Business Plan Vs Strategic Plan
These two terms are frequently used interchangeably, which is incorrect. Business and strategic plans are frequently confused, but they are not the same. Every business should have both types of plans, and it’s critical to understand the distinctions between them so your company can benefit from both.
A business plan is generally required when a company is in its early stages of development. This plan describes how your company will operate, its goals for growth and financial success, and how it intends to achieve them. Essentially, it expresses the why of a business.
What is a Business Plan?
A business plan, in its most basic form, is a guide—a roadmap for your company that outlines goals and details how you intend to achieve those goals. It’s also a way to incorporate and align your organization’s separate strategic plan, marketing plan, funding plan, and however many other plans it’s amassed over the years. The business plan is an incorporated, refined, and effective tool to assist you in the following:
- Sharpen your strategic focus and objectives.
- Determine your desired outcomes and success metrics.
- Determine your target markets and the value you provide to them.
- Determine the strategic alliances that will help you succeed.
- Define the most effective leadership and management functions.
- To best support your mission, align your business model and organizational infrastructure.
- Obtain the resources you require to make a difference.
Three Main Components of a Business Plan
A business plan outline should be deliberately crafted to include all of the focus points considered crucial by the audience. A business plan includes the following 3 Main components:
The Executive Summary
This is one of the relatively short elements of a business plan, but it is the one you must dedicate the most time working on. The executive summary is the greatest elevator pitch in which you introduce your business idea, provide background, discuss your approach and results, and communicate optimism that you will be successful.
Make a point of summarizing the five “Ws” (Who, What, Why, When, and Where) in addition to the mission statement. Consider why you started the company as well as where you want it to go in the future; how will you get there? Your mission statement is the first step in developing a culture in which individuals in the company will work and live.
The Financial Plan
The sections on products and services, marketing, operations, and personnel show that the business idea is feasible, but the financial section proves it is viable.
One of the primary goals of your business plan is to establish the sum of capital required by the company. The financial plan evaluates the proposed use of these funds (e.g., labor expenses, equipment, insurance costs, working capital, and so on) as well as the anticipated earnings potential. It includes projected income statements, balance sheets (showing liabilities, assets, and equity), and cash flow statements.
The Marketing or Sales Plan
The entire purpose of any business is to make sales. They require marketing campaigns and strategies that target the right audience at the lowest possible cost while yielding the highest possible return. A company selling study tools and materials, for example, will target students, particularly through social media. Businesses must plan their campaigns and choose their advertising channels in this manner.
Why A Business Plan Is Crucial to The Organization?
A well-written business plan is essential because it allows entrepreneurs and small business owners, as well as their employees, to set goals and track their progress as their company grows. When starting a new business, the very first thing that should be done is business planning. Business plans are also crucial for attracting investors because they can establish whether your company is on the right track and worth investing in.
Four Reasons to have a Business Plan-
- To raise money for your business
- To make sound decisions
- To help you identify any potential weaknesses
- To communicate your ideas with stakeholders
Cost of creating a Business Plan
Business plan writers and consultants typically charge between $2,000 and $25,000. The cost, however, is heavily influenced by the required quality of your plan, the complexity of your business plan, and the length of the document. Professional business plans for small businesses may only cost a few thousand dollars to write, whereas more complex business plans for larger, growing businesses can easily cost more than ten thousand dollars.
How to use your business plan for strategic development and operations?
The most effective business strategy plans develop gradually and are started after a succession of competitive intelligence, market research, and qualitative study which evaluates your organization’s current state and potential future state.
Clients get a quick overview of your company from your summary, which will help them decide whether to investigate further. A business plan is specific to your organization, thus the methodology and structure differ greatly. Regardless of form, you should still think about your goal while answering a few fundamental questions.
Start with a simple plan
A business plan can be especially useful during a company’s early development and serves as a compass in the midst of the ambiguity, diversions, and occasionally quick changes required in launching a business. A business plan for an enterprise company has to be an active, dynamic document that aids with deliberate expansion.
The strategic plan assists an organization in making strategic decisions based on context and strong analysis. A well-planned strategy should address the fundamental issues of strategic focus, desired impact, position, and imperatives… followed by objectives and strategy.
What is a Strategic Plan?
A strategic plan, as opposed to a business plan, outlines a company’s goals and the steps necessary to achieve them. Your team is the audience. Its primary goal is to increase alignment and decision-making ability in order to prepare your company for the future.
A strategic plan contains answers to the following questions:
- What are my current strengths, weaknesses, values, mission, and vision?
- What are my objectives, and what should I do to reach them?
- Who does what, when, and how to get me where I want to go?
- 5 Main things to Include in a Strategic Plan
- The Vision
Creating a strategic plan, whether for your entire company or for a specific initiative, requires you to be coordinated a vision for success.
Your vision will assist you in:
Bring consistency to your company. People will work together to achieve a common goal, resulting in increased efficiency.
Develop strategies that are focused and coherent.
Motivate employees, investors, and other stakeholders to make emotional and monetary investments in your company.
The second step in the strategic planning process is to set goals. Depending on their purpose, goals can be established for both individual departments and the entire company.
A goal for an organization can be broad, but when establishing goals for a department, you must be specific and detailed so that your team members comprehend what they must do.
The principles of an organization serve as a guide for correct protocol and fair business practices. Many organizations spend time establishing how to best achieve their goals and overarching plan through principles. The principles aid in the coordination of everyone’s efforts toward a common goal in order to resolve any issues that may arise.
The Action Plan
This is the phase where you begin taking your comprehensive evaluation of goals and objectives and translating it into meticulous actionable steps with assigned duties. This fully functioning plan of action ought to be a formal document outlining the series of actions or efforts required to achieve a goal. This is the main source of data for how you will enforce, supervise, regulate, and close out objectives.
Action plans are susceptible to change as unexpected events occur, so be prepared to respond with an adaptive mechanism.
The SWOT Analysis
A SWOT analysis is intended to assist you in developing a strong business strategy by ensuring that you have taken into account all of your company’s strengths and weaknesses, as well as the opportunities and threats it faces in the marketplace.
Strengths (internal, positive factors)
Strengths are the positive characteristics, both tangible and intangible, that exist within your organization. They are under your control.
Weaknesses (internal, negative factors)
Weaknesses are facets of your company that reduce the value you provide or put you at a competitive disadvantage. To compete with your best competitor, you must improve in these areas.
Opportunities (external, positive factors)
Opportunities are externally appealing factors that represent reasons why your company is likely to succeed.
Threats (external, negative factors)
External factors beyond your control that could jeopardize your strategy or the business itself are examples of threats. You have no control over these, but you may benefit from having contingency plans in place to deal with them if they occur.
Why Is A Strategic Plan Crucial to The Organization?
Every business must be goal-oriented, with a specific set of goals and objectives. It is critical for an organization to have goals, aims, and objectives in order to keep the cash registers ringing and reach the pinnacle of growth and success.
The Importance of Strategic Planning :
- It gives a sense of direction to the entire team of the organization
- Competitive edge in the market
- Make the company proactive by nature
- Increases productivity and operational efficiency
- Higher sales and profits
- Keeps employees motivated
- Attracts financial investors
- Minimizes risk
- Cost of Creating a Strategic Plan
The cost to prepare a strategic plan varies widely – the cost can literally range from $5,000 to $50,000 – depending on your organization’s needs and the complexity of the process you require of the consultant.
Business Plan Vs Strategic Plan
Business plans, or BPs, are designed to persuade a shareholder or lender to sponsor you. Strategic plans, on the other hand, are created to establish and document your company’s strategy so that it understands and can achieve its goals.
A business plan is mainly used to secure financing for an endeavor or to direct operations, and the two plans focus on different time periods in business history. A strategic plan is used to research a future period, typically three to five years. A business plan is typically created a year in advance.
Business traditionalists frequently describe that business plans are created for new businesses and strategic plans for established businesses. This is not correct. The distinction between strategic plans and business plans is unrelated to the company’s age. Mature businesses frequently evaluate their business plans on an annual basis to benchmark finances and ensure that the company is on track for success.
At every stage of a company’s development, business plans are used to obtain loans, safeguard alliances, and pique the involvement of corporate executives. Similarly, young businesses can use strategic plans to develop a competitive edge, consolidate operations, and ensure customer satisfaction.
Connections and Dependencies
The contents of the business plan establish the boundaries of the strategic plan. The aims of the business plan are not just to establish the intended outcomes, but also the timeframe for achieving those outcomes. It indicates the number of available resources, personnel, and funds. The strategies are built around those criteria, while also implementing new areas and information required to achieve the desired outcomes.
The larger the organization, the greater the need to establish a strategy for future growth. Many smaller businesses can get by with just a business plan. They frequently do not consider writing a strategic plan. Creating strategic management, on the other hand, usually brings numerous benefits and improves the company’s growth.