Do not confuse business model and business plan

Business plan and business model are two fundamental concepts that should not be confused. What is the difference between both ?

Difference between business plan and business model

The business model is the way the company generates a profit, while the business plan or business plan is a document outlining the company’s strategy and its financial implications for the future .

Thus, the business model is at the center of the business plan.

The business model describes how the company positions itself within the value chain of its sector and how it organizes its relationships with its customers, suppliers, and partners in order to generate a profit. The business plan translates this positioning into a series of strategic actions to be implemented and quantifies their impact.

The production business model

It is the simplest economic model, the company sells a product or a service that it produces.

For this economic model to be viable, the company must succeed in generating a sufficient margin on its sales to be able to cover its production, distribution, and possibly storage costs.

The advertising business model

Also well known, this business model consists of generating income by selling advertising space to advertisers.

On the Internet, this model is available in several variants depending on the remuneration method for advertising space:

  • CPM (Cost Per Thousand): the advertiser pays a fixed amount per thousand impressions (display of its advertisement).
  • CPC (Cost Per Click): the advertiser pays each time someone clicks on their advertisement. The amount paid can be fixed or determined at auction.
  • CPA (Cost Per Action): The advertiser pays each time a predetermined action is taken, for example, a sale. The amount can be fixed or represent a percentage of the sale price.

This business model is already a little more complicated since the company must first invest in the creation of a large audience, purchase of advertising panels or creation of media content, before being able to interest advertisers.

How to choose the legal form of your business?

You have decided to get started, your market research is conclusive, your business plan well advanced, and you must now choose the legal form of your future business.

The choice of the legal form is not an easy task because in France there are a large number of possibilities, and in this jungle of legal statutes, it can sometimes be difficult to navigate.

Your choice will depend in part on the constraints of your project (number of partners, amount of capital required for the activity) and will have implications at many levels (administrative complexity, tax regime, social regime of the manager (s), protection of the private assets of the entrepreneur, mode of decision-making, etc.).

The purpose of this guide to choosing legal status is to help you see things more clearly. It is divided into two parts, in the first we will see all the points to anticipate to choose the right legal form for your business, and in the second we will present a comparison of the most popular legal forms.

The importance of choosing the legal form of the company

Choosing the legal form of your company is above all a fiscal, financial and strategic choice.

It is a fiscal choice because depending on it, you will have the possibility or not to deduct certain expenses, and will be taxed at the social and fiscal level in different ways.

It is also an asset choice because certain legal forms will allow you to limit your liability to contributions to society while others will expose your personal assets in the event of professional debts.

Finally, it is a strategic choice because on this will depend the ease that you will have to make quickly decisions, to raise capital from investors if necessary, and to carry out or not certain activities.

Protection of personal assets

Depending on the legal status of your business, you may or may not be sued on your personal assets for your professional debts.

That is to say that in certain cases, if the company has difficulties and cannot honor its debts, your creditors will be able to seize your house or your car to repay themselves.

The social regime of the manager (s).

Your social security plan will depend on the legal form, you will be attached:

  • either to the general scheme if you are an employee (or assimilated employee)
  • or the social security scheme for the self-employed if you are a self-employed worker.

When you depend on the general scheme, as a manager, you benefit from a level of social protection that is roughly equivalent to that of employees.

On the other hand, when you depend on the social system for self-employed workers, you benefit from reduced social coverage in return for lower contribution rates.

It is possible to compensate for the lower social coverage of the social security scheme for self-employed workers by setting up additional insurance (some of which entitle to tax reductions).