• Paul Thompson

What's the difference between a Business Plan and a Strategic Plan?

Updated: Apr 22, 2018



During my lengthy career I have had the benefit of working with some wonderful, creative, entrepreneurial business start-ups - I have written quite literally over 40 business plans and helped start up over 30 companies - some made it through their first couple of years, sadly, some didn't.


One thing I learn't during the process of understanding what these businesses and the individuals starting them is the importance of working through a business plan, having a clear direction where that business intends to go on its journey.


Whilst writing the plan the business will often change 'shape' several times as information and research comes to hand and the harsh reality bites hard!


While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting.


A strategic plan is primarily used for implementing and managing the strategic direction of an existing organisation. A business plan is used to initially start a business, obtain funding, or direct operations. The two plans cover different timeframes as well. A strategic plan generally covers a period of 3 to 5+ years, whereas a business plan is normally no more than one year.


A strategic plan is for established businesses, organizations and business owners that are serious about growing their organisation. Whereas a business plan could be for new businesses and entrepreneurs who are startups.


Get started . . .

A strategic plan is used to provide focus, direction and action in order to move the organisation from where they are now to where they want to go. Whereas a business plan is used to provide a structure for ideas in order to initially define the business.


A strategic plan is critical to prioritising resources (time, money and people) to grow the revenue and increase the return on investment. Whereas a business plan is critical if the business is seeking funding.


A strategic plan focuses on building a sustainable competitive advantage and is futuristic in nature. Whereas a business plan is used to assess the viability of a business opportunity, and is more tactical in nature.


A strategic plan is used to communicate the direction of the organisation to the staff and stakeholders. However, a business plan is used to present the entrepreneur’s ideas to a bank.


Another way to grasp the difference is by understanding the difference in ‘scale’ between a strategic plan and a business plan. Larger organisations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental plans and marketing plans that work down from the Strategic Plan.


Smaller companies and startup companies typically use only a business plan to develop all aspects of the business on paper, obtain funding and then start the business. Many smaller companies – including startups never develop a Strategic Plan.


If you would like to work through the process of business planning Satsumo would only be to happy to lend a hand - our free one hour workshop will get you on your way - just get in touch with Paul on 021 1977 400 or email paul.thompson@satsumo.co.nz to arrange a time and place!

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