
Creating a Business Model and Business Plan
Aug 24, 2017 · 2 min read
Starting a business is intimidating not only because there is so much paperwork, but because your business model and plan cannot be the same as freelance — picking up random work in no particular order is not an effective way to conduct business for a growing startup.
To clarify for the purposes of this article, a business model includes plans for how you will make a profit. A business plan is a specific document that outlines your business roadmap and how you will develop and grow your business over time. It also projects financial performance — for a new business, this could be low, but don’t worry about that.
Business Models
- Make sure your business model includes an explanation for how your product or service fulfills a need in the market. Afterall, your business cannot make money if it doesn’t have something of value to offer to customers. Understanding what your product has to offer also has the benefit of creating focus for your business in understanding the problem you want to solve. It also allows you to define other aspects of your business model — such as who is your target customer?
- Make sure your product or service can be sold for a high profit margin. For example, you may be passionate about making the best potholder ever. But if it’s really expensive to make and cannot be sold for much higher than that to compete with other potholders, it may not be a good product to pursue.
Business Plans
- A business plan is a really specific document outlining your business. The first thing to do is figure out what sections you want to include. For example, you probably want an executive summary, a market analysis, an organizational chart, and more. Demonstrating how you will make money is important, as business plans are the kind of document that you may show to potential investors.
- Make sure this document is formal and well-written. This is a professional document that you will show to everyone and it needs to make a good impression.
