As a Growth, Success, Acceleration, Healthy Living & Lifestyle Coach, I specialize in working with high-achieving woman entrepreneurs, executives, non-profit leaders and career professionals.
I received a call from Kevin who recently watched my 2011 presentation on Strategic Planning.
Kevin is looking to grow his service-based business and leverage his unique products and service offerings.
Kevin wanted to know if he really needed a strategic plan since he had developed a business plan two years ago when he started his social media company.
I informed Kevin that while a strategic plan is a type of business plan, there are several important distinctions between the two that are worth noting.
- A strategic plan is primarily used for implementing and managing the strategic direction of an existing company, business or organization. A business plan is used to initially start a business, obtain funding, or direct daily operations.
Both plans cover different time frames, e.g. a strategic plan generally covers a period of 3 to 5+ years, whereas a business plan is normally no more than one year.
- A strategic plan is usually for established businesses, companies, organizations and business owners that are serious about growing their company or organization. Whereas a business plan could be for new businesses and entrepreneurs who are in the startup phase.
- A strategic plan is used to provide focus, direction and action in order to move the organization from where they are now to where they want to go. Whereas a business plan is used to provide a structure for ideas in order to initially define the business.
- A strategic plan is critical to prioritizing resources (time, money and people) to grow the revenue and increase the return on investment. Whereas a business plan is critical if the business is seeking funding.
- A strategic plan focuses on building a sustainable competitive advantage and is futuristic in nature. By contrast, a business plan is used to assess the viability of a business opportunity, and is more tactical in nature.
- A strategic plan is used to communicate the direction of an organization to the staff and stakeholders. However, a business plan is used to present the entrepreneur’s ideas to a bank or angel investor.
- A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
- According to SBA, a business plan precisely defines your business, identifies your goals and serves as your firm’s resume. Its basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps when allocating resources properly, handling unforeseen complications and for sound business decisions.
- Another way to grasp the difference is by understanding the difference in ’scale’ between a strategic plan and a business plan. Larger companies with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental plans and marketing plans that work down from the Strategic Plan.
Smaller companies and startup companies on the other hand, typically use only a business plan (with a marketing component) to develop all aspects of their business on paper, obtain funding and then start the business.
Many smaller companies – including startups never develop a strategic plan — and many small businesses never become a large company because they do not go through the strategic planning process – which is essential to growth in this new economy.
My answer to Kevin is that you must have both – a Strategic Plan and a Business Plan (with a marketing component).© Copyright 2013 Laureen Wishom