Strategic Plans vs. Business Plans: What's the Difference?
"The journey of a thousand miles begins with a single step." Lao Tzu
Not only is this an inspirational quote, it encapsulates the difference between strategic plans and business plans.
The strategic plan offers a high-level look at what the organization wants to accomplish - or where, at the end of the thousand mile journey, it wants to be. The business plan details the steps required to ensure the destination is reached. The difference between a strategic and business plan, boiled down to the basics: it's where a business wants to end vs. what actions it needs to take to get there.
Plotting the Journey
A strategic plan does more than satisfy requirements from lenders or potential investors; it provides an organization with the opportunity to clearly describe their business and articulate its mission and goals, i.e to define the strategic direction of the firm. The time frame is typically three to five years, if not longer.
The business plan outlines the steps necessary to ensure that the business reaches its desired outcomes in the short run, i.e. 1 year. Strategic plans are often compared to roadmaps; if so, the business plan is the turn-by-turn directions that Google Maps provides to help you navigate to your destination.
For an example, imagine someone who wants to give up the cold and snow and move to a warmer climate. That's the ultimate destination; the vision is lounging in the sun or maybe hitting the golf course for a round every morning. This individual doesn't know where he'll live or what each day will look like, but he has the end goal in mind.
Now he has to begin this journey with a single step. Part of that is committing to the move and then asking, "What do I need to do now?" Maybe career options are different there, and he needs to bolster his education, or gain more work experience in a specific area. Maybe he's close to retiring and has to iron out financial details. Maybe he has children and needs to research the best schools for them.
The "business" plan incorporates all of these facets and the ultimate end result many years from now; what he can control is what he does today, this week, and this month. Each of those steps brings him closer to warmer weather.
Replace "warmer weather" with becoming the market leader in a given space and growing revenue by X%, and you understand how strategic and business plans work. The strategic plan, to put it simply, is your "what and where." The business plan is the "how."