Business Model vs Business Strategy for a Software Company. Know the Difference and Take Advantage of Each One

Today entrepreneurs talk and hear about business models and business strategy. Will it be the same? In this article, we will know it.

Business Model (Meaning)

A business model is the representation of the architecture of the company you have or want to start. In it, you must contemplate your initial ideas, the pivot, your validations , your value proposal , market segment , scalability (expected), and in general, the value chain from the idea to make effective the purchase and consumption of your product or service by the consumer.

It is to think about raw materials, essentials, production, investment, and all the production processes you expect to have.

The business models even contemplate the market segment you want to reach.

What you need to offer your value proposition and how much it will cost.

It is a complete and general document that defines and articulates the life, evolution, and action of your business. This concept applies to all industries, not only to software companies or software as a service company (SaaS).

Business Strategy

On the other hand, a business strategy is a specific plan that will lead you to fulfill commercial or business objectives.

In fact, more than the plan, it is the decisions you make about the actions you will execute, the path, the people involved, and all the information required to achieve a specific objective. It is usually linked to the commercial area.

What Was the First? The Business Model or Business Strategy?

You've probably asked this question on more than one occasion, and many authors have written about it, although opinions vary.

But most scholars confirm that it is the strategy first and then the business model.

You first think about a goal where you want to go. And then you define the whole structure and operations to meet that objective.

It is likely that throughout the life cycle of your business, you will have to change your business model and even your strategy because they go hand in hand.

The business model facilitates the strategy. This happened to many businesses this 2020. They had to change their strategy in the face of the social changes that took place, and this promoted the digital transformation and the digital markets (business model).

In conclusion: a business model and business strategy are not synonymous, but they are related.

Business Models Possibilities for Software as a Service Companies

* On-Premise:

This business model presupposes that the software was correctly installed within the client's internal structure. This type of model has great advantages since it allows for modifications to be made depending on the client's needs at any time. The simple integration with a client's corporate system server is another advantage that makes this IT company's business model attractive. A disadvantage, it needs space and technical capacity.

* Cloud-based:

This is a method in which the software works in the cloud service or at a hosting provider. You can access your information from everywhere in the world as long as you have access to the internet. It is not necessary to download any mobile application. Nowadays, more and more companies are opting for cloud hosting such as Amazon Web Services or Microsoft Azure .

* Hybrid:

It is a combination of on-premise and SaaS models that allows its customers to have their application installed on-site and also take advantage of cloud services. This business model for software development is highly sought after by enterprises because it is very flexible in terms of data transfer between cloud services and on-premise data centers, as well as allowing large capacity files to be sent and upgraded easily. It also allows for the storage of confidential data on-site.

Business Strategies

Set Your Goals

Define Your Target Market

Get Personal and Tell a Story

Work Out A Social Media Strategy

Invest in SEO

Do Guest Blogging

Educate Your Clients Through Tutorial and Guides

Create a Solid Website

Funnel Marketing

The most important thing of all that we have been discussing is that to start your business you will need both: a business strategy and a business model. You know they are different techniques, and we gave you some ideas about how to do it. If you have an idea that needs incubation, or you already have it, but you need to accelerate it, contact us, and we will help you with this process too. Valid for startups and software businesses.

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