Over the past 15 years, I've helped over 500,000 entrepreneurs and business owners to develop their business and strategic plans.
And, as you might imagine, I've spent a lot of time discussing business plans and strategic plans internally. Enough so that among other things, I use the acronym "BP" for business plans and "SP" for strategic plans.
Now, because these terms are often used synonymously, let me explain the key difference as I see them. Business plans or BPs are plans created for the primary goal of convincing an investor or lender to fund you. Conversely, strategic plans or SPs are developed to determine and document your strategy so your company understands and can attain its objectives.
As you can see, both plans serve very different and very important purposes.
Below are the 5 key sections that a strategic plan must have that need not be included, or require much less focus, in a business plan.
1. Elevator Pitch
An elevator pitch is a brief description of your business.
It is included in your strategic plan since your elevator pitch is both important to your business' success, and should often be updated annually.
An elevator pitch got it's name because you need to be able to describe your business succinctly and within the time it takes to travel from the ground to the top floor in an elevator.
A quality elevator pitch:
- Gets everyone in your company on the same page regarding what your business is and what the key objectives are.
- Allows everyone in your company to give a concise and consistent explanation of your business which leads to more customers.
In a business plan, you do include your elevator pitch in the Executive Summary section to concisely explain your company to investors and lenders. In your strategic plan, it is used to ensure consensus within your organization.
2. Company Mission Statement
A mission statement explains what your business is trying to achieve.
For internal decision-making, it helps as key decisions should be made with regards to how well they help the company progress in achieving its mission.
Also, for internal (e.g., employees) audiences, the mission can inspire and get them excited to be part of what the company is doing.
While your mission statement is often also included in your business plan, investors and lenders are generally more concerned with your ability to earn them a return on investment. As such, it's not as heavily emphasized in your business plan.
Some great examples of mission statements include the following:
- Google's mission is to organize the world's information and make it universally accessible and useful.
- Kiva's mission is to connect people, through lending, for the sake of alleviating poverty.
3. Goal Specificity
Because your strategic plan focuses on setting your company's vision and getting your team to execute on that vision, your strategic plan must include a greater focus on your goals than your business plan.
While your business plan focuses more on your long-term goals, your strategic plan is more granular. Specifically, your strategic plan should lay out your company's 5 year goals, 1 year goals, and your upcoming quarterly and monthly goals.
4. Key Performance Indicators (KPIs)
As the name indicates, your "KPIs" or Key Performance Indicators are the metrics that judge your business' performance based on the success you'd like to succeed.
Identifying and measuring your KPIs is absolutely critical to ensuring you are effectively executing on your vision and plans. Conversely, if you don't measure your KPIs, you have no idea whether you are achieving the success you desire.
In your strategic plan, unlike in your business plan, you must identify the KPIs your business must track in order to achieve your goals.
5. Identification of Required Strengths
In your business plan, you should stress your existing strengths that make your business uniquely qualified to succeed. This helps convince investors and lenders to fund you.
Conversely, in your strategic plan, you must identify the strengths you need to develop. For example, how could you gain competitive advantage by modifying your products or services? Or by hiring and training certain personnel? Or by creating new operational systems? Etc.
By asking and answering these questions in your strategic plan, you can create a strategy for building a rock solid company that's the envy of your industry.
To summarize, the right business plan allows you to raise money to fund your business' growth. The right strategic plan gives you and your team the vision, goals and game plan to achieve this growth. Finally, using the right strategic plan template helps you create your strategic plan quickly and easily so you can start growing immediately.