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How a strategic plan differs from a business plan

How a strategic plan differs from a business plan

A strategic plan is a type of business plan, but there are several important differences between the two.

A strategic plan is primarily developed to set the strategic direction of an existing business, to determine priorities and to allocate resources (i.e. time, cash and people) over a 3 to 5 year period.

In contrast, a business plan is developed for the following three situations:

  • to start-up a new business
  • to secure finance (i.e. to start-up or to fund investment and expansion or for working capital purposes)
  • to direct business operations and allocate budgets over the forthcoming financial year

In large companies, much time and effort is devoted to the strategic planning and the business planning processes with the context for the operational business plan, sometimes called the budget, being set by the strategic plan.

In small companies, a business plan is usually only developed when there is a need to secure additional finance. Many small companies never develop a strategic plan. Without a business plan, your company will underperform and risk failure. Learn more about why a business plan is a business critical document.

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