Business Operating Model Vs. a Strategic Plan | Small Business - Chron.comhttp://smallbusiness.chron.com/business-operating-model-vs-strategic-p...
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Business Operating Model Vs. a Strategic Plan by Charmayne Smith, Demand Media
Related Articles Definition of a Successful Strategic Business Plan How to Create a Strategic Business Plan How to Write a Strategic Plan for an E-commerce Business Difference Between Business Plan & Strategic Plan Strategic Thinking & Business Planning Elements of Strategic Business Plan Objectives Each company's business models and strategies are unique in nature.
A child’s lemonade stand is a basic business with a clear model. The child sells lemonade to customers and the customers pay for it. The strategies can be dynamic, depending on the industriousness of the owner. Marketing strategies may include posters and fliers, extra ice on hot days and flavors for every palate. Customer retention strategies may include discounts for multiple lemonade purchases and continuous availability. Business models and strategies do not have to be long and complex. They must, however, clarify the factors of your business’ existence.
Business Model Before your business can generate income, and even before you build your company’s business plan, your business must have a model. The business model serves as the core of your business. It explains how your business will generate income without consideration of the internal and external environments that can affect successful implementation. It is a straightforward definition of your business’ operations and is generally short in nature. For instance, a barbershop’s business model may consist of the business generating income through haircuts only. The model would explain that the customer comes into the business, obtains a haircut and then pays the barber. There are no considerations of additional services or explanation as to how the client base is generated.
Business Strategies The business strategy, or strategic plan, identifies the steps that the business will use to ensure that the business model is successful. Unlike the business model, strategic plans consider internal and external environmental factors and provide steps to take advantage of those aspects or counteract the effects of those aspects. The strategic plan includes ways that the company can generate increased sales, retain customers and improve service. The business strategies for the fictitious barbershop might include ways to upsell the client with services that complement the haircut, such as with a shave or deep conditioner. The plan might also include customer retention and generation strategies by providing the haircut client with discounts on future services for each additional customer that he refers to the business.
Mission The company mission is defined by the business model and explains why the business operates. The mission statement does not necessarily refer directly to the business model, however. The mission statement identifies why the business exists. For instance, the Walt Disney Company is the parent company of many Disney entities, including Walt Disney Records, Disneyland Park and Touchstone Pictures, to name a few. Though each of its subsidiaries has its own missions and objectives, the companies operate under the parent company’s primary mission that is “To make people happy.”
Dependency Business strategies are built around the specifics of the business model and are, thus, dependent upon the business model. If you make changes to your business model, you must also make changes to your business strategies. For instance, if the fictitious barbershop were to close its doors and become a traveling barbershop, many of its strategies would change and additional strategies would need to be created. Any strategies for attracting walk-in customers would be eliminated. Still, new strategies for scheduling, transportation and servicing would need to be created.
Considerations Clearly defined business models and strategies are key aspects to a business’ overall success. The U.S. Small Business Administration provides a collection of free resources that can assist you in developing these core business essentials. SCORE also provides resources, as well as mentoring assistance, which can help in this development.
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References QuickMBA: The Business Model(http://www.quickmba.com/entre/business-model/) NetMBA: The Strategic Planning Process(http://www.netmba.com/strategy/process/) U.S. Small Business Administration: Strategies for Growth(http://www.sba.gov/strategiesforgrowth/) SCORE: Online Marketing Strategies to Promote Your Business(http://www.score.org/article_online_marketing_strategies.html)
Resources
05/05/2012 21:06
Business Operating Model Vs. a Strategic Plan | Small Business - Chron.comhttp://smallbusiness.chron.com/business-operating-model-vs-strategic-p...
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The Walt Disney Company: Corporate Information(http://corporate.disney.go.com/index.html)
About the Author Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.
Photo Credits Sheer Photo, Inc/Photodisc/Getty Images
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05/05/2012 21:06