That's why it shouldn't be used as a playbook or operational document on how to run a business.  In most instances, the business plan does not survive the first customer visit.

Unlike the list format of a business plan, a business model is a diagram that looks at the flow between the different building blocks for a startup.  A business model is flexible and dynamic - it adjusts with the changes in the major components of your company.  It also allows for the various assumptions to be tested in the market at minimal cost, before drafting an action plan in the form of a business plan.