Are you planning your way to success?
When it comes to business planning, a small business owner will typically react in one the following ways when asked, “Have you got a plan?”:
- “What type of plan?”
- “Never had a plan and I’ve done ok so far!”
- “I’m quite happy with my lifestyle business, thank you.”
- “We did one a few years back.”
Less frequently we will receive the following response:
- “We sit down with the key shareholders and review where the business is going and how we are going to get there on a frequent basis. We set our financial targets, and engage with staff to communicate the changes”
A quick search on Google tends to back this up, revealing several research papers showing that SME’s are not using business or strategy plans, with estimates ranging from 23% (having no strategy) to 80% (not having a formal plan).
Of course, all statistics need to be taken with a pinch of salt but even if we opt for the smaller number, there is still lots of work to be done if SMEs are serious about unlocking the latent potential of their businesses and growing to the next level. It’s not just about having ideas but understanding the opportunities for growth and creating a plan which is meaningful and workable.
So, what is the difference between a business plan and strategic plan?
In short a business plan has been created by a business advisor with the sole purpose of obtaining finance. It includes your company’s organizational structure, a marketing plan and detailed financial projections. Its purpose is to define where you want to take your business. If you were to sit down with a potential partner, investor or banker, this document contains the answers to the key questions they will to ask. It accurately summarizes what you are trying to do, but why your business is a viable proposition.
Strategic planning is a systematic process that helps you set an ambition for your business’ future and determine how best to achieve it. Strategic planning is different to business planning. It requires stepping back from your day-to-day operations and articulating where your business is heading. Through setting long-term goals, objectives and priorities for the future.
A strategic plan is for a 3-5 year period and sets out the tasks, milestones, steps needed to drive your business forward. It focuses your efforts and ensures that everyone in the business is working towards a common goal. It also helps you agree actions that will contribute to business growth, align resources for optimal results, prioritise financial needs, build competitive advantage, engage with your staff and communicate what needs to be done.
Another significant purpose of strategic planning is to help you manage and reduce business risks. Growing a business is inherently risky. Detailed planning may help you to; remove uncertainty, analyse potential risks, implement risk control measures, consider how to minimise the impact of risks, should they occur.
In summary both strategic and business plan documents are essential planning tools for your business. However, depending on your business stage and goals, one may be more useful than the other.
Business Doctors can help you develop either a business plan or strategic plan. To find out more, book a free business health check with your local Business Doctor.