We earn commissions if you shop through the links below.  Read more

Business Plan vs. Business Model

Back to Business Plans

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on February 19, 2023 Updated on December 11, 2023

Business Plan vs. Business Model

If you’re starting a business , you have a business model, whether you know it or not. A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money. 

A business plan , on the other hand, is the business owner’s plan to put that model into action. It’s much more detailed and includes financial projections, objectives, management decisions and further steps. 

Still unsure? Have no fear, this handy guide lays out the differences between a business plan and a business model so that you know exactly what you and your business need to succeed.  

  • Business Model

In simple terms, a business model is how the business will make money. Selling ice to eskimos, for instance, is a bad business model. Selling team jerseys to rabbit sports fans, on the other hand, is a solid business model. 

The components of a business model are best illustrated by Swiss entrepreneur Alexander Osterwalder’s Business Model Canvas, which is a visual representation with nine sections. Four sections represent internal elements of a business that enable it to function and are related to costs. 

Four other sections represent external elements that enable the business to bring in revenue and are related to the customer. The ninth section is the business’ value proposition. 

image

Value Proposition

The value proposition is at the heart of your business model. Your value proposition, which should be no more than two sentences long, needs to answer the following questions:

  • What are you offering
  • Whose problem does it solve
  • What problem does it solve
  • What benefits does it provide
  • How is it better than competitor products

Key Activities

Key activities are all the activities required to run the business and create the proposed value. These can include product development and distribution and any other necessary activities.  

Cost Structure

The cost structure is a sum of all you’ll need to spend to make the business function. It’s the costs you’ll incur to run the business and bring in revenue. 

Key Partners

Key partners are external partners involved in delivering value, such as vendors and suppliers, or maybe a bank. 

Key Resources

Key resources are any necessary practical elements that come with a cost. These might include your office space, employees, and equipment like computers. 

Revenue Streams

Revenue streams are the ways in which you receive payment from customers. You may have more than one revenue stream, such as via direct sales and subscriptions.

Customer Segments

Customer segments are the groups of people to whom you provide goods or services. In other words, your target market. Maybe your products are aimed at younger women, for instance, or older men. Whatever your target segments, you should build customer personas of each group so that you know how and where to reach them with your marketing.

Customer Relationships

Customer relationships refer to how you interact with your customers to deliver value. Your interactions may be online only, by phone, in-person, or all of the above. 

Channels refer to how you reach your customers, such as social media, internet search, direct sales calls, trade shows, and so on. 

To Summarize

If you’re just starting a business, the Business Model Canvas is a great way to understand and examine your business model. One thing to remember is that the elements you put in your Canvas will be based on assumptions that will at some point be tested in the market and adapted as needed. 

Another thing to remember is that you do not need to do a Business Model Canvas. It’s merely an exercise that can help provide insight into your business model.  

  • Business Plan

A business plan is a detailed document that describes how the business will function in all facets. The key is in the “plan” part of the name. It will specify how you’ll launch your business, gain customers, operate your company, and make money. A business plan, however, is not a static document . 

The initial version will be based largely on assumptions, supported by research. As you run your business you’ll constantly learn what works and what does not and make endless tweaks to your plan.

Thus, creating a business plan is not a one-time action – it’s a dynamic and continuous process of crafting and adapting your vision and strategy. 

You’ll present your business plan to potential backers, though in recent years some investors have begun to embrace the Business Model Canvas as a tool to assess a business’ potential. 

A strong business plan includes eight essential components .

1. Executive Summary 

The executive summary is the initial section of your business plan , written last, summarizing its key points. Crucial for capturing investors’ and lenders’ interest, it underscores your business’s uniqueness and potential for success. It’s vital to keep it concise, engaging, and no more than two pages.

2. Company Description/Overview

This section provides a history of your company, including its inception, milestones, and achievements. It features both mission (short-term goals and driving force) and vision statements (long-term growth aspirations). Objectives, such as product development timelines or hiring goals, outline specific, short-term targets for the business.

3. Products or Services Offered

Detail the product or service you’re offering, its uniqueness, and its solution to market problems. Explain its source or development process and your sales strategy, including pricing and distribution channels. Essentially, this section outlines what you’re selling and your revenue model.

4. Market Analysis 

  • Industry Analysis : Research your industry’s growth rate, market size, trends, and future predictions. Identify your company’s niche or sub-industry and discuss adapting to industry changes.
  • Competitor Analysis : Examine main competitors , their unique selling points, and weaknesses. Highlight your competitive advantages and strategies for maintaining them.
  • Target Market Analysis : Define your target market , their demographics, needs, and wants. Discuss how and where you’ll reach them and the potential for market shifts based on customer feedback.
  • SWOT Analysis : Break down your company’s strengths, weaknesses, opportunities, and threats. Detail your unique attributes, potential challenges, market opportunities, and external risks, along with strategies to address them.

5. Marketing and Sales Strategies

  • Marketing and Advertising Plan : Use insights from your target market analysis to decide advertising channels, emphasizing platforms that best reach your audience, like TikTok over Instagram. Develop a concise value proposition to be central to all marketing, detailing how your product addresses specific needs.
  • Sales Strategy and Tactics : Define where and how you’ll sell, such as online, in-store, or through direct sales calls. Sales tactics should highlight the customer’s needs, presenting your solution without overly aggressive promotion.
  • Pricing Strategy : Decide on pricing based on market positioning, whether you aim to be a discount or luxury option. Ensure prices cover costs and yield profit, and position your product in a manner that aligns with the chosen price range. Justify your chosen pricing strategy in this section.

6. Operations and Management 

  • Operational Plan : Outline daily, weekly, and monthly operations, specifying roles, tasks, and quality assurance methods. Include supplier details and order schedules, ensuring clarity on key business functions and responsibilities.
  • Technology Plan : For tech-based products, detail the development plan, milestones, and staffing. For non-tech companies, describe the technology tools and software you’ll employ for business efficiency.
  • Management and Organizational Structure : Define who’s in charge, their roles, and their backgrounds. Discuss your management strategy and forecast the development of your organizational hierarchy.
  • Personnel Plan : List current and future hires, specifying their roles and the qualifications necessary for each position. Highlight the significance of each role in the business’s operations.

7. Financial Plan 

  • Startup Costs : Clearly detail every anticipated cost before starting operations. This will be vital for understanding the initial investment required to get the business off the ground.
  • Sales Projections : Estimate monthly sales for the first year, with an annual forecast for the next two years.
  • Profit and Loss Statement : An overview of revenue minus costs, resulting in either a profit or loss.
  • Cash Flow Statement : Provides clarity on the business’s liquidity by showing cash inflows and outflows over a specific period.
  • Balance Sheet : Displays the company’s net worth by detailing its assets and liabilities.
  • Break-even Analysis : Understand at which point revenues will cover costs, helping to predict when the business will start making a profit.
  • Funding Requirements and Sources : Enumerate the required capital and the sources of this funding. This should also include the purpose for which these funds will be used at different stages.
  • Key Performance Indicators (KPIs) : Identify the metrics vital for measuring the company’s performance. Use these indicators to spot challenges, understand where improvements can be made, and pivot strategies as necessary. Ensure that each KPI aligns with the business’s objectives and offers actionable insights for growth.

Remember, although the financial section might seem daunting, it is pivotal for understanding the economic feasibility of your business. Proper financial planning helps in making informed decisions, attracting investors, and ensuring long-term sustainability. Don’t hesitate to engage financial experts or utilize tools and software to ensure accuracy and comprehensiveness in this section.

8. Appendices

The appendices section of a business plan is a repository for detailed information too extensive for the main document. This can include resumes of key personnel, full market research data, legal documents, and product designs or mockups. By placing this data in the appendices, it keeps the main plan concise while allowing stakeholders access to deeper insights when needed. Always ensure each item is clearly labeled and referenced at the relevant point in the main document.

As you can see, business models and business plans have some similarities, but in the main they are quite different. Your business model explains the foundational concept behind your business, while a business plan lays out how you’ll put that model into action and build a business. 

When you’re starting a business, it’s best to have both, as the work of getting them done involves learning about your business from every angle. The knowledge you’ll gain is likely to be invaluable, and could even be the difference between success and failure. 

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Subscribe to Our Newsletter

Featured resources.

Crafting the Perfect Business Plan: A Deep Dive with Upmetrics’ Vinay Kevadiya

Crafting the Perfect Business Plan: A Deep Dive with Upmetrics’ Vinay Kevadiya

Carolyn Young

Published on October 13, 2023

In the first segment of our conversation with Vinay Kevadiya, the visionary behind Upmetrics, we explored the platform’s origins and itsunique ...

LivePlan Software Review

LivePlan Software Review

Published on September 15, 2023

When you’re starting a business, a business plan is essential whether you’re going to obtain financing or not. Creating a business plan helpsyou ...

What to Include in Your Business Plan Appendix?

What to Include in Your Business Plan Appendix?

Published on September 13, 2023

Launching a business involves countless tasks, and one of the crucial early hurdles is writing a business plan. Many entrepreneurs who aren’tlooki ...

No thanks, I don't want to stay up to date on industry trends and news.

Business Plan Vs. Business Model

  • Small Business
  • Business Planning & Strategy
  • Business Plans
  • ')" data-event="social share" data-info="Pinterest" aria-label="Share on Pinterest">
  • ')" data-event="social share" data-info="Reddit" aria-label="Share on Reddit">
  • ')" data-event="social share" data-info="Flipboard" aria-label="Share on Flipboard">

What Is a Business Plan Template?

Why is planning an important step in starting a business, examples of liquor store business plans.

  • The Differences Between a Business Plan & Business Model
  • Components of a Business Model

A business plan describes what your company does. This written document states your company’s operational and financial goals for the future and how it proposes to meet them. A business model describes how and where you choose to operate your company. The model you choose is detailed in your business plan.

Business Plan

A plan explains why you’re in business. You might want to provide high-quality, affordable administrative services to small businesses. Or maybe you plan to operate a cafe that sells exotic coffee and tea blends to lunchtime patrons in a busy commercial district.

Plans often begin with an executive summary and mission statement. The summary is an abbreviated description of what your business does and how you plan to make it successful. Business owners include an executive summary in their plans to give executives, investors and other interested parties a snapshot of their company. A one- or two-sentence mission statement describes your business philosophy.

Your company’s name, type, location and starting date make up one section of the business plan. Another section outlines your credentials and work experience; business owners sometimes attach their résumés for more detail. The business plan lists your products or services and a strategy for marketing them.

Business owners looking for loans and other funding sources must include financial information in their plans. Lenders and potential investors review current and previous statements to see how you’ve handled your business’s finances in the past. They want to know how much funding you need, why you need it and how you plan to repay a loan if you seek a loan rather than investment capital.

Business Model

How and where you run your company is your business model. A franchise is one business model. An online store, home goods retailer and home-based business are other models. How you deliver your product or service to customers also defines your business model. Shipping goods directly to your customers is one delivery method. Shipping your goods from a warehouse is another common delivery mode.

The U.S. Small Business Administration refers to the business model as a company’s foundation and the business plan as its structure. The foundation, or business model, is the original idea for your business and a general description of how it functions. The structure, or business plan, elaborates on the details of your business idea.

Considerations

Business plans and business models are dynamic rather than static. The Small Business Administration recommends that you periodically review and revise them. For instance, your home-based business might have grown so large that you need to rent retail space. Or you might need a new marketing plan to increase sales.

  • "Grow Your Handmade Business: How to Envision, Develop, and Sustain a Successful Creative Business": Kari Chapin
  • U.S. Small Business Administration: How to Write a Business Plan
  • U.S. Small Business Administration: Time for a Business "Extreme Makeover"?

Valerie Bolden-Barrett is a writer, editor and communication consultant specializing in best business practices, public policy, personal finance and career development. She is a former senior editor of national business publications covering management and finance, employment law, human resources, career development, and workplace issues and trends.

Related Articles

Business plan vs. business strategy, how to describe a small retail business & its merchandise, how to abbreviate my url, different strategic management models, what is the purpose of a business model, how to write ebusiness plans, what is the relationship between the business plan, marketing plan & sales plan, the relationship between the business model and strategy, how to change the default owner name for microsoft excel, most popular.

  • 1 Business Plan Vs. Business Strategy
  • 2 How to Describe a Small Retail Business & Its Merchandise
  • 3 How to Abbreviate My URL
  • 4 Different Strategic Management Models

How Companies Make Money

  • Search Search Please fill out this field.

What Is a Business Model?

Understanding business models, evaluating successful business models, how to create a business model.

  • Business Model FAQs

The Bottom Line

Learn to understand a company's profit-making plan

business model and business plan are not synonymous terms

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

business model and business plan are not synonymous terms

Investopedia / Laura Porter

The term business model refers to a company's plan for making a profit . It identifies the products or services the business plans to sell, its identified target market , and any anticipated expenses . Business models are important for both new and established businesses. They help new, developing companies attract investment, recruit talent, and motivate management and staff.

Established businesses should regularly update their business model or they'll fail to anticipate trends and challenges ahead. Business models also help investors evaluate companies that interest them and employees understand the future of a company they may aspire to join.

Key Takeaways

  • A business model is a company's core strategy for profitably doing business.
  • Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.
  • There are dozens of types of business models including retailers, manufacturers, fee-for-service, or freemium providers.
  • The two levers of a business model are pricing and costs.
  • When evaluating a business model as an investor, consider whether the product being offered matches a true need in the market.

A business model is a high-level plan for profitably operating a business in a specific marketplace. A primary component of the business model is the value proposition . This is a description of the goods or services that a company offers and why they are desirable to customers or clients, ideally stated in a way that differentiates the product or service from its competitors.

A new enterprise's business model should also cover projected startup costs and financing sources, the target customer base for the business, marketing strategy , a review of the competition, and projections of revenues and expenses. The plan may also define opportunities in which the business can partner with other established companies. For example, the business model for an advertising business may identify benefits from an arrangement for referrals to and from a printing company.

Successful businesses have business models that allow them to fulfill client needs at a competitive price and a sustainable cost. Over time, many businesses revise their business models from time to time to reflect changing business environments and market demands .

When evaluating a company as a possible investment, the investor should find out exactly how it makes its money. This means looking through the company's business model. Admittedly, the business model may not tell you everything about a company's prospects. But the investor who understands the business model can make better sense of the financial data.

A common mistake many companies make when they create their business models is to underestimate the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until its revenues exceed its expenses.

One way analysts and investors evaluate the success of a business model is by looking at the company's gross profit . Gross profit is a company's total revenue minus the cost of goods sold (COGS). Comparing a company's gross profit to that of its main competitor or its industry sheds light on the efficiency and effectiveness of its business model. Gross profit alone can be misleading, however. Analysts also want to see cash flow or net income . That is gross profit minus operating expenses and is an indication of just how much real profit the business is generating.

The two primary levers of a company's business model are pricing and costs. A company can raise prices, and it can find inventory at reduced costs. Both actions increase gross profit. Many analysts consider gross profit to be more important in evaluating a business plan. A good gross profit suggests a sound business plan. If expenses are out of control, the management team could be at fault, and the problems are correctable. As this suggests, many analysts believe that companies that run on the best business models can run themselves.

When evaluating a company as a possible investment, find out exactly how it makes its money (not just what it sells but how it sells it). That's the company's business model.

Types of Business Models

There are as many types of business models as there are types of business. For instance, direct sales, franchising , advertising-based, and brick-and-mortar stores are all examples of traditional business models. There are hybrid models as well, such as businesses that combine internet retail with brick-and-mortar stores or with sporting organizations like the NBA .

Below are some common types of business models; note that the examples given may fall into multiple categories.

One of the more common business models most people interact with regularly is the retailer model. A retailer is the last entity along a supply chain. They often buy finished goods from manufacturers or distributors and interface directly with customers.

Example: Costco Wholesale

Manufacturer

A manufacturer is responsible for sourcing raw materials and producing finished products by leveraging internal labor, machinery, and equipment. A manufacturer may make custom goods or highly replicated, mass produced products. A manufacturer can also sell goods to distributors, retailers, or directly to customers.

Example: Ford Motor Company

Fee-for-Service

Instead of selling products, fee-for-service business models are centered around labor and providing services. A fee-for-service business model may charge by an hourly rate or a fixed cost for a specific agreement. Fee-for-service companies are often specialized, offering insight that may not be common knowledge or may require specific training.

Example: DLA Piper LLP

Subscription

Subscription-based business models strive to attract clients in the hopes of luring them into long-time, loyal patrons. This is done by offering a product that requires ongoing payment, usually in return for a fixed duration of benefit. Though largely offered by digital companies for access to software, subscription business models are also popular for physical goods such as monthly reoccurring agriculture/produce subscription box deliveries.

Example: Spotify

Freemium business models attract customers by introducing them to basic, limited-scope products. Then, with the client using their service, the company attempts to convert them to a more premium, advance product that requires payment. Although a customer may theoretically stay on freemium forever, a company tries to show the benefit of what becoming an upgraded member can hold.

Example: LinkedIn/LinkedIn Premium

Some companies can reside within multiple business model types at the same time for the same product. For example, Spotify (a subscription-based model) also offers a free version and a premium version.

If a company is concerned about the cost of attracting a single customer, it may attempt to bundle products to sell multiple goods to a single client. Bundling capitalizes on existing customers by attempting to sell them different products. This can be incentivized by offering pricing discounts for buying multiple products.

Example: AT&T

Marketplace

Marketplaces are somewhat straight-forward: in exchange for hosting a platform for business to be conducted, the marketplace receives compensation. Although transactions could occur without a marketplace, this business model attempts to make transacting easier, safer, and faster.

Example: eBay

Affiliate business models are based on marketing and the broad reach of a specific entity or person's platform. Companies pay an entity to promote a good, and that entity often receives compensation in exchange for their promotion. That compensation may be a fixed payment, a percentage of sales derived from their promotion, or both.

Example: social media influencers such as Lele Pons, Zach King, or Chiara Ferragni.

Razor Blade

Aptly named after the product that invented the model, this business model aims to sell a durable product below cost to then generate high-margin sales of a disposable component of that product. Also referred to as the "razor and blade model", razor blade companies may give away expensive blade handles with the premise that consumers need to continually buy razor blades in the long run.

Example: HP (printers and ink)

"Tying" is an illegal razor blade model strategy that requires the purchase of an unrelated good prior to being able to buy a different (and often required) good. For example, imagine Gillette released a line of lotion and required all customers to buy three bottles before they were allowed to purchase disposable razor blades.

Reverse Razor Blade

Instead of relying on high-margin companion products, a reverse razor blade business model tries to sell a high-margin product upfront. Then, to use the product, low or free companion products are provided. This model aims to promote that upfront sale, as further use of the product is not highly profitable.

Example: Apple (iPhones + applications)

The franchise business model leverages existing business plans to expand and reproduce a company at a different location. Often food, hardware, or fitness companies, franchisers work with incoming franchisees to finance the business, promote the new location, and oversee operations. In return, the franchisor receives a percentage of earnings from the franchisee.

Example: Domino's Pizza

Pay-As-You-Go

Instead of charging a fixed fee, some companies may implement a pay-as-you-go business model where the amount charged depends on how much of the product or service was used. The company may charge a fixed fee for offering the service in addition to an amount that changes each month based on what was consumed.

Example: Utility companies

A brokerage business model connects buyers and sellers without directly selling a good themselves. Brokerage companies often receive a percentage of the amount paid when a deal is finalized. Most common in real estate, brokers are also prominent in construction/development or freight.

Example: ReMax

There is no "one size fits all" when making a business model. Different professionals may suggest taking different steps when creating a business and planning your business model. Here are some broad steps one can take to create their plan:

  • Identify your audience. Most business model plans will start with either defining the problem or identifying your audience and target market . A strong business model will understand who you are trying to target so you can craft your product, messaging, and approach to connecting with that audience.
  • Define the problem. In addition to understanding your audience, you must know what problem you are trying to solve. A hardware company sells products for home repairs. A restaurant feeds the community. Without a problem or a need, your business may struggle to find its footing if there isn't a demand for your services or products.
  • Understand your offerings. With your audience and problem in mind, consider what you are able to offer. What products are you interested in selling, and how does your expertise match that product? In this stage of the business model, the product is tweaked to adapt to what the market needs and what you're able to provide.
  • Document your needs. With your product selected, consider the hurdles your company will face. This includes product-specific challenges as well as operational difficulties. Make sure to document each of these needs to assess whether you are ready to launch in the future.
  • Find key partners. Most businesses will leverage other partners in driving company success. For example, a wedding planner may forge relationships with venues, caterers, florists, and tailors to enhance their offering. For manufacturers, consider who will provide your materials and how critical your relationship with that provider will be.
  • Set monetization solutions. Until now, we haven't talked about how your company will make money. A business model isn't complete until it identifies how it will make money. This includes selecting the strategy or strategies above in determining your business model type. This might have been a type you had in mind but after reviewing your clients needs, a different type might now make more sense.
  • Test your model. When your full plan is in place, perform test surveys or soft launches. Ask how people would feel paying your prices for your services. Offer discounts to new customers in exchange for reviews and feedback. You can always adjust your business model, but you should always consider leveraging direct feedback from the market when doing so.

Instead of reinventing the wheel, consider what competing companies are doing and how you can position yourself in the market. You may be able to easily spot gaps in the business model of others.

Criticism of Business Models

Joan Magretta, the former editor of the Harvard Business Review, suggests there are two critical factors in sizing up business models. When business models don't work, she states, it's because the story doesn't make sense and/or the numbers just don't add up to profits. The airline industry is a good place to look to find a business model that stopped making sense. It includes companies that have suffered heavy losses and even bankruptcy .

For years, major carriers such as American Airlines, Delta, and Continental built their businesses around a hub-and-spoke structure , in which all flights were routed through a handful of major airports. By ensuring that most seats were filled most of the time, the business model produced big profits.

However, a competing business model arose that made the strength of the major carriers a burden. Carriers like Southwest and JetBlue shuttled planes between smaller airports at a lower cost. They avoided some of the operational inefficiencies of the hub-and-spoke model while forcing labor costs down. That allowed them to cut prices, increasing demand for short flights between cities.

As these newer competitors drew more customers away, the old carriers were left to support their large, extended networks with fewer passengers. The problem became even worse when traffic fell sharply following the September 11 terrorist attacks in 2001 . To fill seats, these airlines had to offer more discounts at even deeper levels. The hub-and-spoke business model no longer made sense.

Example of Business Models

Consider the vast portfolio of Microsoft. Over the past several decades, the company has expanded its product line across digital services, software, gaming, and more. Various business models, all within Microsoft, include but are not limited to:

  • Productivity and Business Processes: Microsoft offers subscriptions to Office products and LinkedIn. These subscriptions may be based off product usage (i.e. the amount of data being uploaded to SharePoint).
  • Intelligent Cloud: Microsoft offers server products and cloud services for a subscription. This also provide services and consulting.
  • More Personal Computing: Microsoft sells physically manufactured products such as Surface, PC components, and Xbox hardware. Residual Xbox sales include content, services, subscriptions, royalties, and advertising revenue.

A business model is a strategic plan of how a company will make money. The model describes the way a business will take its product, offer it to the market, and drive sales. A business model determines what products make sense for a company to sell, how it wants to promote its products, what type of people it should try to cater to, and what revenue streams it may expect.

What Is an Example of a Business Model?

Best Buy, Target, and Walmart are some of the largest examples of retail companies. These companies acquire goods from manufacturers or distributors to sell directly to the public. Retailers interface with their clients and sell goods, though retails may or may not make the actual goods they sell.

What Are the Main Types of Business Models?

Retailers and manufacturers are among the primary types of business models. Manufacturers product their own goods and may or may not sell them directly to the public. Meanwhile, retails buy goods to later resell to the public.

How Do I Build a Business Model?

There are many steps to building a business model, and there is no single consistent process among business experts. In general, a business model should identify your customers, understand the problem you are trying to solve, select a business model type to determine how your clients will buy your product, and determine the ways your company will make money. It is also important to periodically review your business model; once you've launched, feel free to evaluate your plan and adjust your target audience, product line, or pricing as needed.

A company isn't just an entity that sells goods. It's an ecosystem that must have a plan in plan on who to sell to, what to sell, what to charge, and what value it is creating. A business model describes what an organization does to systematically create long-term value for its customers. After building a business model, a company should have stronger direction on how it wants to operate and what its financial future appears to be.

Harvard Business Review. " Why Business Models Matter ."

Bureau of Transportation Statistics. " Airline Travel Since 9/11 ."

Microsoft. " Annual Report 2023 ."

  • How Companies Make Money 1 of 23
  • How IBM Makes Money 2 of 23
  • How Micron Makes Money 3 of 23
  • How Snapchat Makes Money 4 of 23
  • How Spotify Makes Money 5 of 23
  • How X (Formerly Twitter) Makes Money 6 of 23
  • How Uber Makes Money 7 of 23
  • How Alibaba Makes Money 8 of 23
  • How Amazon Makes Money 9 of 23
  • How Lockheed Martin Makes Money 10 of 23
  • How Nike Makes Money 11 of 23
  • How Starbucks Makes Money 12 of 23
  • How Bank of America Makes Money: Consumer Banking 13 of 23
  • How Berkshire Hathaway Makes Money 14 of 23
  • How BlackRock Makes Money 15 of 23
  • How JPMorgan Makes Money 16 of 23
  • How Square (Block) Makes Money 17 of 23
  • How Visa Makes Money 18 of 23
  • How Does Robinhood Make Money? 19 of 23
  • How Acorns Makes Money 20 of 23
  • How Chime Makes Money 21 of 23
  • How Credit Karma Makes Money 22 of 23
  • How Reddit Makes Money 23 of 23

business model and business plan are not synonymous terms

  • Terms of Service
  • Editorial Policy
  • Privacy Policy
  • Your Privacy Choices

Business Model vs. Business Plan

business-model-vs.-business-plan

Business plan and business model are two completely different notions. What's the difference between the two?

Difference between business plan and business model

The business model is the mechanism through which the company generates its profits, while the business plan is a document presenting the company's strategy and expected financial performance for the years to come.

As you can see, the business model is at the center of the business plan.

The business model describes how the company is positioned within its industry's value chain, and how it organises its relations with its suppliers, clients, and partners in order to generate profits.

The business plan translates this positioning in a series of strategic actions and quantifies their financial impact.

Examples of business models

Here are some examples of the most common business models:

  • Advertising
  • Subscription
  • Accessories

Let's dive in to these examples in greater details.

The business model of production

It's the most basic business model, the company sales the products and services it produces.

In order for that business model to be viable, the company needs to generate enough sales to cover its production, distribution, and storage costs.

The advertising business model

Here the goal is to generate revenues by selling advertising space.

On the Internet this model can be segmented based on the type of advertising:

  • CPM (cost per thousand): the advertiser pays the publisher a fixed amount for 1,000 impressions.
  • CPC (cost per click): the advertiser pays the publisher every time someone clicks on the ad. The amount paid can be fixed or established through an auction process.
  • CPA (cost per action): the advertiser pays every time a specific action is executed. An action can be a sale or a lead for example. The amount can be fixed or set as a percentage of the action value.

This business model is already slightly more complex than the production one given that the company first need to invest in order to create a large audience before it can attract advertisers.

Business model based on commission (or distribution)

The company acts as an intermediary between the seller and the buyer and takes a cut of every sell it helps generate.

This business model is generally less risky than the two previous ones (and therefore less profitable) as the level of investment required can be minimal.

The subscription business model

The company receives revenues from its subscribers at regular intervals.

This business model has one clear advantage: the company knows in advance how much revenues it is going to generate. The flip side is that it often takes several months to recover the subscriber acquisition costs leading to a lower cash generation at the beginning of the cycle.

The freemium business model

The company offers two versions of its product:

  • A free version with a limited set of features which goals are either to raise awareness about the product or to create a network effect.
  • And a paid version, comprising more features and benefits, from which it can generate enough margin to cover the cost of the free users.

The keys to success with this business model are to be able to generate huge network effect (example: LinkedIn) and/or to convert a sufficient number of free users into paid customers (example: Trello).

The accessories business model

The company offers one product for free or at a price close to its production cost and generates a profit on the sale of accessories.

The classic example of this business model is the sale of razor blades: razors are sold for nothing, but you have to continually buy expensive blades to be able to use them.

This list of business models is far from being exhaustive, and if you have questions regarding a business model in particular feel free to contact us.

What tools can I use to find my business model?

The business model of most activities is straighforward - for example if you own a restaurant (production model) or a real estate agency (commission model) - but sometimes there multiple ways of monetizing a product or service and you need to be able to brainstorm to find the best business model.

A typical example of companies faced with multiple business model options are software publishers. A software can be monetized using the advertising, subscription, or freemium model. The choice of business model will have an impact on the go to market strategy and funding requirements expressed in the business plan.

A good tool to brainstorm multiple business models with your team is the business model canvas.

With the business model canvas you:

  • Start with your your customer segments (who you are selling to)
  • Infer from this your customer relationships (are you selling via an automated self-service system, or offering a bespoke service where you get to know each of your customers)
  • Infer from this your revenue streams (how you monetize each customer segment)
  • Infer from this your distribution channels (how you reach those customers based on the type of relationships)
  • Infer from this your value propositions (what messaging is used in each distribution channel)
  • Infer from this your key activities, resources and partners (what do you need to make the go to market model work in terms of staff, equipment, suppliers, etc.)
  • Infer from this your cost structure (how much do these resources and activities cost)
  • Finally check that the business model works (costs < revenues)

The business model canvas is a very simple, yet powerful, brainstorming tool. If you're interested in trying it out, you can download a blank canvas here .

What tool can I use to write my business plan?

Once you have decided on your business model, you can start writing your business plan.

A good solution for this is to use online business plan software . There are several advantages in doing so:

  • You are guided through the writing process by detailed instructions and examples for each part of the plan 
  • You can be inspired by already-written business plan templates and examples
  • You can easily make your financial forecast by letting the software take care of the financial calculations for you, without errors
  • You get a professional document, formatted and ready to be sent to your bank or investors
  • It’s easy to track your forecast against the actual financial performance of your company, and to keep your plan up to date and relevant

If you're interested in using this type of solution, you can try our software for free by signing up here .

Business plan and business model: recommended readings

To get more information about business model we recommend reading Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers from Alexander Osterwalder.

For more information on business planning, you can have a look at our series on how to write a business plan . You can also download our free business plan template.

Also on The Business Plan Shop

  • What is a business plan and how to create one?
  • How investors analyse a business plan
  • How to write a business plan to get a bank loan?

Guillaume Le Brouster

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

Create a convincing business plan

Assess the profitability of your business idea and create a persuasive business plan to pitch to investors

The Business Plan Shop | Business Plan Software

500,000+ entrepreneurs have already tried our solution - why not join them?

Not ready to try our on-line tool ? Learn more about our solution here

Need some inspiration for your business plan?

Subscribe to The Business Plan Shop and gain access to our business plan template library.

business plan template library

Need a professional business plan? Discover our solution

Write your business plan with ease!

Business Plan Software

It's easy to create a professional business plan with The Business Plan Shop

Want to find out more before you try? Learn more about our solution here

Business Terms Glossary

' src=

68 min. read

Updated February 23, 2024

To start and run a business , you often need to understand business terms that may not be well-defined in a standard dictionary.

Our glossary of business terms provides definitions for common terminology and acronyms in business plans , accounting, finance, funding , and other aspects of small business.

Accounts Payable (AP)

Accounts payable (AP) are bills to be paid as part of the normal course of business.

This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive goods or services from a vendor, receive an invoice, and until that invoice is paid the amount is recorded as part of “accounts payable.”

Accounts Receivable (AR)

Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.

The standard procedure in business-to-business sales is that when goods or services are delivered the come with an invoice, which is to be paid later. Business customers expect to be invoiced and to pay later. The money involved goes onto the seller’s books as accounts receivable, and onto the buyer’s books as accounts payable.

Accrual-Based Accounting

Accrual-based accounting is standard business accounting, which assumes there will be accounts payable (Bills to be paid as part of the normal course of business) and/or sales on credit (sales made on account; shipments against invoices to be paid later), as opposed to cash basis only.

For example, most businesses have regular bills such as rent, utilities, and often inventory purchase which are not paid for at the exact moment of purchase, but are invoiced. Most businesses will also not be able to collect on all of their sales immediately in cash, but must bill the purchaser or wait for payment on at least some percentage of their sales (the exact percentage varies by industry).

Accumulated Depreciation

Total accumulated depreciation reduces the formal accounting value (called book value) of assets. Each month’s accumulated balance is the same as last month’s balance plus this month’s depreciation.

An acid test is a business’s short-term assets minus accounts receivable and inventory, divided by short-term liabilities.

This tests a company’s ability to meet its immediate cash requirements. It is one of the more common business ratios used by financial analysts.

Brought to you by

LivePlan Logo

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

Acquisition Costs

Acquisition costs are the incremental costs involved in obtaining a new customer.

Adaptive Firm

An adaptive firm is an organization that can respond to and address changes in their market, their environment, and/or their industry to better position themselves for survival and profitability.

To be adaptive, it’s smart to look at your business critically—and a tool like a SWOT analysis can be helpful here.

Adventure Capital

Adventure capital is capital needed in the earliest stages of the venture’s creation before the product or service is available to be provided.

Advertising Opportunity

A product or service may generate additional revenue through advertising if there is benefit from creating additional awareness, communicating differentiating attributes, hidden qualities, or benefits. Optimizing the opportunity may involve leveraging strong emotional buying motives and potential benefits.

An agent is a business entity that negotiates, purchases, and/or sells, but does not take title to the goods.

Asset Turnover

Asset turnover is sales divided by total assets . Important for comparison over time and to other companies of the same industry. This is a standard business ratio.

Assets are property that a business owns, including cash and receivables, inventory, and so on.

Assets are any possessions that have value in an exchange. The more formal definition is the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts. What most people understand as business assets are cash and investments, accounts receivable, inventory, office equipment, plant and equipment, and so on.

Assets can be long-term or short-term, and the distinction between these two categories might be whether they last three years, five years, 10 years, or whatever; normally the accountants decide for each company and what’s important is consistency. The government also has a say in defining assets, because it has to do with tax treatment; when you buy a piece of equipment, if you call that purchase an expense then you can deduct it from taxable income.

If you call it an asset you can’t deduct it, but you can list it on your financial statement among the assets. The tax code controls how businesses decide to categorize spendings into assets or expenses.

Back End (Websites)

Back end and front end describe website program interfaces relative to the user.

The front end of your website is how it looks and how a user interacts with it: the graphic design and HTML portion—some people call this the user interface or UI.

In contrast, the back end handles the dynamic parts of the site, that your website visitors generally don’t see or interact with such as a newsletter, an administration page, a registration database, a contact page or more complicated web applications.

Your back end interfaces with your UI and makes your website work.

Balance Sheet

The balance sheet is one of three essential parts that form the bedrock of a company’s financial statements: cash flow, balance sheet, and income statement.

The balance sheet is a snapshot of your company’s assets, liabilities, and owner’s equity at a specific point in time. It shows what a company owns (assets), what it owes (liabilities), and how much owners and shareholders have invested (equity).

A balance sheet always has to balance: Assets = Liabilities + Equity

For more, read our article here on Bplans that gives an overview of what a balance sheet is .

A benchmark is a standard or guideline used to compare some aspect of a business to some objective or external standard measure.

For example, when a banker compares a business’ profitability to standard financial ratios for that type of business, the process is sometimes referred to as “benchmarking.”

Industry benchmarks can tell you whether you are matching the profit margins of your peers, keeping too much inventory on hand, or getting paid faster or slower than others.

For more on small business financials, see The Key Elements of the Financial Plan .

Your company’s brand includes your business name, logo, sign, symbol, design, or a combination of all used to differentiate your goods or services from competitors.

Brand Equity

Brand equity is the added value a brand name identity brings to a product or service beyond the functional benefits provided. For example, Apple benefits from the fact that its brand name is a household name in smartphones and computers. Apple built a brand that seems fundamentally different from all other computers and smartphones.

Brand Extension Strategy

Brand extension strategy is the practice of using a current brand name to enter a new or different product class. An example of this is the ride-sharing company Uber’s foray into scooters and bike share.

Brand Recognition

Brand recognition refers to a customer’s ability to identify a brand based on its name, logo, colors, or other aspects of a marketing campaign.

Break-Even Analysis

A break-even analysis is used to assess the expected profitability of a company or a single product. It helps you determine at what point revenues and expenditures are equal.

Break-even is usually expressed in terms of the number of units you’ll need to sell or how much revenue you’ll need to generate.

The break-even analysis uses three assumptions to determine a break-even point: fixed costs, variable costs, and unit price. Fixed costs and variable costs are both included in this glossary, and unit price is the average revenue per unit of sales.

The formula for the break-even point in sales amount is: = fixed costs/(1-(Unit Variable Cost/Unit Price)).

The break-even analysis is often confused with the payback period (also in this glossary), because many people interpret breaking even as paying back the initial investment.

However, this is not what the break-even analysis actually does. Despite the common and more general use of the term “break even,” the financial analysis has an exact definition as explained above.

One important disadvantage of the break-even analysis is that it requires estimating a single per-unit variable cost, and a single per-unit price or revenue, for the entire business. That is a hard concept to estimate in a normal business that has a variety of products or services to sell.

Another problem that comes up with break-even is its preference for talking about sales and variable cost of sales in units. Many businesses, especially service businesses, don’t think of sales in units, but rather as sales in money. In those cases, the break-even analysis should think of the dollar as the unit, and state variable costs per unit as variable costs per dollar of sales.

Break-Even Point

The break-even point is the output of a standard break-even analysis. The unit sales volumes or actual sales amounts a company needs to equal its running expense rate and not lose or make money in a given month.

The formula for the break-even point in sales amount is: = Regular running costs/(1-(Unit Variable Cost/Unit Price)).

This should not be confused with the recovering initial investment through the regular operation of a business. That concept, often confused with break-even, is called the payback period.

For more detail on the subject, read: What Is Break Even Analysis?

A broker is an intermediary that serves as a go-between for the buyer or seller.

Check out our latest articles on law and taxes for more information on the legal side of setting up and managing your business.

Bundling is the practice of marketing two or more product or service items in a single package with one price.

Burden Rate

Burden rate refers to personnel burden, the sum of employer costs over and above salaries (including employer taxes, benefits, and so on).

Business Mission

A business mission is, also called a mission statement, is a brief description of an organization’s purpose with reference to its customers, products or services, markets, philosophy, and technology.

For more on your business mission, see How to Write a Mission Statement With 10 Examples

Business Plan

A business plan is a strategic roadmap for any new or growing business or startup venture. Formal business plans are generally required by bank lenders, angel investors, and venture capitalists if you’re seeking funding to grow your company. 

A business plan captures the opportunity see for your company: it describes your product or service and your business model, the target market you’ll serve. 

It also includes details on how you’ll execute your plan: how you’ll price and market your solution, and your financial projections.

Check out our full guide covering the basics of business plans .

Buy-Sell Agreement

A buy-sell agreement is an agreement designed to address situations in which one or more of the entrepreneurs want to sell their interest in the venture.

For more on exiting your business, check out our article on selling your business .

C Corporation (C Corp)

The C corporation is the classic legal entity of the vast majority of successful companies in the United States.

Most lawyers would agree that the C corporation is the structure that provides the best shielding from personal liability for owners, and provides the best non-tax benefits. This is a separate legal entity, different from its owners, which pays its own taxes.

Most lawyers would also probably agree that for a company that has ambitions of raising major investment capital and eventually going public, the C corporation is the standard legal entity.

Compound Average Growth Rate (CAGR)

Compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance if you reinvest profits every year.

The standard formula for compound average growth rate is: (last number/first number)^(1/periods)-1

Cannibalization

Cannibalization is the undesirable tradeoff where sales of a new product or service decrease sales from existing products or services and minimize or detract from the total revenue.

Capital Assets

Capital assets are long-term assets, also known as fixed assets.

These terms are interchangeable. Assets are generally divided into short-term and long-term assets, the distinction depending on how long they last.

Usually, the difference between short-term and long term is a matter of accounting and financial policy. Five years is probably the most frequent division point, meaning that assets that depreciate over more than five years are long-term assets. Ten years and three years are also common.

Capital Expenditure

Spending on capital assets (also called plant and equipment, fixed assets, or long-term assets).

Capital Input

Capital input can also be called investment, or new investment. It is new money being invested in the business, not as loans or repayment of loans, but as money invested in ownership.

This is also money at risk. It will grow in value if the business prospers, and decline in value if the business declines. This is closely related to the concept of paid-in capital, on the balance sheet table. 

Paid-in capital is the amount of money actually invested in the business as money, checks written by investors. Paid-in capital increases only when there is new investment. It is different from retained earnings.

Cash normally means bills and coins, as in paying in cash.

However, the term is used in a business plan to represent the bank balance, or checking account balance.

For more on cash, check out our article on forecasting cash flow .

Cash basis means an accounting system that doesn’t use the standard accrual accounting. 

It records only cash receipts and cash spending, without assuming sales on credit (sales made on account; shipments against invoices to be paid later) or accounts payable (bills to be paid as part of the normal course of business).

ash flow measures how much money is moving into and out of your business during a specific period of time.

Businesses bring in money through sales, returns on investments, and from loans and investments—that’s cash flowing into the business.

And businesses spend money on supplies and services, as well as utilities, taxes, loan payments, and other bills—that’s cash flowing out.

Cash flow is measured by comparing how much money flows into a business during a certain period of time compared to how much money flows out of that business during that same period. Usually, cash flow is measured over the course of a month or a quarter.

Cash Flow Budget

A cash flow budget is a budget that provides an overview of cash inflows and outflows during a specified period of time.

This is often called the cash flow, or the cash budget. Just as cash flow is one of the most critical elements of business, the cash flow projection or table is one of the most critical elements of a business plan.

Cash Flow Statement

The cash flow statement is one of the three main financial statements (along with the income statement and balance sheet) that shows the financial position and health of a business.

The cash flow statement shows actual cash inflows and outflows of a business over a specified period of time, usually a month or a quarter. The statement then compares cash received to cash spending to determine if a business is cash flow negative or positive.

Cash sales are sales made in cash, with credit cards, or by check. The opposite of sales on credit (sales made on account; shipments against invoices to be paid later).

Cash Spending

Cash spending is money a business spends when it pays obligations immediately instead of letting them wait for a few days first.

Central Driving Forces Model

The central driving forces model is an entrepreneurial-based model that considers the positives and negatives of three areas of the venture; founder(s), opportunities, and resources. 

The model then evaluates these areas regarding the “fits and gaps” that indicate correlating strengths or weaknesses for the venture. The CDF model also considers industry and market information in the overall analysis.

Channel Conflicts

Channel conflicts refer to a situation where one or more channel members believe another channel member is engaged in behavior that is preventing it from achieving its goals. Channel conflict most often relates to pricing issues.

Channels of Distribution

Channels of distribution are the system where customers are provided access to an organization’s products or services.

Click-Through Rate

Click-through rate is a way of measuring the success of an online advertising campaign.

A click-through rate (CTR) is obtained by dividing the number of users who clicked on an ad on a webpage by the number of times the ad was delivered (impressions).

For example, if your banner ad was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%.

Co-Branding

Co-branding is the pairing of two manufacturer’s brand names on a single product or service.

Cost of Goods Sold

The cost of goods sold is traditionally the costs of materials and production of the goods a business sells.

For a manufacturing company this is materials, labor, and factory overhead. For a retail shop it would be what it pays to buy the goods that it sells to its customers.

For service businesses, that don’t sell goods, the same concept is normally called “cost of sales,” which shouldn’t be confused with “sales and marketing expenses.” The cost of sales in this case is directly analogous to cost of goods sold. 

For a consulting company, for example, the cost of sales would be the compensation paid to the consultants plus costs of research, photocopying, and production of reports and presentations.

In standard accounting, costs of sales or costs of goods sold are subtracted from sales to calculate gross margin. 

These costs are distinguished from operating expenses, because gross profit is gross margin less operating expenses. Costs are not expenses.

Collection Period (Days)

A collection period is the average number of days between delivering an invoice and receiving the money.

The formula is: =(Accounts_receivable_balance*360)/(Sales_on_credit*12)

In business, a commission is the compensation paid to the person or entity based on the sale of a product; commonly calculated on a percentage basis.

The most frequent commission formula is gross margin multiplied by the commission percentage.

Commission Percent

A commission percent is an assumed percentage used to calculate commission expense as the product of commission percent multiplied by sales, gross margin, or related sales items.

Community Interest Company (CIC)

A CIC is a new type of limited company in the United Kingdom, designed for social enterprises that want to use their profits and assets for the public good.

CICs will be easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community. This is achieved by a “community interest test” and “asset lock”, which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes.

Registration of a company as a CIC has to be approved by the regulator who also has a continuing monitoring and enforcement role.

Competitive Advantage

A competitive advantage is strategic development where customers will choose a firm’s product or service over its competitors based on significantly more favorable perceptions or offerings.

Competitive Analysis

Competitive analysis means assessing and analyzing the comparative strengths and weaknesses of competitors; may include their current and potential product and service development and marketing strategies.

Competitive Entry Wedges

Competitive entry wedges are strategic competitive advantages and justification for entering an established market or activity that provides recognizable and known value.

The four competitive entry wedges include:

  • New product or service
  • Parallel competition
  • Franchise entry

Completed Store Transactions

Completed store transactions refer to a conversion value measuring the number of purchases made on the website.

Concentrated Target Marketing

Concentrated target marketing is a process that occurs when a single target market segment is pursued.

Contribution

Contribution can have different meanings in different context.

When the contribution is applied to a product or product line, it means the difference between total sales revenue and total variable costs, or, on a per-unit basis, the difference between unit selling and the unit variable cost. It may be expressed in percentage terms (contribution margin) or dollar terms (contribution per unit).

Contribution Margin

Contribution is frequently expressed as contribution margin for a whole company or across a group or product line, in which case it can be taken as gross margin less sales and marketing expenses.

Conversion Rate

A conversion rate is the percentage of unique website visitors who take a desired action upon visiting the website.

The desired action may be submitting a sales lead, making a purchase, viewing a key page of the site, downloading a file, or some other measurable action.

Core Marketing Strategy

Core marketing strategy is a statement that communicates the predominant reason to buy to a specific target market.

Corporation

Corporations are either the standard C corporation, or the small business S corporation.

The C corporation is the classic legal entity of most successful companies in the United States. The S corporation is used for family companies and smaller ownership groups.

The clearest distinction from C is that the S corporation’s profits or losses go straight through to the S corporation’s owners, without being taxed separately first. 

In practical terms, this means that the corporation’s owners can take their profits home without first paying the corporation’s separate tax on profits. Profits are taxed once for the S owner, and twice for the C owner. The C corporation doesn’t send its profits home to its owners as much as the S corporation because it usually has different goals and objectives. It often wants to grow and go public, or it already is public.

In most states, an S corporation is owned by a limited number (25 is a common maximum) of private owners, and corporations can’t hold stock in S corporations, just individuals. Corporations can switch from C to S and back again, but not often. The IRS has strict rules for when and how those switches are made. 

You’ll almost always want to have your CPA and, in some cases, your attorney guide you through the legal requirements for switching.

Corridor Principal

The corridor principle is the principle where an entrepreneurial venture may find that it has significantly changed its focus from the initial concept of the venture as it has continually responded and adapted to its market and the desire to optimize profitability potential.

Cost of Sales

Cost of sales refers to the costs associated with producing the sales.

In a standard manufacturing or distribution company, this is the same as the cost of the goods sold. In a services company, this is more likely to be personnel costs for people delivering the service or subcontracting costs.

This term is commonly used interchangeably with “cost of goods sold,” particularly for a manufacturing, retail, distribution, or other product-based company. In these cases, it is traditionally the costs of materials and production of the goods a business sells.

For a manufacturing company, this is materials, labor, and factory overhead. 

For a retail shop, it would be what it pays to buy the goods that it sells to its customers. 

For service businesses that don’t sell goods, the concept is normally called “cost of sales,” which shouldn’t be confused with “sales and marketing expenses.” The cost of sales, in this case, is directly analogous to cost of goods sold.

In standard accounting, costs of sales or costs of goods sold are subtracted from sales to calculate gross margin. These costs are distinguished from operating expenses, because gross profit is gross margin less operating expenses. Costs are not expenses.

For more on costs of goods sold, see our article on the LivePlan blog: What Are Direct Costs?

Cross Elasticity of Demand

Cross elasticity of demand is the change in the quantity demanded of one product or service, impacting the change in demand for another product or service.

Current Assets

Current assets are the same as short-term assets.

Current Debt

Current debt refers to short-term debt and short-term liabilities.

Current Liabilities

Current liabilities refer to short-term debt and short-term liabilities.

Doing Business As (DBA)

DBA stands for “doing business as ,” which is a company name, also commonly called a “fictitious business name.”

When a sole proprietor operates a company using any name except his or her own given name, then the DBA or fictitious business name registration establishes the legal ownership to satisfy banks, local authorities, and customers.

So when you start the Acme Restaurant, unless you are named Acme, you need your DBA to open a bank account in that name, pay employees, and do business.

You can usually obtain this registration through the county government, and the cost is no more than a small registration fee plus a required newspaper ad, for a total of less than $100 in most states.

Debt and Equity

Debt and equity is the sum of liabilities and capital. This should always be equal to total assets.

Depreciation

Depreciation is an accounting and tax concept used to estimate the loss of value of assets over time. For example, cars depreciate with use.

Differentiated Target Marketing

Differentiated target marketing is a process that occurs when an organization simultaneously pursues several different market segments, usually with a different strategy for each.

Differentiation

Differentiation is an approach to create a competitive advantage based on obtaining a significant value difference that customers will appreciate and be willing to pay for, and which ideally will increase their loyalty as a result.

Direct Cost of Sales

Direct cost of sales is a shortcut for cost of goods sold: traditionally, the costs of materials and production of the goods a business sells, or the costs of fulfilling a service for a service business.

Direct Mail Marketing

Direct mail marketing is a form of direct marketing that involves sending information through a mail process, physical or electronic, to potential customers.

Direct Marketing

Direct marketing refers to any method of distribution that gives the customer access to an organization’s products and services without intermediaries; also, any communication from the producer that communicates with a target market to generate a revenue producing response.

A directory is a computer term related to the operating system on IBM and compatible computers. Disk storage space is divided into directories.

Distinctive Competency

A distinctive competency is an organization’s strengths or qualities including skills, technologies, or resources that distinguish it from competitors to provide superior and unique customer value and, hopefully, is difficult to imitate.

Diversification

Diversification is a product-market strategy that involves the development or acquisition of offerings new to the organization and/or the introduction of those offerings to the target markets not previously served by the organization.

Dividends refers to money distributed to the owners of a business as profits.

Dual Distribution

Dual distribution is the practice of simultaneously distributing products or services through two or more marketing channels that may or may not compete for similar buyers.

Early Adopters

Early adopters are one type of adopter in Everett Rogers’ diffusion of innovations framework that describes buyers that follow “innovators” rather than be the first to purchase.

Early Majority

An early majority is one type of adopter in Everett Rogers’ diffusion of innovations framework that describes those interested in new technology that wait to purchase until these innovations are proven to perform to the expected standard.

Also called income or profits, earnings are the famous “bottom line”: sales less costs of sales and expenses.

Earnings Before Interest and Taxes (EBIT)

EBIT refers to earnings before interest and taxes.

Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)

Earnings before interest, taxes, depreciation and amortization (or EBITDA) is equal to the gross margin (the difference between total sales revenue and total direct cost of sales) minus total operating expenses (tax-deductible expenses incurred in conducting normal business operations, such as wages and salaries, rent, and so on), plus any depreciation (The loss of value of assets over time) and amortization.

This is similar to earnings before interest and taxes (EBIT). The difference between the two is that EBIT subtracts all expenses, including depreciation, as an expense, and EBITDA subtracts all expenses except depreciation and amortization.

Economies of Scale

Economies of scale refers to the benefit that larger production volumes allow fixed costs to be spread over more units lowering the average unit costs and offering a competitive price and margin advantage.

Producing in large volume often generates economies of scale. The per-unit cost of something goes down with volume because vendors charge less per unit for larger orders, and often production techniques and facilities cost less per unit as volume increases. Fixed costs are spread over larger volume.

Effective Demand

Effective demand is when prospective buyers have the willingness and ability to purchase an organization’s offerings.

Effective Tax Rate

The effective tax rate is a comparison of final tax payments compared to actual profits. Usually the effective tax rate is somewhat less than the nominal tax rate because of deductions, credits, etc.

Entrepreneur in Heat (EIH)

The term “entrepreneur in heat” describes an entrepreneur that continues to develop new products and services beyond what the venture can support and inadvertently may diminish the focus and effectiveness of the activities supporting the venture’s primary revenue streams.

Entrepreneur

An entrepreneur is someone who starts a new business venture; someone who recognizes and pursues opportunities others may not see as clearly, and finds the resources necessary to accomplish his or her goals.

Equity is business ownership—capital. Equity can be calculated as the difference between assets and liabilities.

Equity Financing

Equity financing refers to the sales of some portion of ownership in a venture to gain additional capital for startup.

Evaluating Ideas and Opportunities

Evaluating ideas and opportunities is the process of considering ideas versus opportunities, and then screening those opportunities using objective criteria as well as personal criteria.

Everett Rogers

Everett Rogers is an author who studied and published work on the diffusion of innovation.

Exclusive Distribution

Exclusive distribution is a distribution strategy whereby a producer sells its products or services in only one retail outlet in a specific geographical area.

For the purposes of business accounting, expenses are deductible against taxable income. Common expenses are rent, salaries, advertising, travel, and so on.

Questions arise because some businesses have trouble distinguishing between expenses and purchase of assets, especially with development expenses. When your business purchases office equipment, if you call that an expense then you can deduct that amount from taxable income, so it reduces taxes.

Experience Curve

The experience curve is a visual representation, often based on a function of time, from exposure to a process that offers greater information and results in enhanced efficiency and operations advantage.

Features, Advantages, and Benefits (FAB)

A FAB analysis explores the features, advantages, and benefits of a product or service offering.

Marketing plans need to understand these concepts in order to develop effective marketing programs. People often confuse features and benefits; for example, in an automobile, air bags are a feature that produces the benefit of greater safety. 

Advantages fall in between, and features become advantages that offer benefits to the end user.

Failure Rule, Common Causes

Entrepreneurial ventures most often fail due to one or more of these four issues:

  • Inadequate sales (39%)
  • Competitive weaknesses (21%)
  • Excessive operating expenses (11%)
  • Uncollected receivables (9%)

Failure Rule, Exceptions to the Rule

Entrepreneurial ventures most often fail due to one (or more) of the following common issues: inadequate sales, competitive weaknesses, excessive operating expenses, and uncollected receivables.

Exceptions to the failure rule include:

  • High potential ventures
  • Threshold concept
  • Promise of growth
  • Venture capital backing

Fatal 2% Rule

The concept of the fatal 2% rule is that if a venture can just get “2%” of total market share it will be successful.

This percentage can be unattainable based on the approach, limited resources, and/or structure of the industry.

Fighting Brand Strategy

A fighting brand strategy is adding a new brand to confront competitive brands in an established product category.

First Mover

The first mover is a company that attempts to gain an unchallengeable, privileged market position by being the first to establish itself in a given market.

First Mover Advantage

Key first mover advantages include:

  • Reputation effect
  • Experience curve
  • Customer commitment and loyalty

First Mover Disadvantage

These factors can turn first-mover advantages into weaknesses. They include:

  • Resolution of technological uncertainty
  • Resolution of strategic uncertainty
  • Free-rider effect—others duplicate based on the leader’s success
  • Complementary assets to exploit core technological expertise

Fiscal Year

The fiscal year is a standard accounting practice allows the accounting year to begin in any month. Fiscal years are numbered according to the year in which they end. 

For example, a fiscal year ending in February of 2025 is Fiscal 2025, even though most of the year takes place in 2024.

Five Forces Model

Porter’s model considers these forces as they impact an industry and the overall competitive climate:

  • Risk of entry by potential competitors
  • Bargaining power of suppliers
  • Bargaining power of buyers
  • Threat of substitute products
  • Rivalry among established firms

Running costs that take time to wind down: usually rent, overhead, some salaries. Technically, fixed costs are those that the business would continue to pay even if it went bankrupt.

In practice, fixed costs are usually considered the running costs. These are static expenses that do not fluctuate with output volume and become progressively smaller per unit of output as volume increases.

Fixed costs are an important assumption for developing a break-even analysis. The standard break-even formula estimates a break-even point of sales based on per-unit price or revenue, per-unit variable costs, and fixed costs.

Fixed Liabilities

Fixed liabilities are debts—money that must be paid. Usually, debt on terms of longer than five years are fixed liabilities. Also called long-term liabilities.

Fixed liabilities, in contrast to floating liabilities, are secured by assets with a stable value, such as a building or a piece of equipment.

Floating Liabilities

Floating liabilities are debts—money that must be paid. Floating liabilities, in contrast to fixed liabilities, are secured by assets with a constantly changing value, such as a company’s accounts receivable (debtors). These are usually short-term loans.

Focus Group

A focus group refers to small groups of people, usually between nine and 12 in number, representing target audiences, that are brought together to discuss a topic that will offer insight for product development and/or marketing efforts.

Frequency Marketing

Frequency marketing refers to activities that encourage repeat purchasing through a formal program enrollment process to develop loyalty and commitment from the customer base. Frequency marketing is also referred to as loyalty programs.

Front End (Websites)

Front end and back end describe program interfaces relative to the user.

The front end, here, is the appearance of your website. It is the graphic design and HTML portion—some people call this the user interface or UI.

In contrast, the portion of the application you or your developers work with is the back end. The back end handles the dynamic parts of the site, such as a newsletter, an administration page, a registration database, a contact page, or more complicated web applications. Your back end interfaces with your UI and makes your website work.

Full-Cost Price Strategies

Full-cost price strategies are costs that consider variable cost and fixed cost (total cost) in the pricing of a product or service.

Future Value Projections

Future value projections refer to the process of projecting the future value of a venture and/or an investment in the venture. It typically considers an expected rate of return, inflation, and the period of time to assess future value.

Goodwill is when a company purchases another company for more than the value of its assets—which is quite common—the difference is recorded as an asset named “goodwill.”

This is not a general term for the value of a brand, for example, but a very specific accounting term.

For example, if one business buys another business for $1 million then it needs to show the $1 million spent as an asset. If there are only $500 thousand in real assets, the accounting result should be $500,000 in real assets purchased and another $500,000 in “goodwill.”

Gross Margin

Gross margin is the difference between total sales revenue and total cost of goods sold (also called total cost of sales). This can also be expressed on a per unit basis, as the difference between unit selling price and unit cost of goods sold. Gross margin can be expressed in dollar or percentage terms.

Gross Margin Percent

The gross margin percent is the gross margin divided by sales, displayed as a percentage. Acceptable levels depend on the nature of the business. There are providers who can deliver standard gross margins for different types of industries based on SIC (Standard Industry Classification) codes that categorize industries.

Guerrilla Marketing

The term guerrilla marketing comes from Conrad Levinson’s book Guerrilla Marketing, which refers to marketing via events and stimulated media coverage rather than paid advertisements.

Harvesting is most often referring to selling a business or product line, as when a company sells a product line or division or a family sells a business.

  • Impressions

An impression occurs each time an advertisement is seen by a potential customer. For example, in online marketing, an impression happens when an advertisement such as a banner ad loads on a user’s screen, whether for the first time, when returning to a page, or when the ad cycles through dynamically.

Income Statement

Also called profit and loss statement, an income statement is a financial statement that shows sales, cost of sales, gross margin, operating expenses, and profits or losses.

Gross margin is sales less cost of sales, and profit (or loss) is gross margin less operating expenses and taxes. The result is profit if it’s positive, loss if it’s negative.

Initial Public Offering (IPO)

An IPO is a corporation’s initial effort to raise capital through the sale of securities on the public stock market.

Innovation (Evolutionary or Revolutionary)

Innovation refers to the determination if an innovation is a “new and improved” concept taken to the next level (evolutionary), or the rare innovation that revolutionizes a technology or concept to the product or services.

Innovators refers to one type of adopter in Everett Rogers’ diffusion of innovations framework describing the first group to purchase a new product or service.

Integrated Marketing Communications

Integrated marketing communications is the practice of blending different elements of the communication mix in mutually reinforcing ways.

Intensive Distribution

Intensive distribution is a distribution strategy whereby a producer attempts to sell its products or services in as many retail outlets as possible within a geographical area without exclusivity.

Interest Expense

Interest expense is interest paid on debts, and interest expense is deducted from profits as expenses. Interest expense is either long-term or short-term interest.

Intraprenuership

Intrapreneurship refers to entrepreneurial-based activities within a corporation that receive organizational support and resource commitments for an innovative new business experience within the organization itself.

Inventory refers to goods in stock, either finished goods or materials used to manufacture goods.

Inventory Turnover

Inventory turnover is the total cost of sales divided by inventory. Usually calculated using the average inventory over an accounting period, not an ending-inventory value.

Inventory Turns

Also known as inventory turnover, inventory turns are the total cost of sales divided by inventory. Usually calculated using the average inventory over an accounting period, not an ending-inventory value.

A jobber is an intermediary that buys from producers to sell to retailers and offers various services with that function.

Labor, in this context, refers to the labor costs associated with making goods to be sold. This labor is part of the cost of sales, part of the manufacturing and assembly. The row heading refers to fulfillment costs as well, for service companies.

Laggards are one type of adopter in Everett Rogers’ diffusion of innovations framework describing the risk-averse group that follows the late majority that is generally not interested in new technology and are the last customers to buy.

Leveraged Buy Out (LBO)

A leveraged buy-out is a type of purchase of a business that relies heavily on the venture’s cash receipts with expectations of positive cash flow continuing based on historical or other performance indicators.

Liabilities

Liabilities are debts or money that must be paid. Usually, debt on terms of less than five years is called short-term liabilities, and debt for longer than five years is called long-term liabilities.

A life cycle is a model depicting the sales volume cycle of a single product, brand, service, or a class of products or services over time described in terms of the four phases of introduction, growth, maturity and decline.

Limited (Public) Company (AUS)

A public limited company is one where the right to transfer shares and the number of members is not limited. In addition, the company may invite the public to subscribe for its shares and, to deposit money with the company.

Limited Liability Company (LLC)

The LLC form is different for different states, with some real advantages in some states that aren’t relevant in others.

An LLC is usually a lot like an S corporation, a combination of some limitation on legal liability and some favorable tax treatment for profits and transfer of assets. This is a newer form of legal entity, and often harder to establish than a corporation.

Why would you establish an LLC instead of a corporation? That’s a tough legal question, not one we can answer here. In general, the LLC has to be missing two of the four characteristics of a corporation (limited liability, centralized management, continuity of life, and free transferability of ownership interest). 

Still, with the advisability and advantages varying from state to state, here again, this is a question to take to a good local attorney with small business experience.

Limited Liability Partnership

A limited liability partnership is a form of business organization combining elements of partnerships and corporations, in which both managing and non-managing partners are protected from liability to some degree, and have a different tax liability than in a corporation. 

Although this form of business is available in the U.S., the U.K., and Japan, legal details of forming and operating such a company vary from one country to another, and by state within the U.S.

Long-Term Assets

Long-term assets are assets like plant and equipment that are depreciated over terms of more than five years, and are likely to last that long, too.

Long-Term Interest Rate

A long-term interest rate is the interest rate charged on long-term debt.

Long-Term Liabilities

Long-term liabilities are the same as long-term loans. Most companies call a debt long-term when it is on terms of five years or more.

Loss is an accounting concept, the exact opposite of profit, normally the bottom line of the income statement, which is also called profit or loss statement. 

Start with sales, subtract all costs of sales and all expenses, and that produces profit before tax. Subtract tax to get net profit. If the end result is negative, then instead of profit it is called loss.

Loyalty Programs

Loyalty programs are activities designed to encourage repeat purchasing through a formal program enrollment process and the distribution of benefits. Loyalty programs may also be referred to as frequency marketing.

Manufacturer’s Agent

A manufacturer’s agent is an agent who typically operates on an extended contractual basis, often sells in an exclusive territory, offers non-competing but related lines of goods, and has defined authority regarding prices and terms of sale.

A market refers to prospective buyers, individuals, or organizations, willing and able to purchase the organization’s potential offering.

Market Development Funds

Market development funds refer to the monetary resources a company invests to assist channel members increase volume sales of their products or services.

Market Development Strategy

A market development strategy is a product-market strategy whereby an organization introduces its offerings to markets other than those it is currently serving. In global marketing, this strategy can be implemented through exportation licensing, joint ventures, or direct investment.

Market Evolution

Market evolution refers to changes in primary demand for a product class and changes in technology.

Market Penetration Strategy

Market penetration is the amount that your business is able to sell a product or service to customers compared to the estimated total available market (TAM). 

This is a measurement that can help you define the serviceable available market (SAM), which is the portion you estimate that you can acquire. 

Additionally, it can serve as a baseline for developing a strategy to increase your service obtainable market (SOM), or the subset of customers that you can realistically acquire.

Market Plan

Often found within the business plan, the market plan provides details regarding the overall marketing strategy, pricing, sales tactics, service and warranty policies, advertising, promotion, and distribution plans for the venture.

Market Redefinition

Market redefinition refers to changes in the offering demanded by buyers or promoted by competitors to enhance its perception and associated sales.

Market Sales Potential

Market sales potential is the maximum level of sales that might be available to all organizations serving a defined market in a specific period.

Market Segmentation

Market segmentation is the categorization of potential buyers into groups based on common characteristics such as age, gender, income, and geography or other attributes relating to purchase or consumption behavior.

Market Share

Market share is the total sales of an organization divided by the sales of the market they serve.

Marketing refers to the set of planned activities designed to positively influence the perceptions and purchase choices of individuals and organizations.

Check out our guide on the different ways to market your business .

Marketing Audit

A marketing audit is a comprehensive and systematic examination of a company’s marketing environment, objectives, strategies, and activities with a view of identifying and understanding problem areas and opportunities and recommending a plan of action.

Marketing Mix

Marketing mix refers to the activities controllable by the organization. It includes the product, service, or idea offered, the manner in which the offering will be communicated to customers, the method for distributing or delivering the offering, and the price to be charged.

Marketing Plan

A marketing plan is a written document containing descriptions and guidelines for an organization’s or a product’s marketing strategies, tactics, and programs for offering their products and services over the defined planning period, often one year.

Marketing Cost Analysis

Marketing cost analysis refers to assigning or allocating costs to a specified marketing activity or entity in a manner that accurately captures the financial contribution of activities or entities to the organization.

Materials are included in the cost of sales. These are materials involved in the assembly or manufacture of goods for sale.

Materials Included in Cost of Sales

These are materials involved in the assembly or manufacture of goods for sale.

Mission Statement

A mission statement is a statement that captures an organization’s purpose, customer orientation, and business philosophy.

Moving Weighted Average

Moving weighted average is a statistical method to forecast the future based on past results. It is a subset of time series analysis.

Multiple Channel System

A multiple-channel system is a channel of distribution that uses a combination of direct and indirect channels where the channel members serve different segments.

Net Cash Flow

Net cash flow is the projected change in cash position, an increase or decrease in cash balance.

Net Present Value (NPV)

Net present value is a method of discounting future income streams using an expected rate of return to evaluate the current value of expected earnings. It calculates future value in today’s dollars. NPV may be used to determine the current value of a business being offered for sale or capitalized.

Net profit is the operating income less taxes and interest. The same as earnings, or net income.

Net Profit Margin Before Taxes

Net profit margin before taxes is the remainder after cost of goods sold, other variable costs revenue, or simply, total revenue minus total cost. Net profit margin can be expressed in actual monetary values or percentage terms.

Net worth is the same as assets minus liabilities, and the same as total equity; other short-term assets. These might be securities, business equipment, and so on.

New Visitors

In online marketing, a new visitor is a website visitor who has not made any previous visits to the site or page in question.

New Brand Strategy

New brand strategy is the development of a new brand and often a new offering for a product class that has not been previously served by the organization.

Newsletter Subscriptions

In online marketing, newsletter subscription is a conversion value measuring the number of users who voluntarily include themselves in your database and are willing to accept unsolicited emails from you.

Not Invented Here (NIH)

Not invented here is a negative response to innovations and inventions from sources outside the venture’s own research and development activities.

Obligations Incurred

Obligations incurred are business costs or expenses that need to be paid, but wait for a time as accounts payable (in other words, bills to be paid as part of the normal course of business) instead of being paid immediately.

An offering is the total benefits or satisfaction provided to target markets by an organization. An offering consists of a tangible product or service plus related services such as installation, repair, warranties or guarantees, packaging, technical support, field support, and other services.

Offering Mix or Portfolio

An offering mix is an organization’s offerings, including all products and services.

On-costs are labor costs in addition to salaries and wages; that is, payroll tax, workers’ compensation, and other liability insurance, subsidized services to employees, training costs, and so on.

Operating Expenses

Operating expenses are expenses incurred in conducting normal business operations. Operating expenses may include wages, salaries, administrative and research and development costs, but excludes interest, depreciation, and taxes.

Operating Leverage

Operating leverage is the extent to which fixed costs and variable costs are used in the production and marketing of products and services.

Operations Control

Operations control is assessing how well an organization performs marketing activities as it seeks to achieve planned outcomes.

Opportunity Analysis

Opportunity analysis identifies and explores revenue enhancement or expense reduction situations to better position the organization to realize increased profitability, efficiencies, market potential, or other desirable objectives.

Opportunity Cost

Opportunity cost refers to the resource use options given up due to pursuing one activity among several possibilities. Potential benefits foregone as a result of choosing an alternative course of action.

Original Equipment Manufacturer (OEM)

An original equipment manufacturer is the process that is facilitated through licensing or other financial arrangements where the initial producer of a product or service agrees to allow another entity to include, remanufacture, or label products or services under their name and sell through their distribution channels.

It typically results in a “higher volume, lower margin” relationship for the original producer. It offers access to a broader range of products and services the buyer can offer their consumers at more attractive costs.

Other Short-Term Liabilities

Other short-term liabilities are short-term debts that don’t cause interest expenses. For example, they might be loans from founders or accrued taxes (taxes owed, already incurred, but not yet paid).

Outsourcing

Outsourcing is purchasing an item or a service from an outside vendor to replace the performance of the task with an organization’s internal operations.

In online marketing, a request for a file whose type is defined as a page in log analysis. This is generally what people mean when they talk about webpage hits, but is a more accurate way of tracking this metric because of the way log analysis works.

A single pageview (one visitor looking at one page) may generate multiple hits in log analysis, as all the resources required to view the page (images, .js, and .css files) are also requested from the web server.

Paid-In Capital

Paid-in capital is real money paid into the company as investments. This is not to be confused with the par value of stock, or market value of stock. This is actual money to the company as equity investments by owners.

Partnership

Partnerships are hard to describe because they change so much. State laws govern them, but the Uniform Partnership Act has become the law in most states. That act, however, mostly sets the specific partnership agreement as the real legal core of the partnership, so the legal details can vary widely.

Usually, the income or loss from partnerships passes through to the partners without any partnership tax. The agreements can define different levels of risk, which is why you’ll read about some partnerships with general and limited partners, with different levels of risk for each. The agreement should also define what happens if a partner withdraws, buy and sell arrangements for partners, and liquidation arrangements if that becomes necessary.

If you think a partnership might work for your business, do this right. Find an attorney with experience in partnerships, and check for references of present and past clients. This is a complicated area, and a mistake in the agreement will cause a lot of problems.

Payables is short for account payables—bills to be paid as part of the normal course of business. This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities.

Businesses receive goods or services from a supplier, receive an invoice, and until that invoice is paid the amount is recorded as part of “accounts payable.”

Payback Period

A payback period is the number of years an organization requires to recapture an initial investment. This may apply to an entire business operation or an individual project.

Payment Days

Payment days are the average number of days that pass between receiving an invoice and paying it.

It is not a simple estimate; it is calculated with a financial formula: =(Accounts_payable_balance*360)/(Total entries to accounts payable*12)

Payment Delay

Payment delay is the number of days on average a business waits between receiving a bill and paying a bill. Also called payment days.

Payroll refers to wages, salaries, or employee compensation.

Payroll Burden

Payroll burden includes payroll taxes and benefits. It is calculated using a percentage assumption that is applied to payroll.

For example, if payroll is $1,000 and the burden rate is 10 percent, the burden is an extra $100. Acceptable payroll burden rates vary by market, industry, and company.

Penetration Pricing Strategy

Penetration pricing strategy refers to setting a relatively low initial price for a new product or service.

Perceived Risk

Perceived risk is the extent to which a customer or client is uncertain about the consequences of an action, often relating to purchase decisions.

Perceptual Map

A perceptual map is a two or three-dimensional illustration of a customer’s perceptions of competing products comparing select attributes based on market research.

Personal Selling

Personal selling is the use of face-to-face communication between the seller and buyer.

PEST analysis

PEST is a popular framework for situation analysis, looking at political, economic, and social trends. Analyzing these factors can help generate marketing ideas, product ideas, and so on.

Plant and Equipment

Plant and equipment is the same as long-term, fixed, or capital assets. These are generally assets that are depreciated over terms of more than five years, and are likely to last that long, too.

Point of Purchase Advertising (POP)

Point of purchase advertising is a retail in-store presentation that displays product and communicates information to retail consumers at the place of purchase.

A portfolio is the complete array of an organization’s offerings including all products and services. Also called an offering mix.

Positioning

Positioning refers to orchestrating an organization’s offering and image to occupy a unique and valued place in the customer’s mind relative to competitive offerings. A product or service can be positioned on the basis of an attribute or benefit, use or application, user, class, price, or quality.

Premiums refers to a product-oriented promotion that offers some free or reduced-price item contingent on the purchase of advertised or featured merchandise or service.

Price Elasticity of Demand

Price elasticity of demand is the change in demand relative to a change in price for a product or service.

Privately Owned

A company whose shares are not publicly traded on a stock market. Such companies usually have less restrictive reporting requirements than publicly traded companies. A company that is not owned by the government (state-owned).

Pro Forma Income Statement

A pro forma income statement is a projected income statement. Pro forma in this context means projected. An income statement is the same as a profit and loss statement, a financial statement that shows sales, cost of sales, gross margin, operating expenses, and profits.

Pro Forma Statements

The term “pro forma” in front of any financial statement primarily serves to label that version of the statement as not adhering to the strict “generally accepted accounting principles” (GAAP) standards that all publicly-traded companies must use to produce their financial statements.

Major corporations use pro forma statements to illustrate projected numbers, like in the case of a merger or acquisition, or to emphasize certain current figures.

GAAP standards don’t apply to small businesses, so you don’t really need to worry about distinguishing your financial statements as “pro forma” or not—everyone you show them to expects that they’re not GAAP-compliant. But if you want to be technically correct in your terminology, go ahead and call your financial statements “pro forma.”

Product Definition

A product definition is a stage in a new product development process in which concepts are translated into actual products for additional testing based on interactions with customers. 

Product Development

Product development refers to expenses incurred in the development of new products (salaries, laboratory equipment, test equipment, prototypes, research and development, and so on).

Product Development Strategy

A product development strategy is a product-market strategy whereby an organization creates new offerings for existing markets innovation, product augmentation, or product line extensions.

Product Life Cycle (PLC)

Product life cycle refers to the phases of the sales projections or history of a product or service category over time used to assist with marketing mix decisions and strategic options available.

The four stages of the product life cycle include introduction, growth, maturity, and decline, and typically follow a predictable pattern based on sales volume over a period of time.

Product Line

A product line is a group of closely related products with similar attributes or target markets.

Product Line Pricing

Product line pricing refers to the setting of prices for all items in a product line involving the lowest-priced product price, the highest-priced product, and price differentials for all other products in the line.

Profit is an accounting concept, normally the bottom line of the income statement, which is also called profit or loss statement. Start with sales, subtract all costs of sales and all expenses, and that produces profit before tax. Subtract tax to get net profit.

Profit Before Interest and Taxes

Profit before interest and taxes is also called EBIT, for Earnings Before Interest and Taxes. It is gross margin minus operating expenses.

Profit or Loss

Also called profit and loss statement, a profit or loss statement is an income statement is a financial statement that shows sales, cost of sales, gross margin, operating expenses, and profits or losses. 

Proprietary (Private) Limited Company

A Proprietary Limited Company (often abbreviated as “Pty Ltd”) is a private company, in which the right to transfer shares is restricted and the number of members is limited to no more than fifty.

In addition, the company is prohibited from inviting the public to subscribe for its shares and, from inviting the public to deposit money with the company.

Public Relations

Public relations refers to communications often in the form of news distributed in a non-personal form which may include newspaper, magazine, radio, television, internet, or other form of media for which the sponsoring organization does not pay a fee.

Publicly Traded

Publicly traded means a company owned by shareholders who are members of the general public and trade shares publicly, as on the stock market.

Pull Communication Strategy

A pull communication strategy creates interest among potential buyers, who demand the offering from intermediaries, ultimately “pulling” the offering through the channel.

Push Communication Strategy

A push communication strategy is the practice of “pushing” an offering through a marketing channel in a sequential fashion, with each channel focusing on a distinct target market.

The principal emphasis is on personal selling and trade promotions directed toward wholesalers and retailers. 

Questionable Costs

Questionable costs are costs that may be considered as variable or as fixed costs, depending on the specifics of the situation.

Receivables

Short for account receivables, this refers to debts owed to your company, usually from sales on credit. Accounts receivable is a business asset, the sum of the money owed to you by customers who haven’t paid.

The standard procedure in business-to-business sales is that when goods or services are delivered, they come with an invoice, which is to be paid later. Business customers expect to be invoiced and to pay later. The money involved goes onto the seller’s books as accounts receivable and the buyer’s books as accounts payable.

Receivables Turnover

Receivables turnover refers to sales on credit for an accounting period divided by the average accounts receivables balance.

Regional Marketing

Regional marketing is the practice of using different marketing mixes to accommodate unique preferences and competitive conditions in different geographical areas.

Relevant Cost

Relevant cost refers to expenditures that are expected to occur in the future as a result of some marketing action and differ among other potential marketing alternatives.

Repositioning

Repositioning is the process of strategically changing the perceptions surrounding a product or service.

Resource Requirements (Websites)

Your resource requirements are the personnel, time, space, and equipment necessary to create and maintain your website. Remember that a website is never done—it will always require resources, some of which will be used to create new content periodically.

Retained Earnings

Retained earnings are earnings (or losses) that have been reinvested into the company, not paid out as dividends to the owners. When retained earnings are negative, the company has accumulated losses.

Return on Assets

Return on assets is your net profits divided by total assets. It is a measure of profitability.

Return on Investment (ROI)

Return on investment, or ROI is your net profits divided by net worth or total equity. It’s another measure of profitability.

Return on Sales

Return on sales is net profits divided by sales. It’s another measure of profitability.

Return Visitors

In online marketing, a website visitor who has made at least one previous visit to the site or page in question is considered a return visitor.

Rich-Gumpert Evaluation System

The Rich-Gumpert evaluation system is a method of analysis that associates a numeric value between 1 and 4 regarding the spectrums of product development and the entrepreneur and management team.

S Corporation (S Corp)

The C corporation is the classic legal entity of the vast majority of successful companies in the United States. Most lawyers would agree that the C corporation is the structure that provides the best shielding from personal liability for owners, and provides the best non-tax benefits to owers. This is a separate legal entity, different from its owners, which pays its own taxes.

Most lawyers would also probably agree that for a company that has ambitions of raising major investment capital and eventually going public, the C corporation is the standard form of legal entity. The S corporation is used for family companies and smaller ownership groups. The clearest distinction from C is that the S corporation’s profits or losses go straight through to the S corporation’s owners, without being taxed separately first.

In practical terms, this means that the owners of the corporation can take their profits home without first paying the corporation’s separate tax on profits, so those profits are taxed once for the S owner, and twice for the C owner. In practical terms the C corporation doesn’t send its profits home to its owners as much as the S corporation does, because it usually has different goals and objectives. It often wants to grow and go public, or it already is public. In most states an S corporation is owned by a limited number (25 is a common maximum) of private owners, and corporations can’t hold stock in S corporations, just individuals.

Corporations can switch from C to S and back again, but not often. The IRS has strict rules for when and how those switches are made. You’ll almost always want to have your CPA and in some cases your attorney guide you through the legal requirements for switching.

Sales Break Even

Sales break-even is the sales volume at which costs are exactly equal to sales.

The exact formula is =Fixed_costs/(1-(Unit_Variable_Cost/Unit_Price))

Sales Forecast

A sales forecast is the level of sales a single organization expects to achieve based on a chosen marketing strategy and assumed competitive environment.

Sales on Credit

Sales on credit are sales made on account; shipments against invoices to be paid later.

Scrambled Merchandising

Scrambled merchandising is the practice by wholesalers and retailers that carry an increasingly wider assortment of merchandise.

Seed Capital

Seed capital is investment contributed at a very early stage of a new venture, usually in relatively small amounts. It comes even before what they call “first round” venture capital.

How much is that “relatively small amount?” Some high-end high-tech ventures in the heart of Silicon Valley call an investment of $500K seed capital, and other ventures that called $35K investment seed capital, and the following $300K investment the first round. It depends on the point of view.

Selective Distribution

Selective distribution is a strategy where a producer sells its products or services in a few exclusively chosen retail outlets in a specific geographical area.

Selling Approaches

Selling approaches are potential selling resources based on the sales value and the distribution of the product.

Senior Corps of Retired Executives (SCORE)

SCORE is a no-cost consulting and resources service offered through the Small Business Administration.

Shareholders

Shareholders are individuals or companies that legally own one or more shares of stock in a company.

Short-term is normally used to distinguish between short-term and long-term, when referring to assets or liabilities. Definitions vary because different companies and accountants handle this in different ways.

Accounts payable is always a short-term liability, and cash, accounts receivable and inventory are always short-term assets. Most companies call any debt of less than five-year terms short-term debt. Assets that depreciate over more than five years (e.g., plant and equipment) are usually long-term assets.

Short-Term Assets

Short-term assets are cash, securities, bank accounts, accounts receivable, inventory, business equipment, assets that last less than five years or are depreciated over terms of less than five years. Also called current assets.

Short-Term Notes

Short-term notes are the same as short-term loans. These are debts with terms of five years or less.

Short-Term Liabilities

Short-term liabilities are debts with terms of five years or less. These are also called current liabilities, short-term loans, or short-term (current) debts. These may also include short-term debts that don’t cause interest expenses.

For example, they might be loans from founders or accrued taxes (taxes owed, already incurred, but not yet paid).

Simple Linear Regression

Simple linear regression is a linear correlation that offers a straight-line projection based on the variables considered.

Situation Analysis

A situation analysis is the assessment of operations to determine the reasons for the gap between what was or is expected, and what has happened or will happen.

Skimming Pricing Strategy

Skimming pricing strategy refers to setting a relatively high initial price for a new product or service when there is a strong price-perceived quality relationship that targets early adopters who are price insensitive. The price may be lowered over time.

Slotting Allowances

Slotting allowances are payments to store chains for acquiring and maintaining shelf space.

Small Business Investment Council (SBIC)

The SBIC is a division of the Small Business Administration that offers “venture capital-like” resources to higher-risk businesses seeking capital.

Sole Proprietorship

The simplest business structure is the sole proprietorship. Simply put, your business is a sole proprietorship if you don’t create a separate legal entity for it.

This is true whether you operate it in your own name, or under a trade name. If it isn’t your own name, then you register a company name as a “Fictitious business name,” also called a DBA (“Doing Business As”).

Depending on your state, you can usually obtain this through the county government, and the cost is no more than a small registration fee plus a required newspaper ad, for a total of less than $100 in most states.

Sole Trader

A sole trader is the easiest and quickest form of corporation for a small, privately-owned business. Your Memorandum and Articles of Association are usually fairly straightforward to obtain, and your taxes will be lower than those of a public company.

However, the owner of a sole trader is personally liable for all of its actions and debts, and may not be entitled to benefits, like unemployment payments, that would accrue to those running public companies.

Starting Date

Starting date refers to the starting date for the entire business plan.

Goods on hand, either finished goods or materials to be used to manufacture goods. Also called inventory.

Stock can also refer to privately held or publicly traded shares or securities representing an investment in, or partial ownership of, a business. Public trading of such stock occurs on the stock market.

Stock Market

The stock market is the organized trading of stocks, bonds, or other securities, or the place where such trading occurs.

Stock Turnover

Stock turnover is the total cost of sales divided by inventory (materials or goods on hand). Usually calculated using the average inventory over an accounting period, not an ending-inventory value. Also called inventory turnover.

Strategic Control

Strategic control is the practice of assessing the direction of the organization as evidenced by its implicit or explicit goals, objectives, strategies, and capacity to perform in the context of changing environmental and competitive actions.

Strategic Marketing Management

Strategic marketing management is the planned process of defining the organization’s business, mission, and goals; identifying and framing organizational opportunities; formulating product-market strategies, budgeting marketing, financial, and production resources; developing reformulation.

Success Factors

Primary success factors include considerations regarding:

  • The choice of business based on the status of the market
  • Education and experience
  • People and collaboration
  • Creativity and innovation versus business skills and networks
  • Incubation potential
  • Leveraging available resources
  • Management practices

Success Requirements

Success requirements are the basic tasks that must be performed by an organization in a market or industry to compete successfully.

Sunk cost refers to past expenditures for a given activity that are typically irrelevant in whole or in part to future decisions. The “sunk cost fallacy” is an attempt to recoup spent dollars by spending still more dollars in the future.

Surplus or Deficit

Surplus or deficit is a term used by nonprofits. It’s also called profit and loss statement or an income statement in for-profit plans.

An income statement is a financial statement that shows funding, cost of funding, gross surplus, operating expenses, and surplus or deficit. Gross surplus is funding less cost of funding, and surplus (or deficit) is gross surplus less operating expenses and taxes. The result is surplus if it is positive, a deficit if it is negative.

Switching Costs

Switching costs are the costs incurred in changing from one provider of a product or service to another. Switching costs may be tangible or intangible costs incurred due to the change of this source.

SWOT Analysis

A SWOT analysis is a formal framework of identifying and framing organizational growth opportunities. SWOT is an acronym for an organization’s internal strengths and weaknesses and external opportunities and threats.

Systematic Innovation

Systematic innovation is innovation resulting from an intentional and organized process to evaluate opportunities to introduce change, based on a definition provided by Peter Drucker. The sources of innovation may be internal or external to the enterprise.

Tactics are a collection of tools, activities and business decisions required to implement a strategy.

Target Market

A target market is a defined segment of the market that is the strategic focus of a business or a marketing plan. Normally the members of this segment possess common characteristics and a relative high propensity to purchase a particular product or service. 

Because of this, the member of this segment represent the greatest potential for sales volume and frequency. The target market is often defined in terms of geographic, demographic, and psychographic characteristics.

Target Marketing

Target marketing is the process of marketing to a specific market segment or multiple segments. Differentiated target marketing occurs when an organization simultaneously pursues several different market segments, usually with a different strategy for each. 

Concentrated target marketing occurs when a single market segment is pursued.

Tax Rate Percent

Tax rate percent is an assumed percentage applied against pre-tax income to determine taxes.

Taxes Incurred

Taxes incurred are taxes that are owed but not yet paid.

Telemarketing

Telemarketing is a form of direct marketing that uses the telephone to reach potential customers.

Trade Margin

Trade margin is the difference between unit sales price and unit cost and each level of a marketing channel usually expressed in percentage terms.

Trading Down

Trading down is the process of reducing the number of features or quality of an offering to realize a lower purchase price.

Trading up is the practice of improving an offering by adding new features and higher quality materials or adding products or services to increase the purchase price.

In broad, general terms, traffic is the number of visitors and visits a website receives.

Types of Entrepreneurs

Entrepreneurs may be categorized into eleven areas, including:

  • Solo self-employed individuals
  • Team builders
  • Independent innovators
  • Pattern multipliers
  • Economy of scale exploiters
  • Capital aggregators
  • Buy-sell artists
  • Conglomerates
  • Speculators
  • Apparent value manipulators

User Interface (UI)

User interface is the graphic design and appearance of a website, its function as seen and used by the person on the user end, at the website in a browser.

The UI of a website is ultimately how it lets users know what it has to offer them. If it lacks an easy navigation scheme users get lost, and never find the information on a site.

Unique User Sessions

In online marketing, unique user sessions is a website metric tracking the number of uniquely identified clients generating requests on the web server (log analysis) or viewing pages (page tagging). A visitor can make multiple visits.

Unit Variable Cost

Unit variable cost is the specific labor and materials associated with a single unit of goods sold. Does not include general overhead.

Units Break-Even

Units break-even refers to the unit sales volume at which the fixed and variable costs are exactly equal to sales. 

The formula is UBE=Fixed_costs/(Unit_Price-Unit_Variable_Cost)

Unpaid Expenses

Unpaid expenses are money owed to vendors for expenses incurred, but not yet paid. In bookkeeping and accounting, this is called accounts payable. A simple example would be the advertising expense from advertising that has already run but not yet been paid for by the advertiser.

User Benefits

User benefits refer to understanding and appreciating the base reason an individual purchases a product or service that may not directly correlate with the feature or function of the good or service. These benefits may be intangible.

User Registrations

In online marketing, user registrations is a conversion value measuring the number of website visitors who voluntarily include themselves in your database in order to access the content you provide on your website.

Used as a noun, valuation is what a business is worth, as in, “this company’s valuation is $10 million.”

This would mean that a company is valued at $10 million, or worth $10 million. The term is used most often for discussions of sale or purchase of a company; it’s valuation is the price of a share times the number of shares outstanding, and the price of a share is the total valuation divided by the number of shares outstanding.

Value is the ratio of perceived benefits compared to price for a product or service.

Variable Cost

Variable costs are costs that fluctuate in direct proportion to the volume of units produced. The best and most obvious example are physical costs of goods sold, direct costs, such as materials, products purchased for resale, production costs and overhead, etc.

The concept of variable cost is an important component of risk in a company. Generally, variable costs are less risky than fixed costs, because variable costs are not incurred unless there are sales and production. See also break-even analysis, fixed costs, and contribution.

For more on this, check out What Is Break-Even Analysis?

Variance is a calculation of the difference between plan and actual results, used by analysts to manage and track the impact of planning and budgeting.

Venture Capitalists (VC)

Venture capitalists are thought of in two ways, first, some people think of any wealthy individual who invests in young companies as a venture capitalist. Second, among the more informed investors, analysts, and entrepreneurs, a venture capitalist is a manager of a mainstream venture capital fund.

Venture Capital

Venture capital nowadays is used two ways. First, people often take venture capital as any investment capital obtained through private investment or public investment funds directed to high-risk and high-potential enterprises. 

Second, within the more informed and sophisticated business circles, venture capital is defined more narrowly as investment money coming from the mainstream venture capital firms, a few hundred major firms, different from investment money from other private investors, angels, etc.

A website (or site) is a virtual location, identified and located by a URL (uniform resource locator), an address that can lead you to a file on any connected machine anywhere in the world.

Website Metrics

In online marketing, website metrics metrics are measurement tools used to evaluate how effectively a website is marketing a business.

These can include:

  • Unique user sessions
  • New visitors
  • Return visitors
  • Click-through rate
  • Conversion rate

Website Traffic

In broad, general terms, website traffic is the number of visitors and visits a website receives. This traffic can be measured by a variety of website metrics.

A wholesaler is a channel member that purchases from the producer and supplies to the retailer and primarily performs the function of physical distribution and amassing inventory for rapid delivery.

Working Capital

The accessible resources needed to support the day-to-day operations of an organization.

Working capital is commonly in the form of cash and current (short-term) assets, including accounts receivable, prepaid expenses, accounts payable for goods and services, and current unpaid income taxes.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Check out LivePlan

Table of Contents

Related Articles

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

LivePlan pitch example

Discover the world’s #1 plan building software

business model and business plan are not synonymous terms

Constant customer Assistance

Charita Davis

Testimonials

Our team of paper writers consists only of native speakers coming from countries such as the US or Canada. But being proficient in English isn't the only requirement we have for an essay writer. All professionals working for us have a higher degree from a top institution or are current university professors. They go through a challenging hiring process which includes a diploma check, a successful mock-task completion, and two interviews. Once the writer passes all of the above, they begin their training, and only after its successful completion do they begin taking "write an essay for me" orders.

What Can You Help Me With?

No matter what assignment you need to get done, let it be math or English language, our essay writing service covers them all. Assignments take time, patience, and thorough in-depth knowledge. Are you worried you don't have everything it takes? Our writers will help with any kind of subject after receiving the requirements. One of the tasks we can take care of is research papers. They can take days if not weeks to complete. If you don't have the time for endless reading then contact our essay writing help online service. With EssayService stress-free academic success is a hand away. Another assignment we can take care of is a case study. Acing it requires good analytical skills. You'll need to hand pick specific information which in most cases isn't easy to find. Why waste your energy on this when they're so many exciting activities out there? Our writing help can also do your critical thinking essays. They aren't the easiest task to complete, but they're the perfect occasion to show your deep understanding of the subject through a lens of critical analysis. Hire our writer services to ace your review. Are you struggling with understanding your professors' directions when it comes to homework assignments? Hire professional writers with years of experience to earn a better grade and impress your parents. Send us the instructions, and your deadline, and you're good to go.

business model and business plan are not synonymous terms

John N. Williams

Can you write essays for free?

Sometimes our managers receive ambiguous questions from the site. At first, we did not know how to correctly respond to such requests, but we are progressing every day, so we have improved our support service. Our consultants will competently answer strange suggestions and recommend a different way to solve the problem.

The question of whether we can write a text for the user for free no longer surprises anyone from the team. For those who still do not know the answer, read the description of the online platform in more detail.

We love our job very much and are ready to write essays even for free. We want to help people and make their lives better, but if the team does not receive money, then their life will become very bad. Each work must be paid and specialists from the team also want to receive remuneration for their work. For our clients, we have created the most affordable prices so that a student can afford this service. But we cannot be left completely without a salary, because every author has needs for food, housing and recreation.

We hope that you will understand us and agree to such working conditions, and if not, then there are other agencies on the Internet that you can ask for such an option.

icon

Customer Reviews

Essay writing help has this amazing ability to save a student’s evening. For example, instead of sitting at home or in a college library the whole evening through, you can buy an essay instead, which takes less than one minute, and save an evening or more. A top grade for homework will come as a pleasant bonus! Here’s what you have to do to have a new 100% custom essay written for you by an expert.

To get the online essay writing service, you have to first provide us with the details regarding your research paper. So visit the order form and tell us a paper type, academic level, subject, topic, number and names of sources, as well as the deadline. Also, don’t forget to select additional services designed to improve your online customer experience with our essay platform.

Once all the form fields are filled, submit the order form that will redirect you to a secure checkout page. See if all the order details were entered correctly and make a payment. Just as payment is through, your mission is complete. The rest is on us!

Enjoy your time, while an online essay writer will be doing your homework. When the deadline comes, you’ll get a notification that your order is complete. Log in to your Customer Area on our site and download the file with your essay. Simply enter your name on the title page on any text editor and you’re good to hand it in. If you need revisions, activate a free 14-30-day revision period. We’ll revise the work and do our best to meet your requirements this time.

Customer Reviews

The experts well detail out the effect relationship between the two given subjects and underline the importance of such a relationship in your writing. Our cheap essay writer service is a lot helpful in making such a write-up a brilliant one.

Allene W. Leflore

Megan Sharp

Write my essay for me frequently asked questions

icon

(415) 520-5258

Customer Reviews

Some attractive features that you will get with our write essay service

Grab these brilliant features with the best essay writing service of PenMyPaper. With our service, not the quality but the quantity of the draft will be thoroughly under check, and you will be able to get hold of good grades effortlessly. So, hurry up and connect with the essay writer for me now to write.

Finished Papers

business model and business plan are not synonymous terms

1(888)499-5521

1(888)814-4206

Why do I have to pay upfront for you to write my essay?

  • Exploratory

Customer Reviews

business model and business plan are not synonymous terms

Emery Evans

IMAGES

  1. A complete Guide on Business Model vs Business Plan

    business model and business plan are not synonymous terms

  2. Business Model vs. Business Plan: What Is the Difference?

    business model and business plan are not synonymous terms

  3. Business Model vs. Business Plan: What's the Difference?

    business model and business plan are not synonymous terms

  4. A complete Guide on Business Model vs Business Plan

    business model and business plan are not synonymous terms

  5. A complete Guide on Business Model vs Business Plan

    business model and business plan are not synonymous terms

  6. The difference between a business model and a business plan by Ingrid

    business model and business plan are not synonymous terms

VIDEO

  1. Type of business plan discussion🔥| How to Start New business in 2024@RupaOdiaKahani

  2. Types Of Business Model Discussion in this Video // Business Model Discussion

COMMENTS

  1. Business Model vs. Business Plan: What's the Difference?

    Though the terms are often used interchangeably, business plans and business models are very different tools that are both vital for starting and maintaining a business. By learning what exactly a business plan and business model are and how they work, you can gain a deeper understanding of the fundamentals of business operations. ...

  2. MKTG CH 3 Flashcards

    a) Affiliate b) Subscription c) DAO d) M2M, Business model and business plan are not synonymous terms. a) True b) False and more. Study with Quizlet and memorize flashcards containing terms like Selling software-based services on the Internet is usually an example of which type of model?

  3. Marketing 4650 (Digital Marketing) Chapter 1-6 Quizzes

    Business model and business plan are not synonymous terms? Click the card to flip 👆 True Click the card to flip 👆 1 / 60 Flashcards Learn Test Match Q-Chat Created by Students also viewed Chapter 6 HW 25 terms may_goff Preview MKTG CH 6 20 terms mrstlc Preview 3.2.4 Reasons for staying small 6 terms Iga_Adamczak Preview Consumer 20 terms

  4. Business Plan vs. Business Model: What is the Difference?

    A business model is the foundation of any business idea; it basically outlines how the concept offers value and potential for growth. Essentially, a solid business model ensures that the business will make money. A business plan, on the other hand, is the business owner's plan to put that model into action. It's much more detailed and ...

  5. Chapter 3: Business Models and Strategies Flashcards

    Study with Quizlet and memorize flashcards containing terms like The Authentically Mobile business model is dependent on mobile for its very existence., A business model describes how the enterprise creates value for customers and generates revenue, Business model and business plan are not synonymous terms and more.

  6. Business Plan Vs. Business Model

    The foundation, or business model, is the original idea for your business and a general description of how it functions. The structure, or business plan, elaborates on the details of your business ...

  7. Solved "Business model" and "business plan" are not

    True. A business model and a business plan are not the same thing. While they are both important com... View the full answer Previous questionNext question Not the question you're looking for? Post any question and get expert help quickly. Start learning Answer to Solved "Business model" and "business plan" are not | Chegg.com

  8. What is a Business Model with Types and Examples

    Business Model: A business model is a company's plan for how it will generate revenues and make a profit . It explains what products or services the business plans to manufacture and market, and ...

  9. Business Model vs. Business Plan

    The business model is the mechanism through which the company generates its profits, while the business plan is a document presenting the company's strategy and expected financial performance for the years to come. As you can see, the business model is at the center of the business plan. The business model describes how the company is ...

  10. Business Models: Types, Examples and How to Design One

    To make a profit, distributors buy the product in bulk and sell it to retailers at a higher price. Example: A chain of beauty salons that buys supplies in bulk and sells some of them to other ...

  11. Business Model synonyms

    Synonyms for Business Model (other words and phrases for Business Model). ... 160 other terms for business model- words and phrases with similar meaning. Lists. synonyms. antonyms. definitions. sentences. thesaurus. words. phrases. Parts of speech. ... business-plan. company model. competitive advantage. domain model. form of a business trust.

  12. BUSINESS MODEL in Thesaurus: 100+ Synonyms & Antonyms for BUSINESS MODEL

    BUSINESS MODEL in Thesaurus: 100+ Synonyms & Antonyms for BUSINESS MODEL Parts of speech Synonyms Similar meaning View all corporate model revenue model channels company's plan for making a profit cost structure customer relationship customer segment distribution model key activities key resources partnerships profit model value proposition

  13. Are business model and business plan synonymous terms? 1) True 2) False

    Final answer: The terms 'business model' and 'business plan' are not synonymous. Business model refers to the means by which a company generates revenue, while a business plan is a detailed plan outlining a company's business goals and the strategies for achieving them. Explanation:

  14. Glossary of Business Terms for Small Businesses

    To start and run a business, you often need to understand business terms that may not be well-defined in a standard dictionary.. Our glossary of business terms provides definitions for common terminology and acronyms in business plans, accounting, finance, funding, and other aspects of small business.. A Accounts Payable (AP) Accounts payable (AP) are bills to be paid as part of the normal ...

  15. Business Model And Business Plan Are Not Synonymous Terms

    996 sq ft. Level: College, High School, University, Master's, Undergraduate. 741Orders prepared. Prices than inspire from. Business Model And Business Plan Are Not Synonymous Terms. NursingBusiness and EconomicsHistoryArt and Design+64. User ID: 407841.

  16. Business Model And Business Plan Are Not Synonymous Terms

    ID 19300. 100% Success rate. Total price: Get access to the final draft. You will be notified once the essay is done. You will be sent a mail on your registered mail id about the details of the final draft and how to get it. Estelle Gallagher. #6 in Global Rating. Business Model And Business Plan Are Not Synonymous Terms -.

  17. Marketing 4650 exam 1 Flashcards

    Saas. Study with Quizlet and memorize flashcards containing terms like T or F: Digital disruption occurs when new digital technologies affect the value proposition of existing goods and services., T or F: Most software is now sold as a service, not as a product., ________ is the network of physical objects accessed through the Internet. and more.

  18. Business Model And Business Plan Are Not Synonymous Terms

    Words to pages. Pages to words. $ 10.91. Business Model And Business Plan Are Not Synonymous Terms, Stone Fox Book Reports, Observation Case Study Research, Homework Expo 2012, Actions Speak Louder Than Words Essay 300 Words, Math English For Class 10, How To Write Vhdl Code. Business Model And Business Plan Are Not Synonymous Terms -.

  19. Business Model And Business Plan Are Not Synonymous Terms

    Business Model And Business Plan Are Not Synonymous Terms, Writing Response Essay Rubric Responding To Reading Rubric, Example Of A Transport Company Business Plan, Curriculum Vitae Felix Sima, Best Scholarship Essay Writing Sites For Phd, 00 Usb Mass Storage Devices Found And Configured Press F1 To Resume, Three Paragraph Essay Writing Template Pdf

  20. Business Model And Business Plan Are Not Synonymous Terms

    Diploma verification. Each essay writer must show his/her Bachelor's, Master's, or Ph.D. diploma. Grammar test. Then all candidates complete an advanced grammar test to prove their language proficiency. Writing task. Finally, we ask them to write a small essay on a required topic. They only have 30 minutes to complete the task, and the topic is ...

  21. Business Model And Business Plan Are Not Synonymous Terms

    57 Customer reviews. 8 hours 24 hours 48 hours 3 days 5 days 7 days 14 days. 14 days. 1 (888)814-4206 1 (888)499-5521. 63 Customer reviews. Business Model And Business Plan Are Not Synonymous Terms -.

  22. Chapter 3 HW Flashcards

    Study with Quizlet and memorize flashcards containing terms like A business model describes how the enterprise creates value for customers and generates revenue., Business models in the B2C space are entirely different from business models in the B2B space., The advertising-supported model is an excellent way for a new business to consider making money. and more.

  23. Business Model And Business Plan Are Not Synonymous Terms

    Brilliant drafts for your business studies course, ranging from market analysis to business proposal, can also be done by them. Be it any kind of a draft- the experts have the potential to dig in deep before writing. Doing 'my draft' with the utmost efficiency is what matters to us the most. Bennie Hawra. #29 in Global Rating.

  24. Business Model And Business Plan Are Not Synonymous Terms

    3. Not a big fan of writing? Let's redefine your previous experiences in writing and give this engagement a brand new meaning. Our writers compose original essays in less than 3 hours. Give them a try, you won't regret it. Business Model And Business Plan Are Not Synonymous Terms -.