Are there differences and similarities between business plan and strategic plan? Here is what you need to know
To start any business, chances are that you’ve heard a lot about business plans and strategic plans.
But what do these mean?
At least you know that that a plan refers to systematic preparation to achieve a set goal or target. As we discuss the differences between the two, you’d see how each of these are important.
This understanding will also enable you put these concepts to practical use.
Business Plan Vs Strategic Plan – Similarities
Absolutely! Although there are areas where strategic plans differ from business plans, both of these plans have areas of overlap. We’ll soon show you these points as well as discuss what distinguishes them from each other.
In a nutshell, you’d find out that a strategic plan complements a business plan.
Without delay, let’s dig in to the details;
What are the Differences Between a Strategic and a Business Plan?
The business plan is the starting point for every business. This is because it charts the way. In other words, it sets the agenda. It also provides answers to critical questions of what you seek to achieve through your business. Hence your plan provides direction. As such, it helps streamline all efforts towards achieving a common objective.
This provides a framework that covers the marketing strategies (also called the marketing plan), your financial projections as well as your organizational structure. These capture the essence of your business operations.
The strategic plan on the other hand focuses on how such plans will be implemented. This is rightfully called strategic because it zooms in on the details. While a business plan will show the way, the strategic plan shows the “how.” This is also called the action plan. Both plans (that is, business and strategic) should contain an analysis of strengths, weaknesses, opportunities and threats.
The Business Plan
Business plans normally provide a general overview of the operations of a business. It provides clarity on financing requirements of the business while also projecting a sales forecast. A good business plan should include three main parts; the operational plan, a marketing plan as well as the financial plan.
Let’s discuss each of these briefly for the sake of clarity;
This subsection of the business plan deals with its organizational structure. Every business needs a well laid out structure in terms of competent personnel. This covers both the manpower requirements as well as its equipment needs among others. The operational plan provides an overview of what and who’s needed to run the business effectively.
This deals with how your products and services will reach your target market. The marketing plan seeks to sell your business.
Also, it brings out to the fore the advantages if any your services or products have over similar ones. In summary, It seeks to promote your business activities by appealing to your target market.
However attractive your business propositions may be, the financial plan determines if you get the funding or not. This section proves the viability of the business idea.
Therefore, this will attract scrutiny from investors the most. It reveals if funds invested can be recouped with profits.
The Strategic Plan
Most of the contents of a business plan can also be found in the strategic plan. However, the difference is in the approach.
In other words, strategic plans are more about setting out specific action plans to follow. It clearly spells out the responsibility of each personnel as regards their specific duties. Therefore, every strategic plan is expected to have set deadlines as well as streamlined and systematic plans of action.
It also prioritizes resources such as people, money and time towards maximizing productivity. Hence by providing direction and focus, the strategic plan clarifies the goals of the business. It also enhances the sustainability of your business’ competitive advantage over a long term period.
Common types of strategic plans include marketing strategies, corporate strategies and general business strategies. Each of these works best in certain business environments.
By looking at factors that affect the smooth running of a business both internally and externally, your strategic plan encourages enhanced productivity. This clarifies the needs of the business as well as the needs of the target market.
Can Both be Updated?
As businesses grow, the need to make some adjustments arise. This is necessary to keep up with new challenges or realities.
Therefore, a yearly update isn’t out of place considering the need to better respond to such realities. Most times when business plans are updated, strategic plans also need updating.
However, when this is restricted to the strategic plan, the business plan may not require such updates.
In other words, a change in your business plans will require a change in strategy for better and far-reaching impact on overall business operations.
Both Business and Strategic Plans Must be Comprehensive Enough
When writing both your business and strategic plans, easy comprehension should be your goal. This requires passing the information across the simplest way possible. Lenders and investors want to get as much information from the content of these plans.
Therefore, you need to be deliberate in making it easy to comprehend. This calls for clear and concise writing.
We’ve shown you the difference as well as similarities of the business plan vs the strategic plan. These two plans complement themselves and enable you properly implement your strategies. While clarifying your business activities as provided by your business plan, you get to also implement these successfully. The latter is aided by your strategic plan.