What are Business and Strategic Plans?
Businesses and nonprofit organizations are constantly told to write out plans for many different departments and objectives. For new or inexperienced businesses and nonprofits, this can be overwhelming. Among these plans (and highly recommended by NMBL Strategies) are business and strategic plans. These are key planning tools for understanding and directing your business or nonprofit strategy, but it is not uncommon to confuse the two or at least some of their components. We believe that developing comprehensive plans for business and strategy are key elements to a successful operation, and the first step to properly developing these plans is understanding what they are and what purpose they serve to direct your organization. Below we will take a look at some definitions and the benefits of using these planning tools to their maximum effectiveness.
Business Plan
A business plan is a written document that describes how a business/organization will start-up and operate. It defines the objectives and how the business will go about achieving these objectives. Typically this outlines how it will achieve these objectives from marketing, financial, and operational perspectives. The reason “start-up” is used rather than just saying how a business will operate is that it is essential that organizations with no past operating experience have a plan to stick to while finding their way. We have highlighted the importance of having a physical business plan when entering into a public-private partnership, and the same tenets apply to a business or nonprofit. Starting with a business plan is an important step for any new organization. As organizations gain experience and their operations evolve, the business plan should be reevaluated periodically to note objectives that have been completed, set new objectives, and update the operating principles for achieving these objectives. Additionally, a business plan tends to cover a single year while a strategic plan covers anywhere from three to five or more years.
Key features of a Business Plan
Executive Summary: This will outline the company, including the mission statement, leadership, employees, operations, and location.
Products and Services: The organization will outline its products and services. This outline should include (where applicable): pricing, product lifespan, benefits to the customer, productions/manufacturing process, note any patents, proprietary technology, and R&D
Marketing Strategy and Analysis: A new (and old) organization must have a firm handle on the market sector and its target market. Important factors of this analysis include competition/peer organizations (include strengths and weaknesses), consumer demand, and expected ease of acquiring market shares. As for market strategy, this section will describe how the organization will acquire and keep its client base. This description should include an outline of the distribution channel, advertising plans, marketing campaign plans, and target media channels.
Financial Planning: An important role of a properly constructed business plan is to set up an attractive financial design. This section should include financial projections, a financial plan including targets and estimates. For established businesses revising their business plan, statements, balance sheets, and other financial documents should be included.
Budget: This will include estimations of revenues and expenses related to the operation of the business for a set period of time.
Key Benefits of a Business Plan
A business plan makes partners turn ideas into a physical outline. This physical document requires details, facts, specifics, etc. The exactness required by a physical document will expose where issues are. A business plan makes things visible. You can see if your strategic alignment connects with your plan. You can see whether your product matches your target market. You can see if you will realistically cover your costs. Putting things in writing makes oversights visible. You are forced to work with facts and apply numbers. This will expose where your operation may need fine-tuning. Furthermore, it is an opportunity to show the opposite. A well-developed business plan can attract the right attention. It can motivate you and your team and even attract outside investors or donors. Before putting their money in play, investors/donors want to see a plan with real figures and expanded ideas rather than incongruent ideas stored in multiple partners’ minds. Similarly, before putting your own resources into a business or nonprofit, make sure you and your partners have a shared mindset and ideas by crafting a thorough business plan.
Strategic Plan
A strategic plan is essentially two items paired together, the overarching vision for your organization AND how to get there. If you imagine a car setting out on a road trip across the country, the strategy is the destination, and the plan is the locations/stops along the way that are required to get there. Both are useful pieces to understand, but to be successful with one component, you need the other. A great strategic plan perfectly aligns the two in order to direct an organization’s future. Strategic plans align the future of organizations for the next three to five (or more) years.
Key Features of a Strategic Plan
Organization Makeup
Current Offerings
Environment (PESTLE – Political, Environmental, Social, Technology, Legal and Economic)
Stakeholder Analysis
Marketing, Public Relations, and Brand Awareness
Sales
Operations
Leadership Challenges
Projected Financials
Risk Management
Short/Long Term Performance Measures
These features are what build out the planning process and they are driven by the strategy. By bringing these together, the planning pieces align with the strategy and ensure the success of the strategy. The plan achieves this by succinctly aligning your organization internally and externally. The strategy is developed by examining three key components of any organization…
Mission Statement: A short statement of why your organization exists and what makes it unique/special.
Vision Statement: A guide that allows an organization to align with declared goals.
Strategic Positioning: A more detailed statement of how to align your organization to successfully deliver on your mission and vision statements.
Key Benefits of a Strategic Plan
Now, more than ever, a proper strategic plan is incredibly important. The world has changed considerably in the few years and so did many organizations. Nobody was planning on a pandemic. Everyone was reacting, but with a strategic plan, your organization can enjoy the benefit of a proactive future. As the world is slowly coming out of the pandemic and looks toward a new normal, organizations feel like they are having somewhat of a new start. Many businesses shifted their products, services, and delivery of both. Nonprofits fundraised digitally and donors changed their behaviors. This new normal provides many organizations with the desire to reset their sense of direction. With the new landscape comes changes to previous strategic plans. Metrics of success, competition, consumers, staff, and societal shifts (economic/political/social) are just a few things that have changed. It is essential to get off the back foot and enjoy the strategic benefits of a planned future. A strategic plan provides that guidance and the insights to correct organizational deficiencies.
This blog is just a brief introduction to each type of planning. These planning processes are not interchangeable and each plays a critical role in proper business and nonprofit planning. Engaging in a proper business and strategic planning process at the right time can deliver massive value to organizations whether they have been around for a few months or twenty years. Learn more about our work on planning studies and read more of our insights on strategic planning by checking out the thumbnails below.
Interested in aligning your future? We want to help prepare your organization to meet its strategic goals. Download our free strategic plan prep kit here and click the button below to connect with us for a strategic plan consultation.
