Business Model Canvas vs Business Plan?
The Kauffman Foundation, in collaboration with the founders of Strategyzer – the makers of the best-selling book Business Model Generation and the inventors of the breakthrough Business Model Canvas methodology – developed the animated, short videos to boost executives’ and entrepreneurs’ chances of success in their search for a scalable and profitable business model.
The video series teaches entrepreneurs how to go from having a business idea to pitching a validated business model and value proposition. You’ll learn about the Business Model Canvas: a tool that will help you design business models that have a competitive edge, leverage opportunities in your environment and test your ideas through experiments with customers.
Entrepreneurship.org/learning-paths/business-model-canvas (For the video series)
https://www.strategyzer.com/business-models-the-toolkit-to-design-a-disruptive-company
How are a Business Plan and Business model different?
From:
While related, business plans, business cases, business models, and business model canvases are very different things that serve different purposes. What to use when?
A business plan
A business plan is a detailed description of how you plan to start and grow your business. Typically it is a plan for a time period of 1 to 3 years. It details what the organization plans to do. That is, what the cost structure will be, the expected revenues, and how you will go about the execution. As you can imagine, writing such a plan requires a lot of data. Data often does not exist when the service is novel or when you are just starting the innovation journey for a new offering. Nevertheless, most investors ask for a business model before they are willing to invest in a start-up. For some useful dos and don’ts, including templates, go here.
A business case
A business case explains why it is worth exploring an opportunity. It is the justification for a proposed project. Making the case why spending money figuring out how to address a problem or going after an opportunity makes sense. This terminology is more used in project management than entrepreneurship. In sum, it explains why the organization should fund the adventure. Our hands-on approach will help you create a business case for your project in just a few weeks. More than you want to know about writing a business case can be found here.
A Business model
A business model explains how a new service or company is going to generate revenues and serve its customers. There are various standard models, such as a fee-for-service, razor-blade, or subscription models, see here for nine commonly used models. Combinations of these models are of course possible too. Please beware that the business model is not cast in stone. It takes most start-ups about two years, to figure out which business model works best for them.
A business model canvas
A business model canvas is an abbreviated one-page overview that provides a snapshot picture of a start-up. It sketches who the start-up targets as clients. What the benefits are of the provided solution. How customers will be reached etc. All these topics are subject to change in the early phases of a start-up. Therefore, the canvas is meant as a snapshot. A picture that requires periodic if not constant updating. More on the business model canvas, including templates, can be found on Strategyzer.com.
Throwing business plans out of the window?
In the entrepreneurship community, business plans are no longer in vogue, because most start-ups lack the data to write an accurate and truthful plan. Instead, entrepreneurs are now using the business model canvas, especially in the early stages of their start-up. The canvas is part of the lean start-up methodology. Following this methodology, a start-up is a series of experiments to collect data and figure out what actually works. The business model canvas helps to ensure these experiments are aligned. It also ensures all the necessary components that will be needed to run the business are being addressed.
Keep?
Not so fast I would say. Companies have a huge advantage over start-ups. They have experience. Many of the innovation projects a company undertakes are variations on a theme. If that is the case for your project, new product, or new service, you should dig up the data on these previous projects and undertakings. Those experiences provide useful information that will help you plan the future and write your business plan. After all, if the data is there, you should use it to learn valuable lessons from the past. Stand on the shoulders of giants if you can!
Toss?
However, if the project entails venturing into novel territory, then it will be a waste of time to write a business plan. You will lack the data necessary to make meaningful projections about the future.
The business model canvas is most suited to address changes and uncertainties, however, it does not provide sufficient information to get approval for your project from investors.
And, of Course, there is more to research and learn what is appropriate for your situation.
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Compiled, Written, Edited and Shared by:
David Bruce Savage - Pointer Consulting
Founder and leader of the Inventor’s Education Forum in Jacksonville Florida
Pointing the way for Inventors and Product Developers with Connections, Resources and Advice.
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