What is the Difference Between a Business Plan and a Strategic Plan?
By M. Dana Baldwin, Senior Consultant
We often get questions asking what the difference is between a Business Plan and a Strategic Plan. The first difference is there is a significant difference in intent. A Strategic Plan is focused on improving a company’s performance, exploiting opportunities and building market share. A Business Plan is most often used at the beginning of a company’s existence to define the initial goals and objectives of the company, its structure and processes, products and services, financial resources, staffing/talent needs and all of the basics which go into forming a company and getting it functioning.
Elements of this plan usually include:
1. What products and services the company will offer to the marketplace.
2. What types of customers the company will target
3. What skills and capabilities the company will need to compete effectively and where the company will obtain those skills and capabilities
4. Determining trends in the marketplace, and the characteristics of the market segments the company will initially pursue
5. Developing how you will sell into the market segments you are intending to pursue. What demographics will you target? What are their buying behaviors? How will competition likely react to your company entering these markets?
6. What will your costs be in each of the parts of the company? How will you fund them during the start up phase? What are your first and second year projections for revenues and expenses? How will you make a profit?
Usually a business plan is an overall guide to setting up your business, although some will use it as a more detailed one year plan based on the Strategic Plan. Often there is considerable overlap between the two plans inasmuch as they will often cover similar ground. Generally, however, we envision a business plan as the blueprint for setting up your company and getting it started, and a strategic plan as the ongoing game plan to continually improve market share, volume and profitability.
The intent of a strategic plan is to develop a much more targeted vision of where you want to take your business in the future and how you will accomplish your strategies, goals and objectives, once the business is established and ongoing. Strategic planning is the 30,000 foot view of where we take the company. In your strategic planning, your focus turns more toward looking at the current situation, analyzing what your strengths and weaknesses are, determining how best to build on your strengths and avoid being trapped by your weaknesses.
You will look for your strategic competency, which we define as a sustainable competitive advantage built on the skills, processes and knowledge contained within your company.
By building on your strategic competency, making it better and even more effective as a sustainable competitive advantage, you will improve the opportunities to excel as a company, gaining market share and profitability.
All of the elements of strategic planning, starting with your current situation, working through the analyses of your company, your markets, competition, opportunities and finding out where you may have gaps between your current performance and where you should be in the future, lead to the development of logical, attainable (yet ambitious) strategies which will head you toward winning a higher market share and better profits.
M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. and can be reached at email@example.com.
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