What is the difference between a business plan and a strategic plan?
Business plans are often confused with strategic plans, but they’re not the same thing. Every company should have both types of plan, and it’s important to know the differences between them so your business to benefit from both.
“A business plan describes the foundations of a company, its owners, its capabilities, the industry and market(s) in which it operates, how it generates revenues and its financial projections,” says Jérôme Côté, a Business Advisor with BDC’s Advisory Services who counsels companies on strategic planning.
“A strategic plan assesses the current environment of a business, both internally and externally. It establishes future goals and targets and describes the strategies it will implement to reach them.”
In other words, a business plan describes a current business or a specific new project. A strategic plan talks about how you want to change your company to grow or be ready for the future.
At a glance: Business plan vs. strategic plan
While the business plan lays out how the business is run from day to day, the strategic plan focuses on how you will achieve specific initiatives to develop your business.
Jérôme Côté
Business Advisor, BDC Advisory Services
What is a business plan?
A business plan explains how a company brings in money and how it’s run on a daily basis, including its budget and resources. A business plan is essential for a new venture or initiative, such as entering a new market, launching a new product or making a major equipment purchase. It outlines how and when you expect to make a return and profit.
The audience is usually bankers, investors or partners, and the purpose is to convince them to invest or loan you money.
A business plan answers these questions:
- What is my idea?
- What will be my playground and market scope?
- What investment and financing do I need?
- When will I generate revenue and profit for my business?
- What do I need for my idea to succeed?
- What value will my idea bring to my business and shareholders?
For more information, download our free business plan template.
What is a strategic plan?
In contrast to a business plan, a strategic plan sets out a company’s goals and defines the actions it takes to get there. The audience is your own team. Its key purpose is to build alignment and decision-making capacity to ready your company for the future.
For example, if a company’s business model is manufacturing bicycles, its strategic plan may be to expand into building electric bikes. Its business plan would then outline the budget and resources needed to support the existing model and new product.
A strategic plan answers these questions:
- What are my current capabilities, values, mission and vision?
- What are my goals, and what should I do to achieve them?
- Who does what, how and by when to get where I want to go?
For more information, learn more about how to write a strategic plan.
Côté further explains the differences between the two plans: while the business plan lays out how the business is run from day to day, the strategic plan focuses on how you will achieve specific initiatives to develop your business.