Many business owners know and understand the value of a business plan. The business plan is a key component of the loan process and serves as a foundation for your organization. However, it only tells half the story. To get the whole picture and have a framework on which to build your business you also need a strategic plan.
First, lets look at the difference between a business and strategic plan. In the simplest terms:
A business plan covers the “who” and “what” of the business.
The strategic plan gives us the “how” and “when.”
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 exactly what the business provides and how they provide. Product and services and operations are all explained so that we understand how the claims are being met and if the business is run efficiently.
The strategic plan, on the other hand, lines out the following:
- How will you measure success? What metrics matter and how will you track them?
- What needs to happen so you can achieve your goals? What resources do you need to get there?
- When? When will each activity take place, who will do it, and when do you need to reach specific milestones?
Bottom line, the strategic plan is the action plan for your business. It’s the task, milestones, and steps needed to drive your business forward. Typically a strategic plan is lined out for a 3-5 year period, with specific phases rolled out quarterly. Benchmarks are often set in six month and yearly increments to allow time to plan, execute, and gain traction between milestones.
In both cases, you need a team of players on hand to help you plan, develop, and execute both the business 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 key players and resources to seek out and acquire. Without them, you’re practically driving with the brakes on.