Business Planning and Business Model Design
What a candidate must understand
A business plan is a written roadmap covering the concept, market, operations, management, financial projections, risks and funding needs. Its purposes are internal discipline, external communication to lenders and investors, and a basis for monitoring. Know the standard sections and the logic linking them.
A business model describes how a venture creates, delivers and captures value. The Business Model Canvas has nine blocks: customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure. Understand the difference between a business model (the logic) and a business plan (the document), and between revenue model and pricing strategy.
Financial projections should be internally consistent: sales forecast drives variable costs, staffing drives fixed costs, and the resulting cash flow determines funding requirements. Know the concepts of break-even point, gross and net margin, and cash-flow versus profit.
Traps in questions
- Assuming a long plan is better; clarity and evidence matter more than length.
- Confusing profit with cash: a profitable firm can run out of cash.
- Omitting a risk section or presenting only optimistic scenarios.
- Treating the canvas as a checklist rather than an interconnected model.
Worked example / rule of thumb
A coffee-roasting venture forecasts 500 kg sold monthly at 20 BGN/kg revenue, with 12 BGN/kg variable cost and 2,000 BGN monthly fixed costs. Contribution per kg is 8 BGN; break-even is 2,000 ÷ 8 = 250 kg per month. Rule of thumb: build the plan backwards from the customer and the cash, and show the break-even volume explicitly.