I at times wonder and ask people about their business, “How do you make money?”
It is an important question because you simply can’t survive if your business can’t make money. In my last business venture we had an incomplete business plan and a shaky business model.
Definitions from Wikipedia
1. Business Plan-is a summary of how a business or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company’s business model for the venture in question. Business plans are developed for ventures in both business and government.
2.Business Model–a conceptual tool that contains a big set of elements and their relationships and allows expressing the business logic of a specific firm. It is a description of the value a company offers to one or several segments of customers and of the architecture of the firm and its network of partners for creating, marketing, and delivering this value and relationship capital, to generate profitable and sustainable revenue streams.
Ways to Make Money
There are many ways a business can make money. Whether it be advertising, selling products and services, giving marketing advice, or whatever there are many angles a business can take. There can be two companies that provide the same service and with a similiar business plan, but have a totally different approach of making money. I believe that the business model is more important than the plan because you simply can’t stay alive as a company, if money can’t be made from the business it is really a hobby or a business. There are no problems with hobbies, all of us have them, it just puts everything into perspective when you decide to start a business.
Is This the Only Way?
To be honest no and yes, there have been many successful companies that didn’t have a business plan, but some way of generating money (business model). However, it is best to have something defined and go with the flow of starting a business.