Business Plan vs Strategic Plan: What Business Owners Need to Know


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By Steve Williams CExP™, CMMA

Welcome, dear entrepreneurs! As a business owner, you’re likely confronted with numerous questions every day. Amongst those, one query may continue to echo: “What does my business really need?” It’s vitally important for the success of your venture to know if you need a business plan, strategic plan, or perhaps both. Let’s take a deep dive into this matter and illuminate the path ahead, clearing all your dilemmas. First let’s define, then compare the similarities, difference, applicable scenarios for each, and how to make the right plan happen.

business or strategic plan

 

Definitions of a Business Plan and Strategic Plan

Let’s break it down. A Business Plan, fundamentally, is an extensive document that defines and details the trajectory of your business. It describes what your business is about, the products or services you offer, your target market and competition, your unique selling proposition, and your plan for making the business profitable. A Business Plan leans heavily on extending the strategic direction in the business into realistic financial projections normally in the form of a profit and loss statement.

Strategic Plan, on the other hand, is the blueprint that guides your business to achieving its goals and vision. Stepping beyond the operational aspects, it focuses on the bigger picture of where your business wants to be in the future and outlines the strategies and actions needed to get there. It’s the how-to guide for your business, detailing how you will overcome competitors, address customer demands, and navigate through the journey of business growth. 

As the definition of a Business Plan and Strategic Plan are similar it will help to focus on the difference between the two.

What is the difference between a Business Plan and Strategic Plan?

While both documents are valuable, they serve different purposes. A Business Plan leans more towards providing a comprehensive presentation of your business idea for potential investors, banks, or even for your internal team. The Strategic Plan, meanwhile, is a tool specifically for an internal audience (management team, and employees) that provides direction to your business operations. It allows you to align your team’s effort and prioritize resources towards achieving your long-term goals.

Think of a Business Plan like a comprehensive view of your business. It highlights the unique selling points of your business, provides an in-depth analysis of your market, competitive landscape, and financial projections such as profit and loss statement. It allows you to present a complete picture of your business idea to obtain investments or loans. It’s essentially the document that you’d show to someone who asks, “So, tell me about your business?” 

strategic plan or business plan

In contrast, a Strategic Plan guides the direction your business should take. It’s a practical tool designed for your internal team to establish clarity on the business goals, identify key strategies, and allocate resources effectively. It is a compass that keeps all departments on track in reaching the business’s overarching objectives. Strategic Plans have quantifiable objectives tied to forecasts but typically would not involve financials statements like a profit and loss. Strategic Plans answer the question, “How will we get to where we want to go?” 

While the two plans serve distinct purposes, they are inherently linked. A comprehensive business plan grounds the feasibility of your business idea, while a strategic plan outlines the trajectory to realize its potential. As a business owner, understanding both is crucial in navigating the competitive landscape and achieving sustained success.

This table provides a quick overview of the key distinctions between Business Plans and Strategic Plans, helping business owners understand their unique purposes and applications.

Aspect Business Plan Strategic Plan
Purpose External: Secure investments, loans, partnerships Internal: Guide organizational direction
Audience Investors, lenders, partners Internal management team, employees
Focus Detailed roadmap, financial projections Long-term goals, overall vision, strategies
Content Products/services, target market, competition Vision, strategies, actions, resource allocation
Timeline Short to medium-term Long-term
Use Cases Mergers, acquisitions, securing funding Growth periods, restructuring, market instability
Financial Emphasis Extensive financial projections (e.g., P&L) Less emphasis on detailed financial statements
External Communication Tool Yes No
Internal Operational Guide Limited Yes
Quantifiable Objectives Yes Yes, but typically broader and strategic
Collaborative Process May involve external stakeholders Internal team-focused
Review Frequency Periodic, often tied to funding or investment Ongoing, aligns with organizational milestones
Adaptability May require more frequent updates Provides flexibility for long-term adaptability

How are Business Plans and Strategic Plans similar?

At first glance, you might consider Business Plans and Strategic Plans to be identical twins. They harbor a striking resemblance, with common elements like market analysis, objective setting, strategies and actions. This kinship stems from a shared purpose: guiding your business towards success. 

The cornerstone of both plans is research. Whether you’re crafting a Business Plan or a Strategic Plan, an in-depth understanding of your company’s situation is vital. This involves examining the market conditions, identifying your competitors, knowing your customers’ needs and preferences, and analyzing your company’s strengths and weaknesses. 

What’s more, both plans require a considerable amount of foresight. They compel you to wear the hat of a fortune teller and set goals for your company’s future. You look at trends, make predictions about your industry’s trajectory, and anticipate changes in consumer behavior. Essentially, both plans demand that you prepare for what’s coming. 

Last but not least, the inherent value in both business plans and strategic plans often lies in the process just as much as the final product. Crafting these plans triggers valuable conversations, provokes crucial questions, and fosters better decision-making. It’s not just about what’s on paper. This collaborative, thought-provoking process instigates deep introspection about your business and its potential growth trajectories. It also aids in identifying any existing blind spots or hurdles that might be hindering your path to success. So, never underestimate the power of these dynamic plans and what they can uncover about your business. 

Best Situation for a Business Plan or a Strategic Plan 

A Business Plan is best used in the following scenarios: an investor is interested in learning more about your business, a lender or key partner wants to be able to do analysis of your company to validate if there is a fit with their lending criteria or offering, during the mergers and acquisition process – when a buyer has entered the due diligence process, or when a business needs a check or re-check on its own financial feasibility.

Forked roads in green forest

On the contrary, a Strategic Plan is most valuable in scenarios where company leadership is seeking to provide direction and focus for the organization as a whole. This actionable guide is pertinent during periods of growth or restructuring, or when the marketplace is experiencing instability or a significant shift. It is also vitally important when a company is launching a transformative initiative or new product division, paving the way for strategic thinking and guiding the team actions towards successful realization of envisioned outcomes. 

As a business owner, it’s chiefly essential for you to leverage both Business Plans and Strategic Plans in appropriate situations. Implementing these tools properly assures efficient operation, enhances resilience in fluctuating market conditions, and nurtures a culture of planful, strategic thinking within your organization. 

As the nature of business operation differs greatly among industries, there’s no one-size-fits-all guide for using these plans. The size of your company, its lifecycle stage, the industry sector it belongs to, or the competitive nature of the market, all influence how you should use and adopt your business and strategic plans. 

Beyond the application of these plans, the success of your organization is also influenced by how adeptly and suitably you deploy them. This, in turn, involves ongoing review, evaluation and adjustment over time to maintain the trajectory toward your business goals. Thus, it’s crucial to continually refer back to and update your Business Plan and Strategic Plan as your business evolves, to ensure they remain relevant and beneficial to your company’s growth.

However beautiful the strategy, you should occasionally look at the results.
– Winston Churchill

The Role of a Business Strategist

The role of a business strategist in facilitating and advising during the creation of these plans is paramount. These professionals use their expertise to understand your vision, to set achievable and sustainable goals, and to outline the actions required to fulfill these goals. They not only plan but forecast, analyze, and study market trends to remain ahead of the curve. Their perspectives and experienced eyes can add significant momentum to your business growth journey. 

Selecting the Right Strategist for Your Needs 

Choosing the right business strategist is an important decision. You need someone who can understand your industry, resonates with your vision, and can dovetail their expertise seamlessly with your business’s needs. Business strategists who provide both Business and Strategic plans can cover all the bases, giving you a more comprehensive overview of your business’s current scenario, as well as its potential for growth and success. 

Benefits of an Expert Provider

When you team up with an expert provider of both business and strategic plans, you will discover several benefits. Firstly, experienced providers can deliver tailored strategies, taking into account your business’s unique needs and goals. They can correctly dissect your business model, examine your competition, and offer incisive market analysis to guide your decision-making process. They will design a robust and flexible plan that accounts for potential hurdles and provides solutions to overcome them. 

Final Thoughts

In our final thoughts, we want to emphasize the importance of taking the time and effort to diligently develop either a Business or Strategic Plan. No successful business has ever been created without a solid plan. These preparedness guides not only help businesses foresee potential obstacles but also provide them invaluable competitive advantage in an ever-evolving market. 

Choice Strategic vs Business Plan

The choice between a Business Plan and a Strategic Plan is not a matter of right or wrong, but rather what is most suitable for your particular situation. You have to evaluate your precise needs, the current state of your business and its future direction. 

Remember, hiring an expert provider not only leverages their deep understanding of planning processes and documentation, but it also allows you to tap into their wealth of practical experience from various industries. These specialists can provide invaluable advice and innovative solutions which are tailored to your unique circumstances, giving you a boost forward in your journey of business success.

 

Steve Williams CExP™, CMMA

is a Partner at Incentica Business Plans in Calgary. He is a certified exit planner and mergers & acquisitions advisor with 30 years of senior management and executive experience. Steve has written over 130 business plans and succession/exit plans for some of the biggest best, including Fortune 500 companies. Steve is a Business School grad and Harvard educated.

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