The classic chicken and egg question: what comes first?
We can only speculate to the chicken and egg question, but we do know the answer to the order when it comes to strategic planning and business planning.
In order to answer that question, we first need to understand the difference between a strategic plan and business plan.
What is the difference between a strategic plan and business plan?
We have previously written about this topic in a past blog. Briefly, there is a significant difference in the intent of each plan. A strategic plan is focused on advancing all aspects of a business toward a common goal(s), exploiting opportunities, building market share and engaging with stakeholders. A business plan is focused more on the nuts and bolts, looking at the operational, financial aspects as well as improving performance. The components, functions and reporting structures of each plan are inherently different.
What comes first?
Before a business plan is created, should your organization should develop a strategic plan first? Strategic planning defines the mission, vision, and your organization's values among numerous other things. Without understanding what your organization is trying to achieve, how can you plan the more granular aspects your business and budget? Of course, both of these plans are continuously updated, and referencing each other, likely where much of the chicken-egg confusion comes in. Moreover, there are certain components that may be present in both plans such as vision, mission, values and the fundamentals of your direction and culture, though these can become more specific and change from organizational to department based as your company grows. Regardless, the business plan should contain more detail about the functional, financial and performance management aspects of the business.
A small business, with a team focused on 1-2 key targets should begin with a business plan. A growing or large business, with more goals, departments and customer variation, should look to work toward achieving common goals and how to support each-other, this is where a strategic plan is required.
The vast majority of quality private company investors will request a business plan, that is because they know where the detail should be. A strategic plan presented in its place will paint a nice picture of the business, but will not provide enough confidence to invest, in most circumstances.
So if you are a new business, trying to succeed, create a business plan.
If you are an established business struggling to keep the wheels on, create a strategic plan. These plans should not be seen as separate or similar documents, they are inter-dependant, with their own unique features. Though we have developed Strategic Business Plans for clients that needed to find a healthy balance.
Do I need both a strategic plan and business plan?
In many cases, yes. Both these plans help businesses achieve operational efficiency and organizational alignment. However, with small businesses, there are some instances where developing a strategic plan may not be needed.
Need advice with your strategic or business plan?
Iota consultants can help! Our team of business and strategic consultant can help you develop and audit your strategic and business plans. Feel free to reach out to us today.