The business model is the mechanism through which the company generates its profit while the business plan is a document presenting the company’s strategy and expected financial performance for the years to come.
As you can see, the business model is at the center of the business plan.
For example, the business model for Microsoft was to sell software for $120 that actually only cost them $0.50 to manufacture. The business model of most
internet companies, especially during the internet boom was to attract huge crowds of people to a website, and then, in turn, they would sell others the chance to advertise their own products to these crowds. Peter Drucker for example said that “business models are basically the assumption about what a company gets paid for, specifically it’s about what a
business will and won’t do. It’s about identifying customers and competitors and their specific values and behavior. It’s also about looking at technology and its adoption, and specifically the company strengths and weaknesses.”
Essentially what Peter Drucker was saying is that your business should answer these questions;
 First, who is the customer?
 Second, what does the customer value?
 Third, how do we make money in this business?
 And fourth, what are the underlying economic logic that explains how we can deliver value to customers at an appropriate cost.