A strategic plan refers to the process of identifying the direction, strategy, and the type of decisions that an organization ought to be making based on the resources available to facilitate the pursuit of such a strategy (Allison & Kaye, 2005). Before deciding on the direction that a firm should take, there is a need to first understand the current position as well as the likely cause of action to follow to attain the desired goal.
On the other hand, a business plan refers to a formal declaration of the goals of a business, why the organization believes it can achieve its desired goals, and the desired cause of action to ensure that those goals are achieved (Pinson, 2004, p. 20). A business plan also entails a timeframe within which the organization hopes to have achieved the stated goals.
A strategic plan contains an organization’s mission statement, vision, objectives, and goals within a given timeframe. A strategic plan also illustrates how specific individuals within the organizations will contribute towards the achievement of the objectives identified within the stipulated period. Besides the mission statement, goals, objectives, and vision statement of an organization, a strategic plan should also include the action plans that the organization intends to take to realize the identified goals.
Another key component of a strategic plan is the contingency plans and risk analysis components. In other words, a strategic plan makes room for the unforeseen circumstances that could hinder the organization in its quest to realize its objectives within a specific period, using the available resources. In this case, a contingency plan enables the management to think proactively and make arrangements for an alternative course of action in case of an unexpected event.
Also, a strategic plan attempts to analyze the various forms of risks that a business could be faced with as it tries to attain its objectives and possible ways of overcoming those risks. Also, a strategic plan contains a section on the financial analysis of the business, as well as the competitive analysis of the main competitors of the business in the market. The strategic plan functions as a systematic management tool that enables the organization to solve problems facing it, assists in new product development, market planning, and in the preparation of the business plan. There is a very thin line between, on the one hand, a strategic plan and on the other hand, a business plan.
However, the most important thing to note is that a business plan is generated from the strategic plan of an organization. Given how important a strategic plan is to the organization, the management is always advised to seek the services of skilled independent facilitators so that everybody in the organization participates fully in the process, and also to ensure that the opinions of everybody are captured in the plan.
A strategic plan enables an organization to determine its limited resources such as people, time, equipment, money, technology, facilities, and materials. A strategic plan also enables the organization to evaluate the aforementioned resources so that the management can mobilize everyone to coordinate their actions to achieve the specified objectives within the limited amount of resources./ in other words, a strategic plan can be thought of as an internal document that the management of an organization relies on as a roadmap to guide employee towards achieving the goals of the organization within the specific duration of time.
A business plan not only talks about the business that you are currently engaged in but also what you intend to do in the future. For example, a business plan could provide a projection of what the business shall be done within five years from now. A business plan is a document that informs outsiders about what your business entails. As such, the contents of a business plan would include the company and what it deals in, the market where the company operates, the kind of technology or production that the company engages in, sales and marketing strategies that the business employs, the nature of the management within the organization, and financial analysis of the company.
A business plan should also have an executive summary section, the history of the project or products, the biography of the management teams, a working budget, an action plan, and marketing plans. Potential investors find a business plan quite useful.
Allison, M., & Kaye, J. (2005). Strategic Planning for Nonprofit Organizations. Second Edition. New York: John Wiley and Sons.
Pinson, L. (2004). Anatomy of a Business Plan: A Step-by-Step Guide to Building a Business and Securing Your Company’s Future (6th Edition). Chicago, USA: Dearborn Trade.