Sometimes my clients ask for a business plan but aren’t yet seeking funding or aren’t beyond the ideation/conceptualization stage. This is where a business model is helpful.
“I have an idea for a product/service. How do I monetize?”
At this stage, you don’t need to exactly know the details of marketing strategy, distribution channels, location, etc. unless it is crucial to your business model.
At the ideation/conceptualization stage, you need to know who your market (i.e. customers) is, growth rate of the industry, who your competitors are, the major costs to bring your product/service to market, and any other major hurdles (e.g. regulatory) that might be a barrier to entry. Business models are 30,000 foot views for seeing if the business is feasible and viable. Why decide on the color the napkin if you’re not sure if there’ll be a wedding, right?
Once we have a good understanding of IF the business is likely to succeed, then we can investigate further and do a feasibility study. Feasibility studies go even deeper to include details of the operation, marketing, product/service, and other pertinent information specific to the industry/sector that your company will occupy. Feasibility studies can be easily adjusted into a business plan by adding revenue projections and investment asks.
Business model should not be confused with revenue model. Revenue model is a piece of the business model. In other words, how the company generates revenue: production, subscription, advertising, commission, etc.