It’s not surprising when people confuse business strategies with business plans. Many business owners still don’t know the difference between the two.
Why is this important? It’s hard to conceptualize successful business strategies without knowing the fundamentals of the company- this is where a business plan comes in.
Definition of Terms: Business Plan vs. Business Strategy
Business Plan: Where it All Started
A business plan is often drawn up before the business is even officially started or opened to the public; it includes the mission, vision, goals, industry information, competitor information, target demographics, and a list of the business’s operations. In some cases, the company’s structure or assumed chain of command is also described.
It includes an estimate of the business’s needs for marketing, staffing, and funding. In essence, it’s a comprehensive document reviewing every facet of its operation, including its potential to fail or succeed.
Business plans are also used to secure funding, and share the founder’s goals or visions with employees and are often reviewed when planning successful business strategies.
Business Strategy: The Road Map
A business strategy, on the other hand, is a list of initiatives and strategies that would be implemented to achieve the targets listed in the business plan. Instead of core values, objectives, and competitor data, a business strategy focuses on processes to improve certain aspects of the business, such as sales, market share, product development, and setting up partnerships or new opportunities.
The business plan shows the big-picture plans of the company, while successful business strategies provide the organization with a road map or clear-cut instructions on how to meet or exceed those big-picture goals.
A Comparison
| Business Plan | Business Strategy |
| Used for presenting the business to outsiders, i.e. – when securing funding. | Used internally, successful business strategies aren’t divulged to competitors. Successful business strategies are guarded and often part of non-compete clauses. |
| Defines the business’s purpose, starting point, and end goal | Provides a list of steps or initiatives on how the business could better position itself in the market |
Misconceptions
Some people limit the need for business plans to new ventures, but that’s not really the case. Even established businesses need a good business plan. In fact, any organization wanting to have a solid documentation of its foundation, available resources, and long-term goals are encouraged to create a plan.
Established organizations still look to their business plan when reviewing their goals. It could also be used to check if the business is on the right track, and when making plans for the coming years.
As for successful business strategies, a start-up should create a list of initiatives after they have established their business plan. There’s no sense in wasting time thinking of strategies if you don’t know where to go.
Too often we approach planning as a chore and thus what comes out of the planning process isn’t useful in directing the organization…
The Dos and Don’ts of Planning Helps You Strategically Think Through Where You Want to Go
You’ll save yourself time and frustration, and walk away with a plan that sets you up for success.
