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Are business plans and strategic plans basically the same thing?

Business Plans vs Strategic Plans

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Strategic plans are part of the business plan.

A business plan can have many components, but most have:

executive summary
Market Analysis
Company Description
Organization & Management
Marketing & Sales Management
Service or Product Line
Funding Request
Financial Projections
Appendix

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Think of strategy as your overall approach to business. While the business plan is what you are going to do to achieve the strategy, based on the environment - market analysis, competitive analysis...

Topic Expert
David Wittenberg
Title: Director of Financial Strategy
Company: World Vision
(Director of Financial Strategy , World Vision) |

This is a great question!
"Business Plans" is a term with a different definition depending on who you talk to. To some, it's the umbrella covering all other levels of planning (as Wayne indicated). To others, it's how the strategy will be executed (as Regis answered). In conglomerates, the "business plans" may be the subsidiaries' plans. For start-up or smaller companies, it's a structured document used to raise funds. So its easy to see why this can cause confusion.

In some companies, they avoid the term completely to head off confusion. Maybe the oldest and most common structure is:
-- Strategic Plans: High level statements of direction. For example: Expanding into certain geographies or product lines, becoming the innovation leader or the nimble second-mover, etc.
-- Tactical Plans: More specific ideas of how the strategy will be executed, describing how resources will be deployed. For example: Building a physical presence in the new geography versus shipping to that geography, big investments in IT to better serve customers, marketing strategies, etc.
-- Operating Plans (sometimes Logistical Plans): These are the most specific details for running things on a daily/monthly basis.

There's no wrong definition. What's most important is that everyone in the company uses the same terms & definitions. If you don't, people are likely to do the wrong things... or nothing at all due to uncertainty.

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Ditto on the above, with a perspective of:
-Business Plan: the structure you use to generate Operational Plans
-Strategic Plan: Creates the structure for business / operational plans
...and...
Time windows are often used to discriminate between them. In a startup environment, anything outside of 3 months is potentially fanciful, but you want to know that if things work out, there is money to be made. The business plan looks out past the operational planning window; you don't *believe* that your plan beyond 6 months will really happen...but it is an important framework for what you do now operationally (both for now and the potential futures), and sets up your operational planning process for when you get to the next implementation point.
The strategic plan goes even further, and addresses issues that aren't necessarily financially quantifiable; market threats, technology changes, etc. At Intel the strategic plan was critical for us in planning what the broader ecosystem could look like. We could not control it, but we could (and did) plan for potential futures, watch for influencing trends, and try to effect positive changes. In a larger business like that, the strategic plans were *topical*, addressing certain trends and market segments. These would feed business unit owners information both on what we thought was going on and what the larger company was trying to do in that context.

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

Piggy backing on the earlier comments, both of my long term employers used a three year horizon, by quarter, for the strategic plan, especially for new market penetration. The business and operational plans were updated annually for budget purposes.

Jake Kaldenbaugh
Title: Corporate Development
Company: CA Technologies, Inc.
(Corporate Development, CA Technologies, Inc.) |

I have a slightly different take on this question based on my definition of strategy in a corporate context. 'Strategy' is one of those words that everyone uses yet very few professionals have a common definition of. Most professionals' definition of strategy is the same as business planning which is why you often see people confuse marketing strategies with corporate strategy planning. The definition I prefer is that Corporate Strategic Planning involves the development and enhancements of key competitive assets that enable you to serve your customer more profitably while gaining market share. A key competitive asset is defined as those things which are valuable to the delivery of your offering and are hard for competitors to duplicate.

Using this perspective, time horizon is not the key strategic pivot. Time horizons are good for thinking about two dynamics that typically govern market entry: first, when a new market trend will grow to be attractive enough to be investable, and second, when your organization will be ready to capitalize on a new trend. Sometimes those are independent factors. For instance, you can have an existing market that is already large enough for investment, but your company doesn't yet have the appropriate assets to serve it competitively and vice-versa. Horizons are a nice way to think about timing, but are secondary to a more fundamental question.

The foundation of strategic planning is asking yourself whether you have the right set of sufficient key competitive assets that will enable you to capture customers and market share in segment that you believe has inherent growth and profitability characteristics. Key assets are a combination of your company's capabilities that your customers or future customers desire and will be hard to duplicate by competitors. This can include such things as a well-known brand, superior customer service, lower cost of goods, more efficient product development cycles, patents, high quality goods or services, more effective supply chain, among other things. As a side note, I define marketing strategy as the plan for taking a company's limited marketing budget and capturing the most customers based on the company's current competitive assets, target customers' preferences and modern marketing methodologies.

So using this context, the difference between a strategic plan and a business plan is straight-forward in my opinion. A strategic plan outlines how an organization will create or enhance existing or new strategic assets that will enable it to more effectively address its current or new markets. A business plan typically outlines how a company will execute a strategic plan over a defined period of time and focuses on the tactics to to create the key assets. For example, a strategic plan may be for a company to enter a certain market because of changes in society and its adjacency to the company's current business. It will contain analysis of why the target market is attractive (size, growth, drivers of the change in the market, customer problem statement/pain being addressed) and an overview of the ideal way to address that market. Then it should compare the current state of the company's strategic assets relevant to the target market and make recommendations on organizational changes required to get closer to the ideal state. Lastly, the strategic plan will outline a financial analysis that demonstrates that a company will earn a return on investment from the effort. A business plan typically follows from this and provides details on the tactical implementation of strategic plan: hiring plans, operating expense plans, IT change requirements, etc... The business plan's details should fit within the larger framework that the strategic plan provides.

Clearly, there can be significant overlap between the two concepts and if the business is large and doesn't require significant strategic change, then the business plan may largely contain the strategic plan. If you are a startup with little current strategic assets, then building those assets is the dominant concern, and your strategic plan is largely your business plan. I hope this perspective is helpful to your question.

(Agent, JKS Solutions, Inc.) |

I suggest reading the book "Good Strategy Bad Strategy - The difference and why it matters." by professor R. Rumelt ... http://goodbadstrategy.com/ ... "A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action." AS you can see, a Business Plan is completely different, but will potentially overlap in the guiding policy and coherent actions.

Topic Expert
Stephen Roulac
Title: CEO
Company: Roulac Global LLC
(CEO, Roulac Global LLC) |

No. The two are different in scope, sequence, and creation.

Strategy comes before business planning.

Strategy is concerned with the external, opportunities and threats, implications for the enterprise, considerations of how resources can be directed/enhanced to implement
the direction that is decided.

Planning involves how to implement the strategy, is more internal in focus, more operational than creative in conceptualization.

Thinking the two are the same may be precarious, though many execs and therefore the company managements of which they are apart, insufficiently recognize the differences between the two and the profound implications of those differences.

Terrence Donohoe
Title: President
Company: R M I
LinkedIn Profile
(President, R M I) |

Best to think, know and act the difference between these two or beware the consequences. Defining a cat as a dog does not make it bark. Difference of opinion is great but words do have definite meanings. Kudos to those above who recognize the value of thoroughly pointing that out.

Mark Angelo
Title: CEO/Founder and Editor
Company: Fimark's Winning Business Plans
(CEO/Founder and Editor, Fimark's Winning Business Plans) |

While I agree that Business Plans are the structure you use to generate Operational Plans, Strategic Plans should be well documented, followed and refined from time to time just as one would a business plan. Since both operational process and strategy are factors related to positively impacting the bottom line I think they each should be considered a part of the whole plan or overall business schematic if you will.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

A good differentiator would be WHERE the documents ORIGINATE FROM. Strrategic Plans are more or less molded in the Boardroom and the realm of the Board of Directors while Business Plans in/by the C Suite.

Sergey Klimovich
Title: Independent Trader
Company: ETX Capital
LinkedIn Profile
(Independent Trader, ETX Capital) |

The question of how to write a business plan has significant value for those who want to initiate a startup. The more detailed and deliberate a business plan is, less there would be open questions and uncertainties. Generally, there could be a number of reasons of why people would want to comprise business plans. That is why there could be various types of business plans designed for specific situations and certain conditions. In this way, the accent can put on different parts, depending on the final aim.

For example, if one is planning to get a bank loan, perhaps the financial part of the business plan should depict deliberate and clear financial statements with detailed description of returns and breakeven analysis, thus making a strong emphasis on when the new startup will start bringing profit.
Generally, a business plan is a combination of 3 or 4 smaller plans that are connected amongst each other and are synchronized to complement each other. Every business plan should have: marketing plan, operational plan, legal plan and financial plan. Each of these parts should have clearly defined goals, strategies and methods of how these goals will be fulfilled. In the beginning of each business plan there should be an executive summary and brief idea description that would shortly tell about the viability and reasons why this particular business will survive and bring profit.

In the end of each business plan, there is supposed to be a part where critical risk factors that could threaten business’ existence should be listed. Moreover, business exit strategy is a vital part that describes what should be done in case of failures and what are the options for the owners to save at least part of the invested capital. More or less business plans look alike, however, one should keep in mind that customization of each plan to its specific use makes a lot of sense from the standpoint of accomplishing its initial as well as final goals. In later posts, we will be observing types of business plans as well as their parts, going deep into details and describing what one should do to comprise a perfect business plan.

Please check out my project http://koolst.com/

We help BA students and startups create full-blown BPs. Any feedback is highly appreciated!

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Sergey,

I still have yet to see a start-up that tracked their initial (and even midstride) business plan/s (however detailed or general it is). Although I agree with you that it IS important, it's significance (from a startup point of view) is somewhat overstated exactly because of the ever changing/dynamic of the business environment. I also agree with you that the plans have to be tailored to the need.

From a general sense, knowing where you want to be and how to get there IS important. But a detailed and full blown business plan is "overkill" and unnecessary. I also acknowledge the role of a business plan from a banking/loan point of view but that is just brought about by a "rigid" or different perspective than what "investors" want. And in my view, a misplaced importance.

From a "funding" standpoint, some investors even view a detailed business plan as a "negative" and may reflect rigidity or indicate the inability of the team to pivot. If you try to pitch with a "detailed" plan, you will get laughed/sneered at and you will probably NOT get the funding. I will even argue that the more general it is, the better it is from an investor point of view.

There is NO such thing as a "perfect business plan". In my opinion and in the startup world, show me a detailed business plan and I will show you a plan that will NEVER materialize and more akin to setting yourself up for failure.

SME's (and mature companies) on the other hand where the environment are more stable and predictable are a different story.

Gary A. Pokorn
Title: Sales Enablement Manager
Company: Oracle I NetSuite
(Sales Enablement Manager, Oracle I NetSuite) |

Excellent discussion everyone - thank you! From my sales professional's perspective, strategy and strategic planning is all well and good, but execution is the key ingredient that makes (or breaks) planning, yes? Thx, GAP

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

Depends on the definition of "strategic".

In my book, strategy defines the specific steps that will be taken to meet an Objective or Goal. You can't have a strategy unless you know what you want to accomplish. So I agree that strategy and execution go hand in hand.

Unfortunately you often hear people going off site to have a strategic planning session, when they haven't defined overall Goals and Objectives.

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