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Strategic Plan or Business Plan

Having worked in strategy for over a decade, I often get asked questions about the nature of strategy. One of the questions that sometimes comes up particularly from social entrepreneurs is ‘what is the difference between a business plan and a strategic plan?’ There are a number of ways to answer this….a strategic plan is often more focused on elements that build a much longer, wider view of the organisation, whereas business plans often cover a 1-3 year period and tend to be more focused and financially oriented.

As the rate of change has increased, many organisations have shortened their strategic planning cycle (5 year plans to 3 year plans and now sometimes 3 X 1 year plans). Business plans tend to focus more on the product, financial elements of the organisation.

Having said that one of the interesting comments on this I have seen is from Andy Horsnell, who is one of the founders of the monthly newsletter of the npEnterprise Forum (http://www.npEnterprise.net) , the official listserv partner of the Social Enterprise Alliance, which is the social sector’s association in the U.S.

He commented that a business plan is similar to, or the same as, a strategic plan IF the business plan is focused on the entire organisation. Business plans offer more value when focused on particular products or programmes.  So according to Andy there could be an overall strategic plan for the entire organisation, but a business plan for each of its products or programs.

This is a fair comment as, particularly for social enterprises, different programmes or revenue streams may have very different stakeholders, collaborators, competitors, pricing, etc. Ergo having a business plan for each product/programme is may be preferred. Social Entrepreneurs may have different reasons to present either of these documents, and there is no doubt that funders now are as likely to want a good strategic direction as details on individual areas of the organisation’s activities.

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