Do you need a business model and a plan if you are only self-employed?
You are intending to be your own boss and to provide a service or make a product on a small scale. At present, you are planning neither to employ other people, nor to apply for loans from banks or investors.
Do you, in that case, need to spend your time on writing a business plan and developing a business model?
What is the difference between a business plan and a business model?
What can they help with?
A business plan summarizes your business idea. Apart from describing the service(s) or product(s) of your business, it will include your vision, goals, target groups, your financial plan and more (see here). It will help you think through your business idea in the structure and prevent you forgetting anything important.
A business model is the logic behind your business idea, based on which you believe your business should work out and be profitable. While a business plan describes your business idea, the business model serves to verify it, to check whether you idea has sufficient business logic.
Several components of your business plan and business model will be similar. However, there will be differences too. The business plan will also include time-bound goals and plans. It will include more details than your business model and it will be more complex (e.g. listing all target groups of your customers, all your collaborators). The business model will include only the most important items (e.g. just the most important type of your customers and the most important collaborator), and it will focus on the logical relationship between the components.
Do you need a business plan and model?
They are usually not obligatory, but in my view, they are very useful for making your business successful.
Many self-employments and start-ups close down within their first years. I am convinced that a significant percentage of these failures could have been prevented through better planning.
Personally, I consider it useful to think through all those points of a business plan and a business model, no matter how big or small the scale of your business is. Moreover, I recommend it even to those of you who have been self-employed for some time, but wish to solve any problems or to make your business advance. Both a business plan and a business model can help you identify what might need improvement, and they might also lead to a solution.
Do I need to write my plan and model down?
It is thinking through the plan and model what helps most, however, the written versions offer additional values, including:
- You can use some of the many available templates, which will make it easier.
- When you see your idea in writing, you might get extra insights you would otherwise have missed.
- You can always decide to show your plan or model to other people, be it friends or professionals, who can give you feedback on it.
- Most of all, you will be able to come back to your plan and model, and review or adjust them.
In any case, if you don’t intend to use the business plan formally, for example to apply for external funding or loans, or to show your business plan with the aim of gaining business partners, collaborators or contracts, then your written business plan can remain very brief and informal. You can always expand it into a formal one later, should you need to.
Start with writing down some key words, using a single page, and then decide whether you want to add further details or if this is enough for your needs. If you are creative and arty and want to make it more playful, you can draw, make collages, or use other creative techniques along the structure. The business plan and model will help you to plan your business well and succeed. Why not make it fun?
for developing your business plan and/or business model
The basic business plan structure: click here
Unconventional alternative for those creative and arty: Jennifer Lee: Business plan for your right brain. A Creative, Visual Map for Success (2011). New World, Novato, California.
Guide through developing a simple business model: Tim Clark et al: Business model YOU. A One Page Method for Reinventing Your Career. John Wiley & Sons, Inc., Hoboken, New Jersey.
You can also design or review your plan and model together with an experienced professional: a business coach or a business consultant.