What is the Difference Between a Business Plan and a Strategic Plan?

It is not uncommon that the term strategic plan and business plan get confused in the business world. Before beginning your strategy implementation, take a look at the difference between the two terms to ensure you are on the path to success.

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

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A Strategic Plan vs A Business Plan

  • A strategic plan is primarily used for implementing and managing the strategic direction of an existing organization. A business plan is used to initially start a business, obtain funding, or direct operations. The two plans cover different time frames 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 organization. Whereas a business plan could be for new businesses and entrepreneurs who are start-ups.
  • A strategic plan is used to provide focus, direction and action in order to move the organization 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 prioritizing 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 organization 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 organizations 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 start-up 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 start-ups never develop a Strategic Plan.

10 Comments

  1. Bill Boyer says:

    I agree with your analysis about small companies, but they should do a strategic plan. Just check out how many of the INC 500 companies have an active strategic planning process and they started small. Its about 78%,

    • Yasir Shahzad says:

      Strategic management is a key role of any organization even if belong to small business. it help in growth and also to steam line your values.
      im agree with kristin.

    • Abdulaziz Althabti says:

      I agree with what you said, without strategic planning no organization can survive whether it is big or small. Without a clear strategic plan, it is like walking in the darkness..
      Best Regards..

  2. Sovibol says:

    Vision, Mission in Business Plan VS Strategic Plan ?

  3. Javed Afridi says:

    you made a good analysis on strategic plan and Business plan the difference is quite clear now. But on the other hand, it seems that strategic plan and strategic management are similar which I think not correct. Please can you tell us the difference between these two?. Thanks

  4. Tuly Swai says:

    Thank you. I get points to work on it

  5. nandngowda says:

    super answer Thanking you

  6. Khalid Ahmed says:

    Hi. I went through all the discussions, comments and replies. Thanks! I got a very preliminary idea about functions and necessity of Strategic Planning in Business.
    But currently I am looking for a brief nice, flowery, juicy definition of “Business Strategic Planning” as a whole, which will give anyone a fun and interesting way to understand. Can anyone help me out please?
    Awaiting replies…… 🙂

  7. abraham perez says:

    that was easy to understand,

  8. Bamfo Ntiamoah says:

    Developing a strategic plan either big or small company or organization mostly can’t achieve its goal. A strategic plan or formulation is the first stage of the strategic management plan, therefore, we should be encouraged to develop a strategic management plan. We can develop the best strategic plan but without a clear plan of implementation and evaluation, it will be difficult to achieve goals.

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