Business Process vs. Business Model (+ Examples)

Do You Even ERP

Updated on January 10, 2021

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ARTICLE TABLE OF CONTENTS

This is about business process vs. business model.

You’ll learn:

What a business process is
What a business model is
The differences between a business process and a business model
Lots more

So if you want to learn this 101 of business processes, then this article is for you.

Keep reading!

What Is the Difference Between a Business Process and a Business Model?

Your business model is your plan for how to make money.

Apple’s business model is to sell computers and smartphones.

Meanwhile, a fast-food restaurant’s business model is to offer affordable meal options to busy people.

On the other hand, a business process delineates how you will reach goals in your business.

You need to consider what goals you want to achieve, and you can get as specific or as general as you wish.

What Is a Business Process?

It sounds simple, but when it comes to answering the question “what’s a business process,” you have to dive deep.

In fact, a business process is a series of steps, not a single action. The process leads to a specific goal within the business.

So, a business process might involve multiple steps and numerous team members to reach the desired outcome.

Learn exactly what a business process is in this definitive guide to business process.

Business Process vs. Business Model Purpose

Your business model is more general than a business process because your model shows how your company makes money.

It can be easy for people outside of your business to figure out your business model.

But others may not always be able to guess what business processes you have.

If you have a product-based business, your business process will focus on how to produce your products. It would also include how to get your products in the hands of customers.

When it comes to your business model, your product-based business could operate in a couple of ways.

You could sell exclusively online through your website, or you could sell your products in physical stores.

Business processes tie into your business model, and both can help you make more money and grow your company.

But each has a unique role in growing your business. Consider how each works so that you can use them to your advantage.

Devising a Business Model

When you first start a business, you should consider the business model.

If you have an idea of how you want to make money, it will be easier to set up the various processes. You don’t have to know every detail of your business model.

As you start and grow your company, you may need to change your business model.

You may find that selling your product in one store isn’t as profitable as selling online.

It’s possible to start a business without a clear business model, but you may have to do more trial and error.

But if you do some market research to make sure there’s a need for your product or service, you can create a business model that will work.

Your business model can be one of many options, so consider a few models.

That way, you can choose a model that will work for your business.

Compare Popular Models

Business models can vary significantly based on what the business offers and where you want to sell.

If you want to offer a product, you will have a different business model from a company that provides a service.

You can model your business after a successful company, but you also want to be unique.

Consider a few popular business models that are traditional and some that are newer:

Advertising-based
Brick and mortar
Combination stores
Direct sales
Franchising
Online stores
Subscriptions

Depending on the product or service you have to offer, you can make one or more of these models work for you.

Consider adjusting the model to fit your needs.

For example, if you want to offer hair styling services, you could start with a single location before franchising.

A product-based business could sell both online through Amazon and a company website.

And you can also pitch your products to retail stores to sell them in person.

Consider What to Offer

If you’re unsure of the right business model, think about what you want to sell.

Some products or services lend themselves to specific business models more easily.

For example, it’s almost impossible to offer car repairs over the internet.

But if you want to offer consulting services, you can do that with a brick and mortar office, or you can do so with a video conferencing program.

Then, you can run your business online if you can’t get local clients.

Over time, you may find that a different business model is more profitable than the one you started with.

Perhaps you begin by selling clothing in a retail store, but you realize that you can make higher profits by selling online.

It’s okay to change your business model, and you should do what you can to increase your profits.

Whether you want to start a business or change the model, you should consider how much you can make with various models.

Consider How to Offer It

Another element to your business model is how you structure your product or service.

A lot of subscription businesses, such as streaming websites, offer a free trial.

While you may lose money during the trial period, it can get more people to sign up.

Free trials can help attract people and get them to try your product or service without committing to it.

You can also use free trials as a product-based business.

Consider including a free sample of your newest product with any purchase.

Another option for your business model is to give referral rewards.

Whenever a customer signs up for your service or buys your product, you can give them a unique link.

If someone clicks that link and buys from you, you can give the customer with the link a discount or a credit.

Trials and referrals can be a big part of your business model.

They can help you grow your customer base, but they can eat into your profits.

Consider Costs

When deciding on a business model, you should consider how much you can make.

But don’t forget to calculate the potential costs.

Setting up a physical location for your business can cost a lot of money.

If you offer a physical product, you’ll have to pay for the manufacturing process.

And when it gets to you, you’ll need to pay to store it until a customer places an order.

If you need to hire employees, you’ll have to pay them.

The specific costs you have will vary, and it’s essential to consider them along with your business model.

An online store may make you more money than selling in retail.

But with retail, you won’t have to worry about storing or shipping inventory.

If you offer a subscription for your business, you’ll have to consider how you will send that to customers.

You’ll need to make sure there’s a constant flow for manufacturing or creating what you include in your subscriptions.

Once you know what costs you can expect, you can price your products and services to make money.

But should also consider the standard price for what you sell.

You don’t want to be the one business who charges hundreds more than your competition.

Determining Business Processes

After you have an idea of the business model you want to use, you can start to develop business processes.

Your business processes are what help you reach specific goals in your business.

Your business processes go into how you will produce your product or offer your service.

If you have a larger company, the processes can help all of your employees.

It can allow for more consistency across the company.

Having business processes will help you and your managers train new hires.

But without a business model, you may not be able to decide which business processes are best.

If you sell products online, you may not need a process for getting them into stores.

When you offer a service, you will need a process for how to execute that service.

But you won’t need a process for manufacturing and shipping inventory.

Consider the Business Model

When setting up business processes, think about how they relate to your business model.

You don’t need to have a detailed business model to do this.

As long as you know what you sell and how you can use your business model.

List out every factor you can about your business model.

Think about how that might affect the business processes you use. Once you consider all of those possibilities, you will be able to create a business process.

Like your business model, your business processes will probably change at some point.

But make sure that your processes work with your business model. That way, you can have a successful business.

Set a Goal

The goal of your business model is for your business to be successful.

You want your company to make a profit so that you can keep running it.

But when it comes to creating a business process, the goal is usually more specific.

If you sell products, you might have a business process for how to create those products.

Odds are the goal of that process is to decrease costs without sacrificing on the quality.

So your business process may be to research manufacturers.

A business process for a service-based business might be how to offer the service.

That can include what tools to use, how long to spend with a customer and more.

List the Necessary Activities

Once you find a manufacturer, you will continue with that company for as long as they offer you the same price.

If they raise prices, you may use your business process to consider other companies who can make your product.

Unless you’re the only person working in your business, you should write out the steps when creating a business process.

You and your employees can use those steps to ensure consistency. That way, you can make sure your customers get the best experience.

If you don’t include the details for your business processes, you can risk people doing things differently.

But your business processes are an essential part of making your business model work. It’s better to be too detailed than too general, especially with new hires.