Have you ever been confused about the difference between a Strategic Plan and a Business Plan? How do the two relate?
As you will see, a Strategic Plan is all about leadership and steering the helm of the ship and the Business Plan is the vessel. It’s important to know the difference, otherwise you will not be heading in the direction you want to be!
Business Plans are essential, but typically, much of the focus is on what needs to be achieved in around the next 90 Days.
A good Business Plan will also contain the long terms goals and objectives. Problem is, it’s all too easy to lose sight of them. As business owners, we are often too close to the daily running of the business, preoccupied with the daily business demands, forgetting to keep track of the long term objectives.
In our Structured Business Development Program we use 5 simple measures over time to keep focus on the strategic direction.
- Top line Sales Target (vanity)
- Bottom line – what’s left for the business owner(s) (sanity test)
- Cash flow target (looking to accumulate cash buffer of 25% sales
- Work/life balance – how many days do you want to work
- Succession plan – how to transition the business to other shareholders, pass it on to the next generation, sell the business etc.
These are all meaningful, high level measures that we map out over 5 years.
Here’s an example of what a Strategic Plan may look like
Building a Strategic Plan in this way, allows for creation of a realistic, achievable and effective Business Plan.
The real power of a Strategic Plan however, becomes evident when you cross reference its numbers with the Business Plan.
This is the way to create a reality check of whether or not our plan is going to work and regularly repeating the process, is the magic ingredient that will deliver the optimum results.
By way of example, here’s an extract from the Structured Business Development Program’s One Page Business Plan
I hope you can now see the importance and value of having the Strategic Plan in addition to a Business Plan.
As I said at the beginning of this article, a Strategic Plan is all about leadership and steering the helm of the ship. Your Business Plan is the vessel that will take you to your goal.