Although a strategic plan is a form of business plan, there are several important distinctions between the two “plans” that are worth noting.
The Simple Steps Still Needed
As you put your business plan together, keep in mind the following tips:
- Determine the objectives of your plan
- Decide what information must be presented in the plan, e.g. if finance is required, include sufficient information to enable the financier to make an informed decision
- Determine in advance to whom you will be presenting the plan – knowing the reader(s) will help you decide on the detail required, its length and emphasis
- Use tables, charts and graphs to present data where possible
- Make a good first impression – incorrect spelling, grammar, punctuation, numbers that do not add up and a poorly organised plan all detract from the impact of the document
- Keep paragraphs and sentences short
- Avoid jargon – don’t use language that only an expert could understand
- Don’t make vague or unsubstantiated claims or statements
- Arrange to have your business plan bound in a business-like (not ‘slick’) presentation
- Include an executive summary up-front but write it last
- Be succinct. Quantity does not equal quality – a well-written plan should say it all in 20 to 30 pages
- Use consultants where required to assist you to prepare the plan but not prepare it for you – it should always be your plan, you should understand it fully and be committed to it
The Ying & Yang of Business Plans & Strategic Plans
A strategic plan is used for executing and running the strategic direction of your existing business. Whereas a business plan is the document you use to initially start your business, obtain funding, or direct operations. The two plans cover different timeframes – a strategic plan generally covers a period of three years, whereas a business plan is normally no more than twelve months.
A strategic plan is for established businesses, organisations and business owners who know that they have to plan diligently to ensure they can sustain and grow their organisation. Whereas a business plan could be for new businesses such as a new company, law firm or franchise.
A strategic plan is used to provide focus, direction and action in order to move your business from where it is now to where you have dreamt it will go. Whereas a business plan is used to provide a structure for ideas in order to initially define the business.
A strategic plan is critical to prioritising resources (operations, time, money and people) to grow revenue and increase the return on investment. A business plan is critical if the business is seeking funding and therefore bring the lender up to speed with the borrower’s intentions and ability to repay the loan.
A strategic plan focuses on building a sustainable competitive advantage and is forward looking in nature. While a business plan is used to assess the viability of a business opportunity, and is more tactical in nature.
A strategic plan is used to communicate the direction of the organisation to the staff and stakeholders. However, a business plan is used to present the entrepreneur’s ideas to a bank.
Strategic Plan Benefits from Lessons Learned via Business Plan
Another way to approach the difference is by understanding the variance in ‘scale’ between a strategic plan and a business plan. Larger organisations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental plans and marketing plans that work down from the Strategic Plan.
Smaller companies typically use only a business plan to develop all aspects of the business on paper, obtain funding and then start the business. The valuable material collected for the business plan can be used to start the strategic plan. It’s important to remember where you came from and what didn’t’ work as expected, when preparing your strategy’s SWOT analysis.
Finally, if you don’t want to be explaining your business model over and over again prepare a business plan. The business plan will definitely bring to light to any flaws in your facts, figures assumptions and analysis. It makes you look clever and in control when you find your own mistakes. It would be just embarrassing if a potential lender rightfully challenged your business model.
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