Business Models For Dummies
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A business model plan combines the components of a business plan with business model analysis. This document augments or substitutes for the traditional business plan and has the following basic layout:

  • Background: Follow the traditional structure of the business plan for this section.

  • Breakdown of the business model into the crucial areas:

    • Market attractiveness

    • Unique value proposition

    • Profit model

    • Sales performance

    • Ongoing competitive advantage

    • Innovation factor

    • Avoidance of pitfalls

    • Graceful exit from the business

  • Operational overview: Follow the traditional structure of the business plan for this section.

  • Financial analysis, including proformas: Follow the same format as a traditional business plan with additional emphasis on justifying your sales projections rather than the “we will sell this much because I said so” method.

  • Risk analysis: Some risk analysis is covered in various sections of the business model analysis. Risks related to marketing are covered in the marketability sections. Competitive risks are covered in the competitive advantage section and so forth.

    Eliminate the duplication and focus on presenting a brief overview of the general market risks — such as economic recession, government intervention, and so on — rather than the company-specific risks. The company-specific risks are addressed by the business model.

  • Business model score: This section is optional. To add weight to your self-evaluation of the business model, you can have a Certified Business Model Analyst score your model on a scale of 0 to 100.

Traditional business plans gloss over important aspects of the business model. The figure labeled A shows the minimal inclusion of the business model in the business plan.


As you can see in the figure labeled B, the business model garners much greater attention in a business model plan. The graph shows the increased emphasis on the business model in the business plan.

The advantage of a business model plan over a business plan alone is the increased focus on how the business will create profitable revenue streams and the decreased focus on how the business will operate when it’s generating revenue. If you focus on what matters — profitable revenue — the rest tends to take care of itself.

You can download a sample business model plan at the Business Model Institute website.

About This Article

This article is from the book:

About the book author:

Jim Muehlhausen is the founder and President of the Business Model Institute as well as consultant and speaker to businesses large and small. He is the author of The 51 Fatal Business Errors and How to Avoid Them and a frequent contributor to Entrepreneur, Businessweek, and dozens of other publications.

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