Strategic / Business Plans

 

Strategic Plans versus Business Plans

Business Plans

Strategic Plans

The Planning Process

The Analysis Phase

The Selection Phase

The Implementation Phase

 

Strategic Plans versus Business Plans

There are three main steps in the planning process for most organisations and these are best captured with the following questions:

  • Where are we now?
  • Where do we want to get to?   and
  • How do we get there?

A simple enough framework, but what then is the difference between a Business Plan and a Strategic Plan?  My answer is that there tends to be more clarity and certainty surrounding Business Plans and the timescale tends to be shorter – up to about three years ahead.

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Business Plans

Organisations producing Business Plans usually believe they have a clear understanding of the market and their positions in it and have fairly clear ideas of where they want their organisations to be in a few years’ time.  They then need to work at enunciating their goals clearly and at setting out clearly what they need to do to achieve those goals.  Business Plans in smaller organisations are often produced when demanded by banks and government bodies tasked with developing businesses, such as Invest Northern Ireland and Enterprise Ireland.  However I would suggest that an organisation that produces / updates its Business Plan each year, to meet internal demands, is probably a well-managed organisation.

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Strategic Plans

Managers working through a Strategic Planning process are often unclear about the future for the organisations.  Their organisations may have suffered severely because of disruption to their core market e.g. music companies making CDs have suffered badly because of digital music downloads.  Alternatively a business may have imploded during the recession, as happened with many construction companies and companies supplying the construction sector.  Such organisations need to undertake a fundamental review of their business to plot the way ahead.

Of course, there are also well managed organisations that go through a regular Strategic Planning, process, looking ahead for five to ten years and also producing Business Plans to guide them in the shorter term.

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The Planning Process

Whether the organisation is developing Strategic Plans or Business Plans there are three key phases, which often tend to overlap:

  1. Analysis of the organisation’s current situation
  2. Selection of the strategies to be followed, the goals to be achieved and the methods of implementation
  3. The implementation of the plan.

The steps tend to be iterative, in that often decisions are taken as to what should be done, but when the details are worked out, it will not be possible to achieve the goals.  It is then a case of reviewing the original assumptions, decisions etc and amending them as necessary.  I have often had to fundamentally rework plans because they proved not to be feasible, usually because the organisation could not finance the plans, but sometimes too because management realised they did not have the quality of staff in place to achieve their goals.

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The Analysis Phase

Smaller organisations often skimp on this phase, sometimes because management believe they already have a clear understanding of their strengths and weaknesses, their place in the market and the changes coming to the market.

This, I think, is a fundamental error.  Off-site planning sessions should be attended by a variety of staff from all functions in the organisation.  They are useful in carrying out a realistic assessment of the current situation of the organisation and usually lots of good ideas to develop the organisation are generated.  They also result in “buy-in” and commitment from the participants.

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The Selection Phase

In a Strategic Planning Process, during the Selection Phase, future options for the company should be considered and a number shortlisted.  Those shortlisted should then be evaluated for their feasibility and acceptability.  One or two final options should be chosen as the way forward for the company.  Different methods of implementing the chosen options should then be considered and the best method for implementation chosen.  For example a company may wish to start a different line of business.  This could be done using existing staff and resources, by entering into a Joint Venture with another company, by acquiring another company or by merging with another company etc.

In practice, for most smaller organisations, the focus during this phase is on the detailed plans required for the overall Business Plans.  These include Marketing and Sales Plans, Manufacturing / Operations Plans, Personnel Plans, IT Plans and Financial Forecasts etc.

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The Implementation Phase

During the Selection Phase detailed implementation plans should also have been produced for each function in the business to achieve its goals.  These should be consolidated into one Business Development Project Plan, which sets out the timelines and milestones for goals to be achieved and the names of those responsible for carrying out the tasks and achieving the goals.  The financial forecasts should reflect the tasks and goals in the project plan.

Every month, at the Senior Management Team Meeting or Board Meeting, each senior manager should report on progress in carrying out the work in the plan and achieving the goals.  The Finance Manager should report on the progress against budget.  In my experience the failure to hold managers responsible, at regular monthly meetings, for the progress of the Business Development Project, is a major contributory factor to the failure of many Business Plans.

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Contact

If you would like to receive assistance to develop Business Plans or Strategic Plans for your organisation please contact:

Declan Kelly

dkelly@focusbusinessadvisers.com

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