Strategic Plans are leadership tools typically used at the CEO and Board level. Business Plans are tools designed for the management of the company. Which plan to choose? If leadership is different from management. You probably should have both plans. However, the biggest question is what do you need the most?
Why do we need these plans?
Management generally plans, organizes, and controls the resources of the firm. Management focuses on keeping the organization alive and using its resources well in the short run. Getting general agreement on a definition for leadership is tougher–but leadership is usually concerned with the longer view; it aims at getting people to do the right things to accomplish the vision.
Every organization needs leadership and management. However, they usually don’t exist in equally. For example, start up companies usually have more leadership than management. It is small, with a defined vision, the direction is deliberate and well communicated, and the people are in sync. Many times start- up’s have no detailed planning, the organizational structure is confusing, and standard procedures are neglected or missing.
Business systems are normally in place with mature firms. Organization charts are only sometimes dated, and standard operating procedures have become routine. However, perhaps because of size and loss of energy, the vision has become unfocused. People are not aligned; motivation is lacking; hence a lack is leadership is present.
Strategic planning
A strategic plan sets a direction for a company. It is usually written for the mid to long term future; spelling out the mission statement, primary goals, and measurable objectives. A typical table of contents reads like trhe following:
1. The Company’s situation
2. Our Values
3. Our Vision
A. Our Mission Statement
B. Goals
C. Strategies
4. Objectives
5. Action plans by function
6. Budgets/resource allocations
7. Controls
A successful strategic plan requires the participation of key managers. Different viewpoints on directions, goals, and strategies usually occur but often lead to creative results. Alignment starts when a consensus is reached on vision, values, mission, goals, strategies, and objectives.
A strategic plan must utilize facts and data not on feelings, impressions, and approximates.
The Business Plan
The purpose of the business plan is to set forth objectives and defining the steps necessary to achieve them. A business plan is the best tool to reassure stockholders, creditors, or other parties interested in the firm’s prosperity. A business plan should enable the organization to measure its progress toward short-term objectives and control the activities of the organization.
The best business plans are written by the heads of Sales, Marketing, Finance and Operations. These managers usually involve larger groups of senior and mid-level managers for problem-solving sessions to improve tactics for getting markets, sales, performing work or service, and managing the money.
The business plan is built to improve the effectiveness of the organization without significantly changing its direction. One can think oft the business plan as a translator of the strategic plan or a short-term management control tool. Here’s a typical table of contents:
- Executive Summary
- The Company
- Products and Services
- Market Analysis
- Business Strategy and Implementation
- Organization
- Financial Analysis
To Summarize
If the Company has unclear direction, if the people do not see the vision or headed in the wrong direction, a strategic plan should be written. If the vision is clear, and your people are aligned but a lack of control exists then you need a business plan.
Good Companies are successful because they recognize the need for planning and practice their execution.