What Is The Difference Between A Business Plan And A Strategic Plan? – 2023 Guide
Lots of planning is involved in serious entrepreneurship. It is commonplace for one to deal with or come up with a wide array of planning activities and documents in business. In this article, we are looking at two of such which are a business plan and a strategic plan. It is interesting to note that a business plan is a form of strategic planning or plan if you look at it in some way. On the other hand, a strategic plan seems like a business plan of sorts. However, a business plan and strategic plan are different and it is the difference that we want to explore herein.
A strategic plan is a plan (normally a document) that lays out the framework (strategy) a business will use in charting a particular course. In other words, it is a series of strategic steps a business will take in assuming a particular direction towards an intended destination.
Startupbiz Global defines a business plan as a comprehensive description of how a business will achieve its goals. It is essentially a roadmap that details what a business is, what it seeks to achieve and how it will achieve it.
As the name suggests, a strategic plan is all about strategy. It is a plan or document put together to enunciate on how a particular strategic trajectory (or strategy) is going to be rolled out. For instance, a business wants to start a customer cards-based loyalty program. A strategic plan can be drafted specifically for that. So a strategic plan is primarily used to map out how a certain strategic course will be charted. Looking at that you can see how it possible for a business to come up with multiple strategic plans. This does not negate that a business can have just one all-encompassing strategic plan. In fact, one strategic plan can inform the other individual strategic plans.
One of the main objectives of strategic planning to minimize any risk that a company undertakes. The ability to make informed decisions on the fly is what helps a business owner navigate his company towards success. You can use tools like GatekeeperHQ to manage supplier risk and avoid any unfortunate circumstances happening to your business. Primarily if your business focuses on the sale of products, you will want to know that your suppliers are reliable in terms of service and quality of products. By being on top of this aspect of the business, you will save yourself from unnecessary inventory expenses, have happier customers, and most importantly, and it improves your profits.
The primary use of a business plan is to source funding from investors or financiers. It can also be used for approaching prospective business partners. It also serves as a reference document that can be used to regulate business operations over time. A business plan is more focused in the now as is the case when seeking funding. This differs from a strategic plan which is more forward-looking in terms of what it seeks to achieve. In short, the use of a strategic plan is long haul – either short or long term. Strategic plans typically cover a period spanning from 3 to 5 years, even more.
Level Of Use Or Application
We can also differentiate a strategic plan from a business plan by looking at levels of use. What we mean by ‘level of use’ is the level at which either of them is usually used.
You will typically find a strategic plan or strategic plan being used in medium-sized or big businesses. Big businesses are where you will normally find strategic plans being drafted and used. It is rare to find them being present in small or budding businesses. A big business will obviously have several branches, departments, stakeholders, shareholders and a huge customer base. This somehow makes strategic planning inevitable due to the multi-tier nature of such businesses.
A business plan is commonplace on whatever level – be it small, medium or large. It is also the norm that small-sized businesses only ever deal with business plans – rarely, if ever, do you find them working with strategic plans. This can be due to the fact that most small businesses might not even know of how to approach strategic planning. In some cases, the size of their businesses might be so small that the tenets of coming up with a strategic plan might not hold. For what it is worth they just might take strategic decisions by default without any prior process of coming up with a strategic plan.
Who Are They Addressed To?
The difference between a strategic plan and a business plan can be seen in who they are intended for.
A strategic plan is normally an internal document for business. It is a document or plan that is usually sensitive and highly confidential thus who accesses it is a big deal. A strategic plan is usually meant for the staff members of a particular business. In some cases, it can also be accessible to some of the stakeholders – even shareholders too. Actually, a strategic plan is often drafted by the use of consultative input from staff, stakeholders and even shareholders. According to getfinanceessay.com, it is important to write a paper about the finances as well so that you sum up everything together and have a clear idea of what it takes for your strategic plan.
Who a business plan is meant for depends on why it has been drafted. The most common intended recipient of a business plan is a prospective investor or financier. In other scenarios, it can be intended for a prospective business partner. Naturally, the other addressee would be the author of the business plan since they can later use it as a reference document.
A strategic plan usually consists of vision and mission statements, goals, core values, SWOT analysis, and a strategic plan log frame. The strategic plan log frame entails aspects such as critical success areas (or factors), main objectives (broken down into specific objectives, strategies and activities), resources, key performance indicators (or key result areas), responsibilities, and time frames.
A business plan comprises of components such as the executive summary, company description, market analysis, management structure, products, marketing and sales plan, and financial summary or analysis.
Descriptive Terms Used
A strategic plan enunciates how things will be done and by when they should be done. Basically you are looking at how what should be done will be done, in what time frame it should be done, who will be responsible and what will be evaluated (and how) to assess progress. A business plan leans more on who the business is all about (owners, competitors and consumers) and what is it all about regarding those three entities.
As a business, you do well to have both a strategic plan and a business plan but understand the difference.