Other Tips Besides Digital Marketing : The Difference Between A Business Plan And A Business Model
A business plan and a business model are two different
things. Though they are complimentary tools they are
different. This is important because you would not
want to use the wrong tool for the job. Carpenters and other
artisans know very well the importance of the right tool for the
right job in contributing to the quality of the job and its timeous
finish. If you attempt to use a spanner where you should be
using a screw drive you can even damage your work. This is
exactly one of the reasons why many start-ups fail. Its not
always about capital but also about
knowledge. People use wrong tools for the job because they
do not know the difference between the tools ! You
shall know (knowledge) the truth and the truth
will set you free.
So what is the difference between a business model and a
business plan ? A business model is simply a discussion
about how you make money. So if you sell
farm produce like tomatoes, you will be buying tomatoes from
a farmer at some costs, you will be adding value to the
tomatoes like packaging at another cost and
you will be selling it at a price. That should end up making you
a profit on the sale of those tomatoes. That is your business
model. Multiply that by 500 tomato
packets and now you got a business.
A business model is quite different from a business plan. A
business plan is a goal with a series of steps to achieving that
particular goal. But as an early stage company your goal
might be to uncover or refine your business model. So in your
business model you might have a suspicion that selling a
certain grade of tomatoes to a certain customer segment with
a certain set of marketing plans is going to work. Your
business plan will then say over the next three months you
will have these particular tests to determine what grade, what
customer segment and what marketing plan should really be
used.
So both a business model and a business plan are important
but you must know how they operate differently. To do justice
to this topic I should also draw your attention to the Business
Model Canvas because it is the latest idea that is being used
successfully at leading entrepreneurship centers like Silicon
Valley USA (home to Facebook, Google, Apple) and in
business studies and entrepreneurship degree programs at
leading universities across the world.
A business model canvas is a template for developing new or
documenting existing business models. It has nine parts as
follows;
(1) Value proposition
What are you building and for who ?
(2) Customers
Who are my customers and why do they buy ?
(3) Channels
How does your product get from your company to your customers ?
(4) Customer Relationships
How do you get, keep and grow customers ?
(5) Revenue model
How does the company make money from each customer segment ?
(6) Key resources
What are the most important assets required to make the business model work ?
(7) Key partnerships
Who are the key partners and suppliers needed to make the business model work ?
(8) Key activities
What is it you need to be really good at ?
(9) Cost structure
What are the costs to operate the business model ?
You do not need to reinvent the wheel in order to become a
successful entrepreneur. Using these ideas by other people
proven to work can be a game changer for your small
business and your life.
Consider also opportunity costs. This simply mean you will
loose more by trying to figure out everything by yourself
instead of adopting brilliant ideas by experts. It can be wiser
to even hire one to help you so that you can achieve good
results timeously. The business model canvas has nine areas
that have questions. Are you able to answer them all by
yourself ? I kind of doubt it.
Lets consider therefore number (4) Customer Relationships –
How do you get, keep and grow customers ? What ever you
are producing or creating you do need someone to buy it
because your enterprise needs income to cover its costs and
pay off its debts so that it survives. Your marketing must be
best and the best marketing must include digital or online
marketing like social media marketing, search engine
optimization etc. You might be focusing more on the opposite
which is offline marketing like flyers, banners, print
newspapers but please consider the following comparison it
might be eye opening.
You may ask but I do not know about digital marketing ?
Fortunately, now there is a way for you to use digital
marketing in your new business even if you do not have the
knowledge of digital marketing yet.
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