Does your organization have a business plan? Great! What about a strategic plan?
If your answer to that last question was, “Isn’t that the same as a business plan?” you’re not alone. Many organizations confuse these two critical planning frameworks, leading to misaligned business goals, wasted resources, reduced profitability, and missed opportunities.
If you want to avoid this mistake, read on. In this article, we’ll explore the differences between strategic and business plans as well as how they work together to drive organizational growth and success.
What is a strategic plan?
A strategic plan is a framework that outlines an organization’s long-term goals and objectives. It serves as a roadmap to guide the organization toward a desirable future state.
The strategic planning process should leave business owners and strategy teams with a plan that:
- Defines the organization’s purpose: Clearly articulates the organization’s mission and vision statement.
- Builds on the organization’s competitive advantages: Inform decision-makers how to best use the organization’s strengths and mitigate weaknesses.
- Is easy to communicate to the staff: Helps strategy leaders ensure all employees understand the company’s goals and mission statement and how their work contributes to them.
- Prioritizes the organization’s financial needs: Prioritizes data collection and data-driven decision-making that are imperative for the effective allocation of resources to support strategic initiatives.
- Directs the team to move from plan to action: Translates strategic goals into actionable, real-world steps. This makes it easy for team leaders to assign tasks and responsibilities.
- Sets the stage for long-term success: Establishes a clear action plan and focuses on key components, milestones, and priorities.
What is a business plan?
When we think of business plans, we normally think of a document prepared by an entrepreneur or a startup looking to get something off the ground. But business plans don’t become redundant the moment your business idea becomes a small business. It is something you should continuously refer to when evaluating progress toward achieving goals. It is also a living document that needs refreshing to help you evaluate new ideas and adapt to internal and external changes.
In essence, your business plan:
- Communicates your business objectives and goals: Highlights the product or service you’re offering, the target market, and your unique selling proposition (USP).
- Organizes your human resource operations: Outlines the experience and qualifications needed from each of your current and future team members.
- Offers you financial projections: Forecasts your organization’s financial performance by projecting future revenue, expenses, and profitability. This includes creating financial statements like income statements, balance sheets, and cash flow statements.
- Identifies your funding needs: Determines the amount of funding new businesses require to start or grow the business. Helps to develop a plan to secure financing.
- Develops sales and marketing strategies: Outlines your sales and marketing plans that will be used to attract and retain customers.
- Creates an operational plan: Details the day-to-day operations of the business, including production processes, supply chain management, and inventory control.
The key differences between business plans and strategic plans
While both strategic and business plans are essential tools for organizational success, they serve distinct purposes and have different characteristics. To help you distinguish clearly between the two, let’s take a better look at each of them side by side and how they differ in terms of timeframe, target audience, focus, resourcing, and scalability.
Timeframe
- Strategic plan: Typically covers a longer timeframe, often spanning several years (e.g., 3-5 years).
- Business plan: Often focuses on a short-term timeframe. For startups or new ventures, this is normally a year to three.
Both new businesses and old ones must refer back to and update their strategic and business plans over the years.
Target audience
- Strategic plan: Primarily intended for internal stakeholders, such as executives, managers, and employees.
- Business plan: Often targeted at external stakeholders, including investors, lenders, and potential partners.
Focus
- Strategic plan: Concerned with the organization’s long-term direction, competitive advantage, and overall business model.
- Business plan: Focuses on specific business operations such as marketing initiatives and sales strategies.
Resourcing
- Strategic plan: Prioritizes the allocation of resources to support strategic initiatives and generate a return on investment. This may involve reallocating existing resources or seeking additional funding.
Operational plan: Focuses on securing the necessary resources needed for launching and running the business operations. This includes funding, personnel, and equipment.
Scalability
- Strategic plan: More adaptable to changes in the external environment and can be revised as needed.
- Business plan: May need to be updated more frequently to reflect changes in the market or operational conditions.
Why you need both a strategic and a business plan
Both strategic and business plans are essential tools for organizational success. While they serve distinct purposes, they are interconnected and complement each other.
Aligning long-term and short-term goals
A strategic plan outlines the organization’s long-term vision and goals, while a business plan focuses on the short-term actions needed to achieve those goals. By aligning these two plans, organizations can ensure that their daily operations contribute to their overall strategic objectives.
Effective resource allocation
A strategic plan helps prioritize initiatives and allocate resources to the most critical areas. A business plan, on the other hand, provides a detailed breakdown of the costs and resources required to implement specific projects and programs.
Risk management
Both strategic and business plans help organizations identify potential risks and develop strategies to mitigate them. Strategic plans can identify long-term threats to the organization’s business model, while business plans can focus on operational risks that could impact day-to-day operations.
Identifying and acting upon opportunities
A strategic plan can help organizations identify opportunities for growth and innovation. A business plan can then be used to develop specific strategies to capitalize on these opportunities by altering daily operations.
Gaining a competitive advantage
A well-executed strategic plan can help organizations gain a competitive advantage by differentiating themselves from competitors and providing unique value to customers. A business plan can support this by highlighting specific metrics and key performance indicators (KPIs) to track when pursuing a competitive advantage.
Improving employee satisfaction and morale
When employees understand the organization’s vision and how their work contributes to achieving it, they are more likely to be engaged and motivated. Both strategic and business plans can help create a sense of purpose and direction, leading to higher levels of employee satisfaction and morale.
How to create a strategic business plan
Here’s a step-by-step guide to help you develop comprehensive and effective strategic and business plans.
1. Understand your organization’s jump-off point:
- Conduct a SWOT Analysis: Identify your organization’s strengths, weaknesses, opportunities, and threats.
- Market research: Analyze your industry, target market, and competitive landscape.
- Performance review: Evaluate your organization’s past performance, including financial data, customer satisfaction, and employee engagement.
2. Define your strategic objectives and set business goals:
- Mission and vision: Clearly articulate your organization’s purpose and long-term aspirations.
- Strategic goals: Set specific, measurable, achievable, relevant, and time-bound (SMART) goals to guide your organization’s direction.
3. Develop initiatives and action plans:
- Marketing and sales: Develop strategies to attract and retain customers, including branding, advertising, and sales initiatives.
- Financial management: Establish financial goals, create budgets, and develop strategies for managing cash flow.
- Operational efficiency: Identify opportunities to improve efficiency and reduce costs through process optimization and technology adoption.
- Human resources: Implement strategies to attract, retain, and develop talented employees.
4. Create and communicate the plan:
- Document the plan: Create a comprehensive document that outlines your organization’s vision, mission, goals, strategies, and action plans.
- Communicate effectively: Share the plan with all relevant stakeholders, including employees, investors, and board members.
- Monitor and evaluate: Regularly review and update your plan to ensure it remains relevant and effective.
Execute your plans with AchieveIt
Planning software like AchieveIt can make all the difference when planning and executing your strategic and business initiatives. AchieveIt offers both strategic planning and execution solutions as well as operational. These include streamlined progress update processes as well as data collection and analysis. It centralizes all of your organization’s information, leading to increased visibility and accountability and, ultimately, improving the execution of all of your business and strategic efforts.
If you’d like to see AchieveIt in action, check out our product tours here.
