Do you need a business plan or a strategic plan?

Every business needs a strategic plan.

But not every business needs a business plan.

A business strategy gives you direction in every area of your business. It looks at where your business is at currently, where you want to be, and the steps you need to take to reach your future vision. You are looking 5 to 10 years out with your strategy.

A business plan helps you get financing or investment dollars. You are still looking at where you are now and where you want to be, but the focus is 2 to 5 years out. Your business plan outlines what you will be doing with financing or investment because it’s main purpose is to secure money.

Which Does Your Business Need?

It can be confusing to figure out which of these you need for your business right now. You have to think about if you are looking for money or if you are looking for a roadmap to get you where you want to be.

A Business Plan To Secure Money and Investment

A business plan is a formal document businesses put together to get financing. It may be for a loan, a grant, or to get investors to buy in. There is a structure to a business plan and while there are different templates, they all have similarities. The basic structure of a business plan is:

• Executive Summary
• Business Description
• Market Analysis
• Human Resources
• Financial Projections

A good business plan discusses the business after the financing is received. It also discusses how the money will be used to improve the business and ensure the loan will be paid.

Financers and investors use the business plan to determine if this business is a good investment.

Banks and financial institutions want to know they will get their payments in full and on time (interest is how they make their money), and they want to know what security they have against their loan.

Investors want to know that will get a return through various means; this could be through a loan repayment, dividends paid out, or another way agreed upon.

It is important that the business plan explains every part of the business and answers all (or at least most) of the questions the reader will have, shares complete references, has detailed financials with assumptions for the projections, and a full marketing plan. All of these go a long way to getting funding.

A Business Strategy to Have a Step by Step Plan

A business strategy has many similarities to a business plan. The main difference is that a business strategy is for internal use. It has details on every part of your business, both now and in the future, and lays out the steps to be taken to reach your goals.

Each area of the business is looked at – marketing, accounting/finances, your team, your processes and systems – and evaluated to see how each contribute to your success (or how they might holding you back).

Goal Setting is Essential

Once you know where you are now you need to define your goals. Goals will vary business to business, but common goals revolve around revenue, gross profit, net income, number of clients helped, hours worked in the business, team compensation, client retention, cash flow, and more.

It’s also important when defining your goals to check that you aren’t already set to reach your goals; setting stretch goals is important: you want your goals to push you to grow but not be completely out of reach.

Your Strategic Plan Lays Out Each Step You Have to Take

Your business strategy needs to support you in reaching your goals. If you don’t have the right offer, at the right price, being marketed to the right audience, with the right systems in place, reaching your goals is impossible. Add to that understanding your expenses and cash flow to allow you to reach your income goals and you get a full picture of your business.

A good strategic plan will look at all of this (and more!) and lay out the steps you need to take.

At Clear Direction Advisors we will create a business plan with you to help secure financing or a business strategy to bring your vision to life, with ongoing support and accountability. To explore which option is the right one for you and your business, let’s chat.