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Business models before business plans

    • 1 posts
    October 31, 2011 3:51 AM EDT

    Strategic plans and business plans are frequently the first topic addressed with businesses, especially small businesses.  What’s your plan?  What template should I use?  What financial data should be included?  Etc. Etc. Etc.

    While I strongly believe that strategic plans are crucial to small business success, its even more critical to have a business model in place and validated before creating a strategic plan.  If fact, if you create your business model and validate it with customers from the segments you are planning to market to, the plan will flow easily from the model.

    What is a business model?  It is the model that defines how your business will deliver value to your customers.  It also defines how your business will capture value (revenue) by delivering value to your customers.  A typical model covers nine discrete, but intrinsically related areas that clearly present how value is delivered and captured.  Its possible to insert numbers into the model to generate revenue models and profit models under different scenarios as well.

    A critical step is taking the created business model and validating the assumptions with potential customers.  You need to “get out of the building” and talk to prospects and get their feedback.  You can also use surveys, trials, etc.  Once your model is validated, you know that you have a product or service that is likely to succeed and you’ve also collected tips that will help you in improving and marketing the product/service too.

    Now you can get down to writing that plan, knowing that its based upon solid thought and is likely to succeed.

    Free small business strategy guide at:  http://thecogentcoach.com/Strategy/Strategy.php