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What are the main differences between a business strategy and a business plan?


Topic Expert
Joan Varrone
Title: CFO
Company: Cloud Cruiser
LinkedIn Profile
(CFO, Cloud Cruiser) |

A business strategy spells out the overall goals of the company in various aspects of the business. A business plan represents the tactics to achieve the strategies that have been set out. Some companies make the mistake of not aligning their actions with their strategy in which case the strategy is not achieved.

Robert Honeyman
Title: CFO
Company: Advanced Predictive Analytics
(CFO, Advanced Predictive Analytics) |

I view a business plan as a document used to raise capital or used to set in writing a uniform vision of direction for operating a company. It includes a statement of strategy and how that strategy is to be implemented. The results are found in the financial forecasts.

Business strategy is a statement that assesses product, brand, positioning, and key competencies of the organization and synthesizes these with the market being addressed. What am I good at and how will I position myself in the market in which I play? This is a key element is describing the vision of the company and is a necessary part of a business plan document being used to sell the company, whether to an internal audience or to an external audience.

David Rader
Title: Director
Company: Grant Thornton LLP
(Director, Grant Thornton LLP) |

A strategy is a consistent set of choices. A business strategy states choices about customers to serve, their needs to be met, the value proposition offered and the deployment of resources to deliver on the promises to meet needs of the chosen customers.

A business plan is a numerical model of the operating structure of the business. Given demand of certain types from certain segments, what does it cost this business to make, sell and deliver the goods and services demanded.

The actual number is less interesting than the structural and operational assumptions about asset turns, COGS, costs to acquire customers, overhead efficiency, cash conversion rates, etc. Analysts will recast the model into a cash forecast to understand the ability to generate cash and the need to deploy cash to support the business.

The narrative associated with the business plan provides the management explanation for the relationships shown in the financial model. These should be consistent with the strategic choices.

Topic Expert
Randy Lewis
Title: Managing Partner
Company: LP Valuation, LLC
(Managing Partner, LP Valuation, LLC) |

Good comments. To me, the business plan is just the written expression of the strategic planning process, with expected financial and operational consequences. They need not be mutually exclusive.

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