Business Plan & A Business Model. Is there a difference ?

Hey everybody this is Cain Ndhlovu the Chief Executive Officer of Sunrise Start-up Solutions and creator of the three part free training series for you on Start-up Growth Mastermind. If you haven’t registered for this flagship and amazing training yet please click here in order to do so.

Welcome ! Welcome ! Welcome ! I hope I find you well !

I help start-ups, entrepreneurs, sales and marketing professionals, CEOs, founders etc to grow their businesses through outsourced online marketing services and to also upgrade their online marketing skills through training programs so that they become able to make significant achievements in their lives sooner rather than later.

Today I am very excited about presenting to you my bonus article. Being a citizen of a country with record high unemployment starting your own business is a prerequisite for survival. But starting a business isn’t easy. Our education prepared us to be employees not employers.

So many Zimbabweans have been in a dilemma. As a result many have been forced to become expatriates seeking greener pastures. But jobs are becoming scarce in the countries of refuge too so they have to return home where they must start a business to survive.

I have been in Zimbabwe all my life. I have been through the difficulties associated with starting a business from scratch. Erosion in value of the local currency reduced my savings to zero. But here I am I still stand.

This is what I call the furnace of struggle. A furnace through great heat purifies. So my struggles purified me into a better entrepreneur. They were my school in which I was educated. Indeed I learnt a lot and my graduation was in form of the ability to start and run my own enterprise called Sunrise Start-up Solutions.

Looking in retrospect I can boldly declare that I have attended the best business school ever. Why ? I am yet to hear of a business studies student whether from Cambridge or Harvard who starts a business on graduation. This is why Mark Zuckerberg and Bill Gates left university to start own businesses.

Sharing my experiential knowledge about entrepreneurship in Zimbabwe is very important for the country because it will help plug loopholes for country men whose education prepared them for employment. It can do a lot more things like helping to shorten the learning curve.

In 2012 I participated in a Global Entrepreneurship Week challenge sponsored by YETT and the Swedish Embassy. Amongst the things they required for qualification was a business plan. This wasn’t my first time to hear about a business plan. It however, was a confirmation of the fact that a business plan was a topical issue in entrepreneurship.

In 2012 everyone with interests in starting a business talked about a business plan. They still do even now because a business plan is important. Another phrase that was also a buzz word is business model. This also is important.

Later I realized that despite the popularity of these two few knew the difference between them and how they were complimentary. I decided to do a research. My findings are what you must know as an entrepreneur. During my research I discovered that what a business plan and business model mean to a corporation like Econet Wireless listed on the stock exchange is different to what these two mean to a start-up still operating from a garage. Lets learn more.

Business Plan And A Business Model. Is There A difference ?

It is a fact that the majority of start-ups fail. Due to the scarcity of capital some start-ups are set up through sacrifice. Some people even borrow children’s school fees in the belief that the money can be returned once the business become prosperous. In their calculation the risk is worth taking. Unfortunately, what they think is not what happens. This is one of the reasons why many are scared away from starting own businesses.

However, some of the causes of failure are not understanding fully certain aspects of starting a business. If you look at successful football managers one can see that there is correlation between success and a comprehensive understanding of the game. Likewise, if you want to be the master of your own game you must have a thorough understanding of all its key aspects. Imagine you want to hire a carpenter to repair your door. Can you hire someone who doesn’t know the difference between a claw hummer and a screw driver ? You wont do it. Right ?

A business model and a business plan are key aspects of the game. One of the reasons why many fail is that they do not know the difference between the two. A business plan and a business model are two different things. Though they are complimentary tools they are different.

Business Model

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.

Business Plan

On the other hand a business plan is quite different. 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.

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