Not too long ago, I talked to you about what a business plan is and what steps you should take to prepare one. 

A few hours after that post was published, a friend reached out to me. He wanted me to check his business plan to see if there were any mistakes. But there was a problem. Instead of a business plan, he had sent me a strategic plan. And it wasn’t because he had attached the wrong file. My friend clearly didn’t understand what sets the two types of plans apart. 

So I decided to tackle this issue in today’s post. 

I will explain the main differences between a business plan and a strategic plan and why companies should have both. Being able to tell the two types of plans apart will allow you to get maximum benefits from both of them. 

Let’s get started. 

Business Plan and Strategic Plan Definitions 

As we established earlier (in my recent post), a business plan is like an introduction to a company. This plan shows how profit will be generated, what the day-to-day operations are, and who the team members are. 

With a strategic plan, a company sets out specific, short-term goals. It establishes the necessary steps and actions needed to achieve those goals, too. The plan acts as a framework and helps focus the company’s efforts in order to streamline operations and improve the business procedures. 

Business Plan vs. Strategic Plan: The Differences 

Before diving into a detailed analysis of the differences, let me just say that the main one here is the purpose of these plans. In general, a business plan is needed when you’re just starting out, while a strategic plan is suitable for the growth of an already established company. 

Now, let’s talk about the other differences: 

• A business plan presents the general idea of the company, especially if financing is needed. A strategic plan outlines the organization’s direction, for example, to share with stakeholders and staff. 
• A business plan is more tactical in nature, assessing the viability of an opportunity a company is trying to take. A strategic plan is meant to build a competitive advantage and support the sustainability of a business. 
• A business plan provides the initial structure upon which ideas for the company and its operations will be generated. A strategic plan gives a set of specific directions and actions to enhance the focus and move the company towards its goal. 
• A business plan is critical when a company is looking for funding. A strategic plan plays an essential role in growing revenue, increasing the return of investment, and prioritizing resources. 

Finally, the use of business and strategic plans can also be attributed to the company’s scale. The bigger the organization—the higher the need to develop a strategy for further development. Many smaller companies can function with a business plan only. Oftentimes, they never even think of writing a strategic plan. However, creating strategic management usually brings plenty of benefits and improves the company’s growth. 

But that’s a story for another time. 

I hope that you find this article helpful and informative. I also believe that now, after you’ve learned the difference between business and strategic plans, you won’t make the same mistake my friend did.