Unfortunately, these two terms are frequently used synonymously, even though they shouldn’t be Even worse, when an organization really wants a true strategic plan, many consultants misrepresent what is actually a business plan. A strategic plan, put simply, is how an organization communicates its direction, plans, and goals. In contrast, a business plan is a written document that details the company’s main operations, goals, and strategies for achieving those goals. How do these documents actually differ in form and use, and what does this mean for your organization? Let’s take a look.
Strategic Plan or Business Plan?
What is a business plan?
A business plan is a framework of plans and actions to launch a new company. A well-executed business plan results in the establishment of a new company and aids in processes like operations and obtaining financing. Entrepreneurs who want to realize a start-up idea frequently use the business plan to organize and streamline their efforts into concrete and attainable results. Most business plans have three key components, which include:
The organizational plan
This plan, which outlines the company’s vision and values and can be used to determine the market sector they want to operate in, is one of the essential components of the business plan. The organizational stage of the business plan is where you do your market research and determine how likely it is that the company will be funded or sponsored. It helps you realistically assess the likelihood of your company expanding and indicates how long it might take for that positive development to materialize before you start to see net income values.
The financial plan
The ability of a startup to expand and transform into a successful enterprise depends on money. In order to determine specifics like projected assets, liabilities, income, expenses, and many other financial factors, the financial plan requires a great deal of preparation, attention to detail, and foresight. For a startup to determine how to obtain funding, how much they need, and where they should invest it, they must accurately identify these factors. The financial plan has a significant impact on the company’s success because it affects almost all operations and aspects.
The marketing or sales plan
The marketing plan, which is also referred to as the sales plan, covers all areas of marketing and sales, such as building the brand and predicting sales. It’s crucial that the business summarizes in this plan the brand marketing initiatives and market share projections it wants to achieve over time or by a specific launch date. An effective marketing or sales plan is actionable, realistic, and helps to build a foundational, steady clientele.
What is a strategic plan?
When existing businesses want to enhance their internal procedures and streamline their operations, they use a strategic plan as a business framework. The strategic plan aids businesses in concentrating their efforts on leading the organization in a new direction that should result in fruitful and long-lasting outcomes.
A strategic plan is composed of five components, including:
The vision
A vision statement is a succinct, overarching statement that describes what a company stands for and what it aspires to. The vision encourages everyone in the organization to work towards a common goal, personify the established culture, and maintain the company’s sense of purpose.
The goals
Businesses set objectives to achieve milestones and see projects through to completion. If these goals are short-term or long-term depends on the scope of the strategic plan they implement. Companies may use the goals as inspiration to carry out projects that are consistent with their overall mission and core values.
The principles
The guiding principles of a company act as a model for good manners and ethical business conduct. Many organizations frequently take some time to consider the best principles to use to achieve their objectives and overall vision. In order to resolve potential issues, the principles help to streamline everyone’s efforts toward a common goal.
The action plan
The action plan is a list of tasks and programs that teams carry out to achieve the objectives of the strategic plans. These strategies aid in ensuring that everyone contributes to achieving the goals by the deadlines established. It is common for action plans to undergo multiple revisions because a successful action plan establishes realistic expectations for what people can accomplish.
The SWOT analysis
The SWOT analysis, which is done when a company does research to identify specific factors that can affect the business, is a crucial part of the strategic plan. This research provides a framework for a company’s decision-making in relation to both internal and external factors. SWOT is an acronym that stands for:
The difference between strategic plan vs. business plan
The biggest difference between a strategic plan vs. a business plan is its purpose. Strategic plans are used by established businesses to expand while business plans are used by entrepreneurs to launch new enterprises. There is also a different timeframe for each plan. A business plan with all the necessary elements can operate in less than a year, while a strategic plan is typically carried out over a number of years. Additionally, the strategic plan and business plan provide various applications and advantages.
Benefits of using a strategic plan
One of the main advantages of a strategic plan is that it helps a business grow more profitable, giving it more leeway in how it can allocate funds for things like purchasing cutting-edge technology and hiring more qualified personnel. Additionally, it helps businesses grow their clientele and spread the word about their brand to a wider audience.
Benefits of using a business plan
Entrepreneurs and startups gain from the business plan because it enables them to organize all of their ideas into a cohesive system where everyone has a responsibility to play in order for the company to succeed. These new businesses can establish a long-term, profitable business system with the aid of a successful business plan.
Uses of a strategic plan
Established businesses can use the strategic plan to specify a clear direction for the company’s future growth or changes, such as making a significant change to the products they offer or becoming a nonprofit. In order to see positive revenue growth and return on investment, businesses need to know where to allocate their resources, such as time and money. A strategic plan can also help a business create a long-term operating system and give it a competitive edge over other businesses in its industry.
Uses of a business plan
Startups and entrepreneurs use the business plan to develop a plan for developing a profitable business. It is used to determine whether a business idea is marketable and assists in determining how to obtain funding to put the idea into practice. A startup’s ability to raise funds will determine how quickly they can start the process of forming their company, including locating suppliers, creating a website, and hiring qualified personnel.
FAQ
IS strategic plan a part of business plan?
A business plan should not be mistaken for a strategic plan. Setting short- or mid-term goals and outlining the steps required to achieve them are the focus of a business plan. A strategic plan typically explains the fundamental tactics for achieving a company’s mid- to long-term goals.
What is strategic plan in business plan?
Strategic business planning is a methodical procedure for determining an organization’s course of action. Additionally, it outlines the goals and steps needed to realize that future vision as well as success metrics.
