Businesses should have both a business plan and a strategic plan. The two plans serve different purposes. The business plan serves as a roadmap for defining your business, while a strategic plan serves as a roadmap to reaching your company’s goals.
Business Plan vs. Strategic Plan
When you started your business, you likely created a business plan. A business plan outlines the purpose of your business, your sales and marketing strategy, and financials (Read More on How Do I Craft a Business Plan).
A business plan focuses on the who and what by defining what the company does, its marketing and sales strategy, its revenue model, etc. A strategic plan focuses on the how and when of the business by establishing goals, evaluating the internal and external environment, and outlining a plan to evaluate progress towards goals.
A strategic plan is all about creating a plan to reach your goals, gauging the company’s performance, and identifying weaknesses and strengths. It defines your company’s current situation, defines goals, and actionable steps to reach those goals. A strategic plan is action-oriented and defines how the company will grow.
Elements of a Strategic Plan
Your strategic plan defines where the company is, where the company is going, and how the company will get there. When it comes time to crafting your strategic plan, you will want to define the following:
Description of the Company
Provide an overview of the company in terms of what you do, your target audience, and what makes you unique. You can think of this as your elevator pitch.
Mission, Vision, and Values
Start by defining your mission statement, vision statement, and values. Your mission statement defines your company’s purpose. A vision statement describes where the company will be years from now. Your values define what the company stands for. Defining your mission, vision, and values helps you define where the company is. It lays the foundation for your strategic plan.
Industry Analysis
Now, it is time to evaluate where the business will go in the future. Start with an Industry Analysis to evaluate your industry in terms of market size, lifecycle, key success factors, etc. You can use a PESTEL Analysis to evaluate political, economical, social, technological, environmental, and legal factors influencing your industry. Evaluating these factors will help you identify opportunities and threats.
Competitive Analysis
Once you have evaluated the industry, you can get more detailed with a competitive analysis. Evaluating the competition is an important step for determining how to position your company in the market and for identifying opportunities for growth. With an understanding of where your competition excels versus your internal strengths, you can define competitive advantages within your market. When defining your competitive advantage, ask yourself: What makes our company different from the competition? What makes us unique? Why do our customers choose us over the competition?
SWOT Analysis
After establishing the company’s current position and evaluating the industry and competition, you are ready to bring it all together with a SWOT Analysis. A SWOT Analysis is used to evaluate the strengths, weaknesses, opportunities, and threats.
Through this exercise, you determine where the company is in terms of the internal environment (strengths and weaknesses) and the external environment (opportunities and treats). A SWOT Analysis helps you identify opportunities to grow your company and strength to develop internally.
When conducting a SWOT Analysis, you can ask yourself the following questions:
Strengths
What does your company do well?
What capabilities or qualities separate your business from the competition?
What are your internal resources?
What are your tangible assets such as intellectual property?
What do others see as your strengths?
Weakness
What can you improve?
What are your company resource limitations?
What does your competition do better?
Opportunities
Are there underserved markets?
Are there any emerging needs?
What trends can you take advantage of?
How can you leverage your strengths?
Are there areas where there is little competition?
Is there positive press or word of mouth about your company?
Threats
Are there emerging competitors?
Is there a change in the external environment (think PESTEL)?
Do your weaknesses pose a risk to your business?
Is there negative press or word of mouth about your company?
Goal Setting
Define your business’s long-term goals. Then, translate your goals into objectives that are specific, attainable, and realistic. Where do you want the business to be in 5 years?
Then work backward into shorter-term goals for each quarter. These shorter-term goals likely revolve around specific strategies that can be further divided into tactics. Also, the short-term goals are more detailed and likely tied to a specific department or project.
Now, it’s time to make your goals measurable in terms of key performance indicators (KPIs). A KPI measures the performance of a particular organizational activity.
Implement Your Plan
Once you have defined your strategic plan, you need someone to monitor the plan and share it with the rest of the business. By clearly communicating the plan, your employees will understand the business’s mission, vision, values, goals, strategies, tactics, and KPIs. A strategic plan is a great way to provide employees with a sense of direction, improve employee engagement, and maximize efficient use of resources.
Evaluation Plan
Lastly and most importantly, make sure you revisit the strategic plan. Define an evaluation plan. How often will you revisit the plan to measure progress? Strategic plans can be reviewed anywhere from monthly to annually. At a minimum, plan on an annual review to evaluate progress made toward goals and adjustments for the future.
Customize the Strategic Plan to Fit Your Business
Unlike business plans that are standardized, strategic plans are more customized. The terminology and sections may be different from one business to another. Regardless of the sections, make sure your strategic plan defines where the company is, where the company is going, and how the company will get there.