How a business plan differs from a project

What it is: O A business model is a collection of analyzes and reflections on the very concept of a company. It is he who indicates whether this idea will be valid and whether all parts will correctly complement each other, forming an effective system. Already a business plan is a document that shows what is necessary for the success of a company.

Why Do It: A well-designed business model helps you understand how a business can operate and sustain itself, as well as its market strategy and its differentials. Have a Business Model, of course, provides insight into how the heart of the company works and strategically evaluates how to improve it.

Before starting any venture, it is important to develop a model and business plan. But do you know the difference between them? For many people, both mean the same thing, but in reality they are completely different. To ensure the success of your business, it's important to better understand what each is and how they can affect your business.

Difference between model and business plan

A business plan is a collection of information, calculations and analyzes that demonstrate the viability of a business. That is, this document should contain a description of how the business will be built, what steps, what investments are needed, detailed costs, steps, incomes, etc.

This document is the one that will be provided to a potential investor to confirm the viability and potential of your business. It is with you that you will reduce risk, better plan every step and investment, and fix problems before you get your idea out of paper.

Since they are related, these two tools need to be configured. Thus, if the business model is changed, the Business Plan will also need to be redesigned to fit the new ideals of the company.

What should be included in the business model

The business model must include information, calculations and analysis that define the product or service provided to customers, how the company deals with suppliers, employees, customers, etc., and how it will benefit.

Thus, developing a business model is the first step in preparing a company and precedes the creation of a Business Plan. Among the many tools and points that need to be analyzed when creating a business model, we highlight some of them that deserve attention:

If you have an understanding of how your business model works, you should submit it for an assessment that will analyze the quality of your company. Factors to consider include the scalability of your business, the ability to generate income, originality, the cost of change, the ability to generate income, and other characteristics.

Another interesting point to evaluate is how the company generates money. Checking the type of revenue stream, as well as its sources, allows you to use averages and determine the strategic values ​​that can be directed towards the future plans of the company.

The cost structure defines the internal costs required to support your business and the frequency of those costs. With these subtotals defined, you can estimate how much it costs to keep your business running and thus take on the averages needed to maintain business stability and profit.

The difference between a business plan and a business model

Investment planning is the key to success for any investor. At the same time, it is important that planning is comprehensive and covers all aspects of the proposed activity.

The difference between a business plan and an investment project is that the former often acts as one of the documents of the latter, that is, its integral part. Very often, when implementing a small or short-term investment project, only a business plan can be drawn up.

Similarities and Differences

In general, the difference between an investment project and a business plan is that an investment project includes a large-scale substantiation of a wide range of tasks, including:

  • commercial ;
  • industrial ;
  • economic ;
  • social, etc.
  • On the other hand, a business plan can be viewed as a program of activities for a project that is in operation or is just being developed.

    The business plan contains:

    • the mission of the organization;
    • the goals of the organization;
    • the objectives of the organization;
    • the resources of the organization;
    • task executors;
    • key areas of work.

    The most important task of a business plan is planning and forecasting the further development of the organization in a specific time period. And now let's try to consider both documents in more detail.

    Investment project

    An investment project is a complex set of measures aimed at creating new products, services, modernizing or reconstructing operating industries in order to obtain economic benefits.

    The main goal of an investment project is to obtain investments. An investment project is a document developed at the stage of the project concept, that is, at the very first stage of the project's life cycle. Often in an investment project, a detailed plan of financial investments is not made, but a certain reserve of financial resources is simply laid down, on average in the amount of 10% -20% of the cost of the entire project.

    At the heart of business management is the development of a strategy, its adaptation to the specifics of the company and implementation. A company's strategy is a comprehensive management plan that should strengthen the company's position in the market and ensure coordination of efforts, attract and satisfy customers, compete successfully and achieve global goals. The process of developing a strategy is based on a thorough study of all possible directions of development and activity and consists in choosing a general direction, markets to be mastered, needs to be served, methods of competition, attracted resources and business models. In other words, strategy means a company's choice of development path, markets, methods of competition and business.

    The company's strategy is a combination of methods of competition and business organization, aimed at customer satisfaction and the achievement of organizational goals.

    Strategy is the actions that the company plans to take in response to changes or in anticipation of changes in the external environment, customers and competitors.

    Strategy Levels

    Strategy is a rather vague concept. Generally, any kind of thinking with “broad scope” is called strategy. This is actually a more complicated thing. There are three levels of strategy to consider:

    Pulling the hat of a strategist on your head, you must ask yourself: “At what level do I intend to think - functional, corporate or business strategy?”.

    Functional strategy

    Functional strategy is those operational methods and “value-adding” activities that management chooses for their business.

    Business Strategy

    Business strategy is a battle plan with competitors in the industry in which the company is currently operating. Business strategy is at a higher level than functional strategy, but there is undoubtedly a link between how a company operates and how it competes.

    Corporate Strategy

    Corporate strategy is a complete set of business opportunities.

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