What is a Strategic Plan in Business?

You’re not alone if you’re asking yourself, “what is a strategic plan in business and how do I get one?” Business planning is vital to ensure the longevity of a company by positively impacting the company’s growth and its success. To that end, a strategic business plan gives the company the appropriate tools to track growth, determine a budget and be prepared for any unforeseen changes within the market place. 

A strategic business plan is a comprehensive guide on how the given company can manage company objectives in order to improve financially. A strategic plan in business requires that the business be able to clearly define its goals as well as conduct extensive research in order to accurately understand industry trends. Asking “what is a strategic plan in business,” creating one for your business and analyzing the results requires several key elements and ongoing evaluation to determine its success. 

What is Business Strategic Plan Definition?

A strategic business plan is a written document that combines the company objective or objectives with market place needs. A strategic plan is essential in order to maximize market research and understand how the market does and can affect the business, as well as achieve optimal market share for the business. 

A strategic plan is able to provide the company with a more streamlined approach to attract its customers by determining who and how to market to them. The plan enables the business to focus on an area in the marketplace that the business can serve. The business can then tailor its sales, advertising and customer management to that area. This allows the business to know their target audience and the gaps within the marketplace that they can fill. 

What is the Purpose of a Strategic Plan?

The overall purpose of a strategic plan is to set overarching goals for the business and develop a plan that details how to meet those goals. It requires a big-picture mode of thought, as opposed to day-to-day operations, that asks the questions:

• Where is the business headed?
• What should the business priorities be?
  

Shifting from a day-to-day focus to a comprehensive viewpoint enables effective strategy development towards a more broad and long-term business plan and options. A strategic plan determines at a high level which direction the business should go in.

SCHEDULE MY EXPERT

What’s the Difference Between a Strategic Plan and a Business Plan?

A strategic business plan is similar to a traditional business plan, with the difference that the strategic plan is more comprehensive and in-depth. The strategic plan defines the company goals in relation to how best to reach them in accordance with available business opportunities. The importance of strategic planning and its long term significance to the business cannot be overstated. 

Both plans use goal setting as a means of tracking success, but the time periods within the goal-setting vary. A business plan sets short-term or mid-term goals and outlines a path that is needed to reach them. A strategic plan, on the other hand, is focused on mid-term to long-term goals and basic steps that are to be utilized to accomplish them.  

Business Plan

A business plan answers the question of “what do I want to do?” Oftentimes it is the blueprint and founding document of new businesses and includes the following pertinent company information:

• Organizational Structure/Plan - Explains how the company will execute its vision. Details HR requirements needed to staff the team and what the business will use in terms of space, equipment and distribution. 
• Marketing Plan - A specific description of the goods and/or services that the business will offer, the target market and how the business will sell to customers. Tells what is compelling and different about what the business is offering compared to the competition and how the business will market itself and its products. 
• Financial Projections - Gives a detailed outline of the company’s financial projections over the next few years. It’s important to include growth expectations as lenders and investors want to know they will get a return on their investment. 

A business plan contains more preliminary, broad information that starts the company in the right direction. The document answers key questions that a potential partner, investor or banker may ask. It accurately summarizes the broad scope of the business and why the business is a viable concept. 

SCHEDULE MY EXPERT

Strategic Plan

A strategic plan answers the question of “how will I do it?” It is comprised of a detailed action plan for the next several years that outlines how the company will achieve its goals. Many aspects of a business plan can be part of a strategic plan. The difference is that the strategic plan sets a roadmap for the company to follow over the next several years in order to achieve the objectives laid forth in the plan. 

Therefore, the strategic plan is an action plan with specific undertakings, due dates for those endeavors and who is responsible for each venture. The strategic plan is built to ensure growth objectives in a coordinated, systematic and informed manner. This increases the odds of success for all parties involved. 

A business plan and strategic plan are both active documents and proposals that should be reviewed continuously. They should be evaluated annually in the least, although ideally a strategic plan would be reviewed every time a major event occurs that impacts the business. Such an event could be:

• A new competitor entering the market
• A new product launch
• A sudden cash flow issue
• An important currency fluctuation

A business plan and strategic business plan have different functions, depending on which stage the company is going through. Regardless of their discrepancies, both should feature a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) in order to create an optimal plan based on the situations and desired objectives. 

What are the Elements of a Strategic Plan?

Business owners and company leaders must have a deep understanding of how their business works in different ways in order to develop a strategy for growth. They should understand the business internally and in relation to the external environment of the market and competitors. There are three questions that should be answered with the elements of strategic planning.

Where is the business now?

This means the owners and company leaders must have extensive knowledge of the business, including:

• Internal operations
• What increases and decreases profitability
• How the business compares to its competitors

It is important to be realistic, critical and detached when answering this question. 

SCHEDULE MY EXPERT

Where is the future of the business? 

This is where the highest priority objectives are decided. The business must work out the following criteria to outline the next five to ten years.

• Vision
• Mission
• Objectives
• Values
• Techniques
• Goals

Other aspects to consider are the focus of the business and how the business has an advantage over its competitors in the marketplace. 

What must be done to get there?

This question lays the groundwork for the next several years as the business advances towards its goals. The business must ascertain:

• What changes must be made to meet the strategic objectives?
• What are the best methods to implement those changes?
• What structural and financial changes may be required?
• What goals and deadlines should be given to individuals within the business?

All three questions must be considered in the context of each other. The second question, where is the future of the business, is the core of the strategic plan but the other two are equally important in the planning process.  

The vision for the business should be balanced against the practical realities of the current situation. Account for implications of any changes, such as increased investment into resources or capital, and have contingency plans in the event that expected changes don’t occur. In order to be fully effective, a strategic plan should be realistically achievable and take internal and external factors into consideration. 

SCHEDULE MY EXPERT

What’s Included in a Strategic Plan?

A strategic plan provides a sense of purpose and priority to everyone involved in the business. The process of developing the plan helps the owner, manager and employees to stop for a moment, examine the present, see where they want to go and understand the path to get there. Work can still be done without a plan, but the plan provides clarity and structure to the day-to-day operations in the grand scheme of the business. 

The strategic plan as a document can be one page, several pages, a notebook or a binder depending on the complexity and details given. At a base level, a strategic plan has nine fundamental sections that make up the framework. More specialized sections can be included, but the nine are a good starting point and can be adjusted and fleshed out as needed.

1. Executive Statement - Although this is at the beginning of a strategic plan, it should actually be completed last. The portion summarizes each of the other sections that are to follow. The executive summary is important because it helps to give key figures in and related to the business, such as employees, advisors or investors a quick understanding of the plan. 
2. Vision Statement - Describes the way the owners and company leaders envision their business. The vision statement should communicate that image to employees, customers and stakeholders and should be continuously reviewed in order to ensure it is always aligned with the company objectives and operations.
3. Mission Statement - Describes what the company currently does. The vision statement describes the owner’s view of the business to employees, customers and stakeholders but the mission statement describes what the company does, for who and how it does those things.
   

The mission statement can either broaden or narrow the company’s choices. In addition, those within the company can reach the vision by focusing on the mission each day.

1. Core Values - Describes the company’s beliefs and behaviors. These beliefs will enable those within the company to achieve both the vision and the mission.
2. SWOT Analysis - An acronym for strengths, weaknesses, opportunities and threats. A SWOT analysis gives a situational investigation into the company’s position in the market. This is the place to spot and name any important aspects, happenings and/or adversaries of the business.
3. Long-Term Goals - Uses the vision statement as a base to determine how the company will achieve its goals. Long-term goals should start being met around three years out with future plans to around five years.

The goals should coincide with the vision and mission statements. Long-term goals should be considered milestones set by the company to guide operations towards far-reaching objectives. 

1. Yearly Objectives - Each long-term goal should be broken down into multiple one-year objectives that lead to reaching the goal. Each objective should follow SMART guidelines: Specific, Measurable, Achievable, Realistic and Time-based.
   

The one-year objectives can be further broken down into short-term goals which then define the actions and plans over the next three months, again, to reach the yearly goal. These types of plans are called action plans.

1. Action Plans - Each objective within a goal should have a plan that details how the final goal will be met. Action plans can have more detail if the company wants a more structured, less flexible path for managers and employees or less detail if the company wants to give the manager and employees more flexibility in meeting the objectives.
2. Financial Plan - The final section of the strategic plan covers financial projections for the business. A financial plan can help to assess potential pitfalls and results from each objective and action plan. 

Furthermore, the financial plan can help to map out the short and long term goals. Numbers can serve as a baseline for when a given goal is met, such as how many new customers the business must obtain in order to reach a certain revenue for a specific month. 

SCHEDULE MY EXPERT

Do Small Businesses Need Strategic Planning?

Any business committed to long-term growth should partake in some type of strategic planning. Therefore, smaller businesses should be just as invested in strategic thought and actions as large companies. A small business that does invest in strategic planning may very well move ahead of its competitors by thinking ahead of possible problems and solutions.

The strategic planning process, within a large company, can be a time-consuming process that usually involves the company owners and leaders, with input from staff within the organization. The plan is often written by executives that may not reflect the necessary work and commitments that must be done by lower management. For that reason, implementation of the plan may fail.

A small business has an advantage when going over strategic planning strategies because they can simplify the process and tailor resources and needs to make the plan practical and relevant to its own business. Including the strongest employees within the small business and discussing strategic issues, concerns and general hot topics within the industry will involve them in the process and also serve to improve the business environment. Those employees will feel a sense of ownership in the business and its future. 

The criteria when strategic planning for a small business is different than for a large company. The small business strategic planning doesn’t have to be as long, formal or detailed. The most important aspects that should be covered are fully analyzing your competitors and having open discussions with investors, employees, customers and vendors.

A strategic plan should leave you prepared for future events and lower the chances of the business facing any unexpected surprises. Successful planning becomes a way of thinking, correcting and adjusting to business conditions in order to reach those long term goals while staying true to the company mission and strategic goals. A company that is small, with possible tight resources, should still make planning a cultural mindset that is fostered or risk spinning its wheels instead of progressing forward.

Why is Strategic Planning So Important to a Small Business?

A small business that makes use of a strategic plan with many internal contributors is able to voice its long-terms goals and logistics strategy within the company. The strategic plan then becomes more than a company announcement or speech by management, it is an ongoing effort from everyone. 

A typical business document that outlines a template approach will not produce buy-in or commitment from those employees or people who can produce long-term results. Instead, a company produces better and more realistic operating guidelines when it can think long term and combine that thinking with a short-term planning process.

The factors that make a successful large company are the same factors that can make a successful small company. A business that can incorporate long-term goals, performance objectives and forward-thinking strategies into short-term goals, performance targets and the company budget is one that will thrive in their market and prosper on all fronts. 

A large business has the benefit of already reaching some level of success, giving it some cushion in the case of hard times. A small business generally has less cushion and room for error, making it more vital to achieve annual budget goals and performance milestones. That is why it is necessary for the company culture to establish a sense of shared accountability. Every employee must feel that their effort and performance will directly affect the business as a whole, which is likely the case. 

SCHEDULE MY EXPERT

What are the Four Phases of Strategic Management?

Strategic management is an ongoing process that analyzes internal procedures, processes and resources to meet goals and objectives. It is used in the creation and execution of the strategic plan. There are four primary phases that must be utilized for each strategy and each phase’s purpose should be understood by leaders within the organization. The four phases of strategic management are:

• Formulation
• Implementation
• Evaluation
• Modification 

Formulation

The formulation phase entails formulating, or choosing, the most profitable course of action needed in order to achieve success when reaching goals. Objectives are set and pathways are identified as a way and means of accomplishing short-term and long-term goals.

This is where the SWOT analysis takes place to identify company strengths, weaknesses, opportunities and threats. The SWOT analysis should reveal critical areas pertaining to company products and services that need more work and attention. 

Implementation

Implementation is when strategies are executed to meet the objectives. Strategies are able to be executed successfully when employees understand their roles and responsibilities. The work that is done should be measured in order to provide needed feedback with facts to pinpoint positive impacts and possible areas that should be adjusted. It is vital that the company pay attention to details within the objectives in order to monitor the process and make any quick changes that are necessary. 

Evaluation 

This is when strategies that were used in the implementation phase are evaluated to get performance feedback. An analysis can be used to compare how the company performed when meeting the short and long term goals. The company can determine if new products are needed or if additions must be made to existing products by analyzing the present state of the company as compared to the desired future state. 

Modification

This phase is essential when fixing any weaknesses or failures discovered during the evaluation phase. Any new strengths that are found can then be implemented in other areas of the company, thereby streamlining the solution process. 

SCHEDULE MY EXPERT

What is an Example of a Strategic Plan?

A strategic plan is not a “one size fits all” document and can come in varying forms, shapes and sizes depending on the company, market, resources and goals. Some strategic plans are more simple and mainly include goals, objectives, strategies and tactics while other complex strategic plans have those sections plus other multiple levels and layers. 

The most simple, basic, strategic plans should have three levels that serve specific functions. 

• Objectives: Target goals that can be quantified and measured, which answer questions “how much” and “by when.” A strategic plan must have objectives that can be measured, otherwise, those items are simply a list of tasks. Objectives can be a baseline or targeted performance, or a due date for completing a larger objective. Objectives are the foundation for any future planning and are accomplished by using strategies and tactics. 
• Strategies: Broad action-oriented items are implemented in order to achieve the objectives. A strategy provides the focus for a specific action, which contains individual tactics. Hence, a strategy is an accumulation of tactics.
• Tactics: task assignments that are completed by individuals. Tactics include more specific assignment criteria, such as a smaller task due date or deliverables. They are delegated to specific people within the company for completion and execution. Strategies are made up of these smaller action items. 

More complex strategic plans have additional levels that are in addition to the three listed above. A fully developed plan also has two additional two sections, both of which come before the objectives:

• Strategic Themes: group headings are used to categorize strategic and operational plans. The headings are usually short, only one to three words and are often titled as below. It is most common to have four to six of these categories. 
  • Quality
  • Safety
  • People
  • Customers
  • Service
  • Finance
  • Growth
• Goals: broad statements that turn the company’s vision statement into something concrete and meaningful, which can be completed within a given amount of time. Goal statements can be used with strategic themes to give strategic themes a vision and be more specific. 

A complete and complex strategic plan would then look like this:

Strategic Theme: Client Satisfaction

Goal: Be considered a trusted partner by the company’s clients

Objective 1: Increase client satisfaction from 85% to 93% by January 1

Strategy 1.1: Implement an annual client conference

Tactic 1.1.1: Choose date and venue

Tactic 1.1.2: Develop an agenda for the conference

Tactic 1.1.3: Select and invite speakers

Tactic 1.1.4: Create social events within the conference

Tactic 1.1.5: Decide on a menu

Tactic 1.1.6: Design invitations 

A company can develop various strategic themes, goals, objectives, strategies and tactics depending on how in-depth and detailed they want to go into the business. It’s a good idea to first tackle the largest, most pressing and time-sensitive issues before getting into smaller areas of concern within the business. The company may find that addressing the larger issues may resolve or change the dynamic of any smaller concerns. 

SCHEDULE MY EXPERT

How Do You Write a Good Strategic Plan?

It’s one thing to think of what to put in a strategic plan; it’s another thing to actually get it down on paper in a clear and concise format. Writing and developing a good strategic plan means sifting through all of the ideas and content, deciding what’s pertinent and making them into a good outline. Consider these general tips when writing a strategic plan:

• Select a writer: Find the best writer in the group, and utilize them to take the ideas and words and turn that into written text. The best writers are those that can understand the general idea being said and contextualize it concisely so the reader can fully grasp the concept.  
• Less is more: Plan on having a small number of people when starting the process. More people can lead to confusion when it comes to differences in wording and phrasing. The people involved from the start should be important and knowledgeable figures within the company that understand many of the inner workings within and between departments. 
• Stay within the company: Writing the plan should be a job for those in the company. Consultants can help and give suggestions on content, clarity and tone but a consultant is not going to understand the full scope of the business like those already involved. 
• Focus first on a rough draft: Don’t worry about getting every detail right the first time around. Finish the first draft and get something down on paper as quickly as possible. That will provide good source material for the strategic plan as a whole, which can then be reworked and rehashed as needed. 
• Get your first draft approved: Present the rough draft to top management in order to get their initial approval. That will make them feel included and involved from the start and give them confidence that the team working on the strategic plan will use them throughout the process. 
• Also include employees: Get input from employees when it comes to the action planning process. They will likely be the ones implementing the action plans and their opinion should be heard on what’s feasible and what isn’t. However, not every employee needs to approve of the plan. Trying to please everyone will slow the entire process down and it’s unlikely everyone will agree on the process. 

How Long Should a Strategic Plan Be?

The length of the strategic plan depends entirely on the company’s goals, how much they want to accomplish and the length of time they are covering. A company can choose to have a shorter strategic plan that is only a page long and that addresses one or two concerns that they want to tackle over the next year.

On the other hand, a company can also choose to create a strategic plan to spans the next five years and has multiple areas they want to change with multiple methods they want to implement. There is no right and wrong answer as there are many different variables involved in the process. 

Companies often use a three-year to five-year model when creating a strategic plan. This also provides a longer roadmap to follow that gives the company direction several years into the future. 

How Do You Evaluate a Strategy’s Results?

Evaluating the success of a strategic plan is essentially evaluating the success of the overall business and its procedures and processes. There are a few simple benchmarks that can be used as a meter towards success. 

• Compare Goals: Go back to the SMART goals that were set and see how far along the business is towards reaching them. The SMART goals should be reviewed on a regular basis to maintain a steady path towards achieving them. Compare where your goals started to where they are currently and see if they still fit within the SMART guidelines.
• Review the Plan Itself: Similarly to comparing goals, the strategic plan should be reviewed periodically to track the steps and progress of the plan. Analyze which stage of the four phases of strategic management the business is at and the end goal of each phase. Look at the bigger picture of the plan within the current stage to see if the business is on track with its current operations.
• Utilize an Income Statement: Prepare an income statement for the period being evaluated. The time frame can be a year or a specific quarter but no matter what the period, compare sales from the selected timeframe with the previous timeframe.

Also, compare business expenses to prevent any escalating upward trends due to any changes in operation. Both comparisons should have positive progress. If they don’t, go back to determine why and reevaluate the business approach. 

• Survey Those Around the Business: The business has several parties affected by its operations - employees, customers and business associates. Survey all of them to see if the type of response is one that is valued by those within the business. The survey can include direct questions from specific people or a general, online survey with anonymous responses. 

R+L Global Logistics as a Strategic Partner

R+L Global Logistics offers logistics, shipping consultant and supply chain solutions for operating in a global marketplace and becoming a wholesale distributor. Your strategic plan will likely encompass the logistical side of your business operations. Speak with one of our R+L Global Logistics consultants if you would like some guidance on how to answer your question, “what is a strategic plan in business” when designing, improving or implementing your current logistical structure. 

Our product distribution strategy consultation services cover complete supply chain solutions on transportation, warehousing, trade shows and more. Call us today at 855-863-7672 to start the conversation with one of our professional consultants.

SCHEDULE MY EXPERT