Business plan vs Strategic Plan - What You Must Know

Like everything else in life, the nature of business mandates a plan in place to follow and measure. This is one of the key elements of a startup or even a business division within an organization that is expanding or diversifying. It has every resource element and needs to be mapped out for the business, including projected milestones for the future. However, every business strategist needs to know that there are some subtle differences between what constitutes a business plan, and the several differences it has with a strategic plan. A deep dive into the elements that comprise each also explains the outcomes they eventually hope to achieve.

Meet The Business Plan

A business plan is essentially what the name suggests. A plan to start and run a business or a new entity of an existing business, usually either an expansion in a newer region or a diversification into a new market. Business plans may be created for internal reference purposes or external funding purposes, with the latter being the common usage. Business plans form the basis of all business strategies and decisions made at the ownership level in an organization. The most essential components of a business plan include:

Organizational Plan - This is basically the core. It includes the mission and vision statement, the market in which the company plans to operate. It also includes relevant research into the market potential of the business, based on which it will be funded or sponsored. The rationale of the business’ growth, and time frames related to all of them.

Financial Plan - Cash is king, and so is the balance sheet. Financial plans include some of the most important elements of the entire business plan and include elements like projected cash flow statements, capital requirements, a summary of projected overheads, projected balance sheet including assets and liabilities, income and expense statements. Consider this the central nervous system of the business plan, because it spans almost everything the business hopes to achieve.

Sales and Marketing Plan- We mentioned “almost” everything above for this very reason. Sales and marketing form the other significant component of the business plan. These include sales forecasts and overheads, marketing and brand management summaries and market share projections that the business hopes to achieve within a time frame.

Business plans, by their nature, are fairly comprehensive and overarching. They form the basis of the existence of the business, or the rationale for investments in the business. But what of the actual operations? About walking the talk in the business plan? The actionable?

The Actionables- A Strategic Plan

Strategic plans constitute the basis of operations and responsibilities within the business. Strategic plans lay the paths out for each member of the organization to follow, and define the functional outline and the key outcomes for every project and process within the business. This goes onto define the operations and their outcomes within the organization, its departments, and its employees. The only common element it shares with the business plan is the vision of the organization, and for obvious reasons - vision guides strategy, which in turn, guides operations of the business.

Why A Strategic Plan Is Crucial to The Organization

One word - synchronization. A robust and well laid out strategic plan creates the much-needed sync between teams and their objectives. It provides a guide for daily operations alongside the focus and direction that teams often need to get the job done, on time and on budget. Combine all of these together in one large network and you begin to see the actual value of a strategic plan in the business- a grand orchestration of departments, teams, and individuals using the resources allocated to them to achieve the key performance indicator that they are responsible for.

Elements to Consider in a Strategic Plan

If you’re tasked with creating a strategic plan for your business, you will need to incorporate certain components that will ensure that the stakeholders are aligned completely to the organization’s goals and objectives. These include:

Vision and Values- The vision statement is the most important component of the strategic plan, as well as the most overarching. It propels the organization towards established goals and the values that every employee and stakeholder must incorporate.

Goals - These are short, medium or long term, depending on the scope of the strategic plan. They provide the much-needed context for the organization to undertake initiatives that meet the vision while maintaining the values.

Guiding Principles - More often than not, organizations face crossroads where they need to decide which steps to take next, in order to reach their vision. Principles are included in strategic plans to align teams towards the vision when faced with a dilemma and form a critical part of strategic planning.

Action Plans - A sum of key initiatives, processes, and projects that are required to be performed on a pre-determined periodic basis in order for the goal to be accomplished. These also include the time frames for each and the responsible stakeholder for each of the options. They usually follow the DACI format for each action (Driver, Approver, Contributor, Informed)

SWOT Analysis - The quintessential component, the Strength, Weaknesses, Opportunities and Threats analysis of the strategic plan lends context to all business actions vis-a-vis the external environment of the business. This includes competitors, market forces and conditions, identification of internal and external threats and several other factors.

Learning All About Strategic Planning

If business is war, a strategic plan is the terrain map in the hands of the general based on which the entire army fights to win. It is crucial, therefore, to acquire the necessary skills and certifications for employment as a business strategist who would be entrusted with creating it. Know more about how to become a successful and sought after business strategist today!