What is a Business Plan?
The term “business plan” usually refers to a plan for a start-up – one that is presented to a bank or to investors in order to secure capital. The business plan, while it is a practical and doable plan, serves to present a new venture and its market value, growth potential, service or product line, financial projections, and finally a request for funding. A business plan might be projected to take about a year to complete.
What is a Strategic Plan?
A “strategic plan” often applies to an already existing enterprise. The words “strategic” or “strategy” are easily understood in reference to sports or in a military context. The English word strategy in the early 19th century meant “art, office or command of a general” and goes back to the Greek strategos meaning “general, commander of an army” and earlier words meaning “army, expedition, encampment, that which is spread out” as well as “leader” and “to lead”. When we are talking about strategy, we mean leadership in a broad and tactical sense. We mean leading an enterprise toward the attainment of precisely delineated targets and the achievement of its goals.
Making a distinction between a business plan and a strategic plan is in fact a misnomer. They are both STRATEGIC. It’s really more like strategic plan #1 and strategic plan #2 or start-up strategy and expansion strategy. It is true however that the two strategies have different characteristics since the first is concerned with establishing something new and the second relates to something that already exists. The reason a new strategy often follows the start-up plan is because after you’ve gotten rolling, you know far more than when you started. You’ve gotten your feet wet and your hands dirty.
Many small (and large) businesses never put together a new strategic plan after they’ve gotten going. They just sort of keep recycling the business plan. And while that is better than no plan at all, any company seeking expansion would do well to put some time and effort into long-range strategic planning.
The Importance of Strategy
Read about business plans and strategic plans and it can get very dry, with references to KPIs (Key Performance Indicators), SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), and extremely detailed and rather complex financial projection charts. All the super-specialized lexicon is enough to turn someone away from the whole idea, which is presumably why a certain percentage of businesses don’t bother doing it. Planning and strategy are not merely “administrative exercises”. When well-thought-out and done, they mean prosperity and growth. They mean E-X-P-A-N-S-I-O-N. And you want that.
Composing a Strategic Plan
Any strategic plan, whether for a start-up or an established company, is broad and sweeping by its very nature. It can be broken down into smaller plans. For the purpose of clarification, let’s refer to the smaller plans as programs. A program is designed to execute or accomplish a section of a strategic plan. A program can be broken down further into projects.
Example: A company has a strategic plan. That strategic plan has a marketing section. A marketing executive or department has a program in order to accomplish its section of the strategic plan. Within their program may be several projects.
Here are some of the major points to incorporate into any strategic plan (whether for a start-up or an established company):
Goals & Purposes
Your goals and purposes describe why you exist, your values as a company, the culture you strive to epitomize. They pervade every part of your organization. And where you fall short, you use your goals as a yardstick to set things right. These are not nebulous intangible thoughts. They summarize your ideals that are doable and reachable. The words aim, dream, aspiration, ambition, vision and mission statement also exemplify your ideals and what you wish to attain. These are all just different ways of describing what you intend to accomplish.
Many organizations neglect the formulation of sound company policy. Factually, your policy falls right under your goals and purposes as far as your priorities are concerned. Why? Policy should also encompass your culture and values. Policy is not rote and mechanical. It is very much alive. It’s how you do things, the standards you expect, how you take care of your customers and how you take care of each other. There are two main segments of policy: general and specialized. You will need both. To start with, look at some companies you admire and see if you can get a concept of their policies. Discover and decide if these would work for you. Adapt them or formulate your own.
Programs & Projects
You reach your goals and purposes through tactical programs and projects. These are the step-by-step solutions to accomplish strategic planning and achieve your goals. But they also contain numbers, such as how many clients you want, how many square feet you’ll occupy, how many new employees you need. You can get extremely specific, down to how many visits, clicks, shipments, boxes, envelopes and paperclips. Individual steps are called targets and they add up to the completion of programs and projects. From the minutia to the major, each step, each target builds on the ones before.
Every company is concerned with getting new customers and retaining the ones it already has. You should do some work to determine your core market segment and any you wish to expand into. There are many methods for getting new customers. Here are a few:
- Social media pages: Facebook, LinkedIn, Twitter, etc.
- PR events
- Press releases
- Special offers
- Referral incentives
- Cold calling
- Networking: events, tradeshows, conferences
- Search Engine Optimization
One effective system, when done right, is called a strategic alliance, a host beneficiary relationship, or a third party endorsement. Once you have a clear idea of your target market, you find out what established businesses already cater to those people. These businesses need not do anything related to what you do; it’s their customers you are interested in. You then set up a meeting with some of these companies and present yourself and what you have to offer. What you are after is an alliance between yourself and the other company.
Let’s say you offer marketing services specifically for dentists. You locate a company that sells the premiere software for dentists. You set up a meeting (live, Skype, etc.) and get an agreement wherein they will send out an offer of a free product or service from your company. Just make sure it is something you can deliver that isn’t too costly. What the other company gets is goodwill, free of charge for them. If they send the offer to 1,000 names and you get 300-500 responses, you get 300-500 potential clients’ with names, numbers, emails, etc. The potential return is considerably high. That is just one example of a bright idea to get new customers right away at minimal expense.
You probably have competitors. What are they doing? What are they offering? What do they have that you don’t? What do you have that they don’t? What are your strengths, weaknesses, opportunities and threats? You need not get super-technical on this, but you should have a firm grasp of what is going on in your field.
Any strategy must include an assessment of existing resources that can be used immediately or cultivated. These include members of your team and their individual specialties, existing funds, potential capital, existing customer base, your premises, equipment, marketing channels, and of course the products and services you deliver. When you’ve listed these out, incorporate their utilization and augmentation into your strategy. Your current and potential resources are a key component to achieving the goals you have set.
Metrics (aka statistics) are vital as they measure what you’re doing and what you’re not doing. They indicate your current output versus your potential. In your planning, you must include numerical targets to be met. These are the numbers that represent expansion. If you set targets of 5-10 times expansion, you’ll get yourself thinking in the correct order of magnitude. But take it a few notches further: Do a projection for 100 times expansion and see where that goes. You’ve got nothing to lose and everything to gain.
Those are some of the key elements of a strategic plan, or a business plan for that matter. If any of this seems difficult to grasp, draw it out in diagram form. In doing so, its core simplicity and practicality should be clear.