what's the difference between a strategy and a business plan

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Business plan vs Strategic Plan - What You Must Know

Like everything else in life, the nature of business needs a plan in place to follow and measure. Crafting a strategic roadmap isn't just a suggestion—it's a necessity.

This is one of the key elements of a startup or even a business division within an organization that is expanding or diversifying. It has every resource element and needs to be mapped out for the business, including projected milestones for the future.

However, every business strategist needs to know that there are some subtle differences between what constitutes a business plan, and the several differences it has with a strategic plan. Let’s walk through the different elements that comprise each and understand the outcome each aims to achieve.

Introducing The Business Plan

A business plan is exactly what the name suggests— a plan to start and run a business or a new entity of an existing business; usually either an expansion in a newer region or a diversification into a new market. Business plans are mainly created for internal reference purposes or external funding purposes, with the latter being the common usage. They form the basis of all business strategies and decisions made at the ownership level in an organization. The most essential components of a business plan include:

Organizational Plan - This is the core of a business plan, and it includes the mission and vision statement, along with the market in which the company plans to operate. This plan also encompasses thorough market research to gauge the potential of the business, crucial for securing funding or sponsorship. It articulates the rationale behind the business's growth trajectory, outlining clear timelines for achieving milestones along the way.

Financial Plan - A robust financial plan is the bedrock of any successful business venture, where cash flow reigns supreme, and a meticulously crafted balance sheet serves as the ultimate scorecard. A financial plan includes some of the most important elements of the entire business plan and includes elements like projected cash flow statements, capital requirements, a summary of projected overheads, a projected balance sheet including assets and liabilities, and income and expense statements.

Remember to regard this as the central nervous system, for it permeates and influences almost every aspiration the enterprise hopes to attain.

Sales and Marketing Plan - We mentioned “almost” everything above for this very reason. Sales and marketing form the other significant component of the business plan. These include sales forecasts and overheads, marketing and brand management summaries, and market share projections that the business hopes to achieve within a time frame.

Business plans are indeed comprehensive and all-encompassing. They form the basis of the business's existence or the rationale for investments in it. But what about translating these plans into action? How do we ensure that the sky-high goals set forth are actually achievable?

The Actionables- A Strategic Plan

Strategic plans constitute the basis of operations and responsibilities within the business. These plans lay the paths out for each member of the organization to follow and define the functional outline and the key outcomes for every project and process within the business. A strategic plan goes on to define the operations and their outcomes within the organization, its departments, and its employees. The single thread connecting strategic planning with the business plan is the vision of the organization, and for obvious reasons— vision serves as the guiding light for strategy formation, which, in turn, directs the day-to-day operations of the business.

Why A Strategic Plan is Crucial to The Organization

In a word— synchronization. A robust and well-laid-out strategic plan establishes the much-needed sync between teams and their objectives. Not only that, it also provides a guide for daily operations alongside the focus and direction that teams often need to get the job done, on time and within budget. When all these components are integrated into a cohesive network, the true value of a strategic plan emerges—a seamless and grand orchestration of departments, teams, and individuals using the resources allocated to them to achieve the key performance indicator that they are responsible for.

Elements to Consider in a Strategic Plan

When tasked with creating a strategic plan for your business, you will need to incorporate certain components that will ensure that the stakeholders are aligned completely with the organization’s goals and objectives. These include:

Vision and Values - The vision statement is the most important component of the strategic plan and the most overarching. It propels the organization towards established goals and the values that every employee and stakeholder must incorporate.

Goals - These are short, medium, or long-term, depending on the scope of the strategic plan. They provide the much-needed context for the organization to undertake initiatives that meet the vision while maintaining the values.

Guiding Principles - Often, organizations face crossroads where they must decide which steps to take next, to reach their vision. Principles are included in strategic plans to align teams towards the vision when faced with a dilemma and form a critical part of strategic planning.

Action Plans - A sum of key initiatives, processes, and projects that are required to be performed on a pre-determined periodic basis for the goal to be accomplished. These also include the time frames for each stakeholder responsible for each option. They usually follow the DACI format for each action (Driver, Approver, Contributor, Informed)

SWOT Analysis - The quintessential component, the Strength, Weaknesses, Opportunities, and Threats analysis of the strategic plan lends context to all business actions vis-a-vis the external environment. This includes competitors, market forces and conditions, identification of internal and external threats, and several other factors.

Read This - SWOT Analysis: How to Strengthen Your Business Plan

Here’s a table highlighting the main differences between a Business Plan and a Strategic Plan with a focus on the key components of each—

Learning All About Strategic Planning

In all businesses, a strategic plan serves as the foundational blueprint, akin to a meticulously drawn map for a general. It provides the essential guidance and direction needed for the entire organization to navigate toward success. It is crucial, therefore, to acquire the necessary skills and certifications for employment as a business strategist who would be entrusted with creating it. Know more about how to become a successful and sought-after business strategist today!

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Business Plan Vs Strategic Plan: What’s the Difference?

Business Plan Template

• May 6, 2024

Strategic and business plans are both different sides of the same coin! Some entrepreneurs use it interchangeably but they have a significant difference.

Now the question might arise, when to use which, and what is the difference, right?

Worry not—we’re here to guide you through it all. In this article, we’ll learn the differences between a business and a strategic plan, understand their meanings, and know how to use them effectively.

So, let’s kick-start this journey by exploring a business plan vs. strategic plan . Get ready to unlock everything about both!

What is a Business Plan?

A business plan is a written document that outlines a company’s goals, timeline, finances, and strategies for achieving them. It provides a roadmap for the future of your business.

Generally, it includes sections such as an executive summary, company description, market analysis, products & services, financial plan, and much more. Your business plan is a must-have document when it comes to securing funds for your business.

Okay! And what about the strategic plan?

What is a Strategic Plan?

A strategic plan is a document that communicates an organization’s vision, mission, and core values. It focuses more on specifics about how a business will operate and generate profits.

Strategic plans are typically long-term documents, covering a period of three to five years or more, and are used to guide decision-making and resource allocation within the organization.

Key Difference Between a Business Plan and Strategic Plan

It was all about the basic definition of business and strategic plan. Now, let’s compare them side-by-side to understand their use case, and how they are distinct from each other:

Level of detail

A business plan is usually considered a granular and in-depth document. It outlines the tactics and actions necessary to achieve operational objectives. Business plans are usually 15-30 pages long .

A strategic plan typically provides a high-level overview of the organization’s goals and the strategies to achieve them without going deep into the business operations. Strategic plans are generally 10-15 pages long, but the length depends on various factors of the business.

Time horizon

A business plan focuses on a shorter time frame, often one to three years, and is more operational. It focuses on things like product development, marketing strategies, financial projections, etc.

A strategic plan answers the questions related to a longer time frame, usually five or more years. It sets the direction of the company for the future by mentioning the mission, vision, and objectives.

Audience and use

A business plan is primarily used to attract investors, bankers, or partners for securing funding or partnership.

Whereas, internal members, such as senior management or a board of directors, use a strategic plan to guide decision-making.

A business plan explains all the sections like market analysis, products & services, management team, target market, sales & marketing strategies, financial projections, and more.

While a strategic plan has a vision statement, mission statement, core values, action plans, and more. Some of the strategic planning models are SWOT analysis , PESTLE (political, economic, social, technological, legal, and environmental) analysis, Porter’s five forces, and more.

Entrepreneurs and startups use business plans to create a strategy to build a successful business. It is used for assessing how marketable a business idea is and also helps them gauge how they can get the funding to turn this idea into reality.

Established companies use the strategic plan to give them a clear direction for where they want the company to change or develop.

For instance, decisions like changing the products they provide or moving into a nonprofit can be made with the help of a strategic plan.

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Now that we know the key differences between strategic and business planning, let us understand the common pitfalls. 

Common Pitfalls in Execution

Despite the benefits of business planning as well as the strategic planning process , organizations often face many challenges in their strategy implementation. Here are some common pitfalls:

Disparity between strategy and execution:  Without effective execution, even the strategic plan that is the most well-crafted may fail to give results.

Lack of alignment:  Failure to align the business plan with strategic objectives often results in missed opportunities and misallocation of resources.

Inadequate marketing analysis:  Insufficient analysis of external factors leads to missed opportunities or strategic blind spots that can cause more harm to a company.

To overcome these challenges, organizations need to foster a culture of communication, continuous improvement, and collaboration.

The Bottom Line

There is no one-fits-all solution when it comes to this decision! Choosing between a business and a strategic plan solely depends on the needs & objectives of your business.

Moreover, know this planning is not a one-time process! As your business evolves and external factors change, you will need to revise your plans accordingly.

A business and a strategic plan are crucial for guiding any organization to success. By using both methods effectively, businesses can navigate uncertainties, achieve steady growth, and grab opportunities in a constantly changing business world.

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Frequently Asked Questions

Which comes first, strategy or business plan.

Before making a business plan, you should create a strategic plan. A business should know all its long-term growth goals before actually defining how to reach them.

So, first, create a strategic plan, then a business plan, and then edit both of them when needed according to the circumstances.

Can a business plan be used for a strategic plan?

No, both are different. While a business plan details the operational and financial aspects of a business, a strategic plan defines goals and the strategies to achieve them. Therefore, serving different purposes, a business plan can not be used to make a strategic plan.

Is there a sample business plan or strategic plan template available online?

Yes, there are many sample business plans and strategic plan templates available online. You can find such templates on:

• Upmetrics – An AI-powered business plan software
• Small Business Administration Website
• SCORE business plans

Do I need both a business and strategic plan?

Yes, both a business plan and a strategic plan are essential for a company’s growth. A business plan focuses on the initial stages of a business, aiming to get it started. In contrast, a strategic plan focuses on the business’s distant goals and strategies to achieve them.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Business Plan Vs Strategic Plan Vs Operational Plan—Differences Explained

Noah Parsons

5 min. read

Updated October 27, 2023

Many business owners know and understand the value of a business plan.  The business plan is a key component  of the startup and fundraising process and serves as a foundation for your organization. However, it only tells part of the story. To get the whole picture and have a framework on which to build your business you also need a strategic plan and an operational plan.

• What is a business plan?

In its simplest format, a  business plan  describes the “who” and the “what” of your business. It lays out who is running the business and what the business does. It describes the products and services that your business sells and who the customers are. 

• What is a strategic plan?

A  strategic plan  looks beyond the basics of a business plan to explain the “how”. It explains the long-term goals of the business and how it expects to achieve those goals over the long term. A strategic plan explores future products and services that your business might offer and target markets that you might expand into. The plan explains your strategy for long-term growth and expansion.

• What is an operational plan?

An operation plan zooms into the details of your business to explain how you are going to  achieve your short-term goals . It is the “when” and “where” of your planning process. The operational plan covers the details of marketing campaigns, short-term product development, and more immediate goals and projects that will happen within the next year.

• What is the difference between a strategic plan and a business plan?

First, let’s look at the difference between a business and a strategic plan. For review:

A  business plan  covers the “who” and “what” of the business. The  strategic plan  gives us long-term goals and explains “how” the business will get there, providing a long-term view.

In broader terms, the business plan tells us who by showing us:

• Who is running the business? What makes them qualified? What do they bring to the table that adds value?
• Who is the competition? What do they offer and what makes you different?
• Who is your customer? How big is the market? Where are they? What do they want and how will you give it to them? Also, how will you connect with your market?

The business plan answers the “what” by telling us:

• What the business provides and how it’s provided. 
• Product, services, and operations are all explained so that readers understand how customer needs are met.

The strategic plan, on the other hand, outlines long term goals and the “how”, focusing on the following:

• Where will the business be in 3, 5, or even 10 years?
• How will you expand to offer different products and services over time?
• Will your market and industry change over time and how will your business react to those changes?
• How will you grow your market and reach new customers?
• What needs to happen so you can achieve your goals? What resources do you need to get there?
• How will you measure success? What metrics matter and how will you track them?

So, your business plan explains what you are doing right now. Your strategic plan explains long-term aspirations and how you plan to transition your business from where it is today to where you want it to be in the future. The strategic plan helps you look more deeply into the future and explains the key moves you have to make to achieve your vision.

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• What is the difference between strategic planning and operational planning?

While strategic planning looks at the long term and explains your broad strategies for growth, an operational plan looks at the short term. It explains the details of  what your business is going to do  and when it’s going to do it over the next twelve months or so. An operational plan covers details like:

• What activities need to happen to achieve your business goals?
• When will each activity take place, who will do it, and when do you need to reach specific milestones?
• How will your business operate? What suppliers will you work with? When do you need to have them in place?
• What marketing campaigns will you run and what will they cost?
• What investments will you make in your products and services this year?

The bottom line, your operational plan is the short-term action plan for your business. It’s the tasks, milestones, and steps needed to drive your business forward. Typically an operational plan provides details for a 1-year period, while a strategic plan looks at a  3-5 year timeline , and sometimes even longer. The operational plan is essentially the roadmap for how you will execute your strategic plan.

• How to use your business plan for strategic development and operations

A great business plan can encompass both the basic plans for the business, the long-term strategic plan, and the near-term operational plan. Using a lean planning method, you can tackle all three phases of planning and make the process easy to review and revise as your business grows, changes, and adapts.

Start with a simple plan

The lean planning methodology starts with a simple,  30-minute business plan  that outlines the fundamentals of your business: who you are, what you are doing, and who your customers are. It’s a great way to provide a brief overview of your business.

Expand your plan

From there, you can expand your plan to include your longer-term strategy. Adding greater detail to elements of the plan to explain long-term goals, milestones, and how your products and services will change and expand over time to meet changing market conditions.

Finally, your lean plan will cover  financial forecasts  that include monthly details about the short-term revenue and expenses, as well as longer-term annual summaries of your financial goals, including profitability and potential future loans and investments.

• Use your business plan to manage your business

Regardless of the type of plan, you are working on, you need a team of players on hand to help you plan, develop, and execute both the operational and strategic plans. Remember, your business needs both to give it a clear foundation and a sense of direction. As well as to assist you with identifying the detailed work that has to happen to help you reach your long-term goals. 

Learn how  LivePlan  can help you develop a business plan that defines your business, outlines strategic steps, and tracks ongoing operations. You can easily share it with your team and all of the right stakeholders, explore scenarios and update your plan based on real-world results. Everything you need to turn your business plan into a tool for growth.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

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