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Do You Need a Strategic
Plan or a Business Plan? Or Both?
Frequently, a Strategic Plan and a
Business Plan can be confused with one another. A
Strategic Plan can often be a subset of an overall
Business Plan. But the two plans have different
purposes, and take on different formats. In this
article, we will explore some of the similarities and
differences, to help you decide if your business needs
one or the other. Or both.
A business plan is usually a
substantial and detailed document. It typically
includes a thorough examination of a new product/service
concept, the viability of a market for that
product/service, an overview of competitors and their
products/services, how the concept is differentiated
from the competitive offerings. It also spells out how
the concept will be fashioned into a product/service,
how much the product/service will cost, how it will be
promoted, how much revenue is it expected to generate,
plans for development and operations management, and the
necessary resources to make it all happen (including
capital, employees, space, and equipment). The business
plan spells out what you want to do, who else is doing
it, what impact you can create, or need you can fill,
and how much money will be spent and made in this
endeavor.
On the other hand, a strategic plan
is usually a shorter document which provides the
foundation and framework for a business plan. It spells
out a company's mission, primary goals, and measurable
objectives, and explains the basic strategies for
achieving the mission and the goals. It’s about focus
on direction; it says, this is what we ultimately want
to do, this is where we are now, and this is how we plan
to get to where we want to be.
Business Plan
Much has been written about the
differences between management and leadership. The
consensus is that management is really about projects
and processes, while leadership is more about people.
Using this premise, a business plan is a management
tool, for companies that may be aligned regarding
ultimate vision and direction, but not so clear on
organizational structure, standard procedures and
systems, and overall detailed planning. The business
plan helps an organization manage its activities, and
measure its progress toward short- and mid-term goals.
It aims to enhance the effectiveness of an organization,
without significantly altering its established
direction.
A business plan typically
concentrates on a specific product, service, or
program. It focuses on realistic financial projections,
and will contain market research, competitive
intelligence, projected sales and budget figures.
Business plans usually sketch out the next three to five
years, and are typically updated every year or two.
Strategic Plan
A strategic plan, on the other
hand, is a leadership tool, useful to companies whose
organization and systems are established, but perhaps
lack a focused vision, or their employees may not be
united towards a defined goal. The strategic plan
describes the business’ mission, along with supporting
goals and objectives, and the strategies to be utilized
in pursuing them.
The process of creating a strategic
plan can be as valuable as the finished work itself. It
is imperative to involve key management people in this
exercise. Oftentimes, differing viewpoints may emerge
from within the team, but through discussion and
communication of ideas, consensus is usually found.
Frequently, product or service enhancements and
innovations are born out of such strategy exercises.
The most successful business plans
have a strong balance between the enthusiastic
possibilities for the future, and the pragmatic realism
of hard business data. It should serve as a roadmap
showing the best way to get you to where you envision
your business.
Strategic planning should be done
at the beginning of a business venture, and in
preparation for each subsequent new fiscal year. It
should also be done prior to launching any new venture,
division, or product/service line. The strategic plan
tells how you plan to achieve the financial projections
stated in the business plan.
So
Which Do You Need?
Successful, organized businesses
have both, and both are updated every year or so for
accuracy, market feasibility, budget guidelines, The
plans do not necessarily need to be rewritten each time,
but the points therein should all be re-evaluated to
ensure continued relevancy. You want to know if your
desired destination is still in the same spot, and if
the roadmap you are using is as up-to-date as possible.
If your business hasn’t reviewed
its business plan and strategic plan in over three
years, it is definitely time to attend to them. If you
never bothered with written business and strategic plans
for your business, we urge you to make time for the
process, sooner than later. There is always benefit in
having your vision, mission, goals, objectives, and
strategy all on paper for your entire organization to
see.
When a CEO brags that his company
is “all on the same page,” he means the pages of the
business plan and strategic plan.
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