Planning is a vital part of any business—a failure to plan in business results in failure. Your business will crumple if you do not make smart and strategic plans. Every seasoned business owner knows the importance of planning, and it would be ideal if you knew too. This article answers the question, “what is strategic planning in business”.
It also discusses other important things that you should know about this topic.
At the end of this article, you will learn enough to take your business to the next stage using strategic planning.
So, ensure you stick with us to the end.
Meaning of Strategic Planning in Business – What is Strategic Planning in Business
Strategic planning is the process through which a company creates its business strategies and implements them.
It also involves using these strategies and plans to define and meet the company’s long-term vision and goals.
The strategic planning process is about coming up with the best steps and approaches the company has to take to reach its goals and vision.
This entire process is known as a strategic plan.
Strategic plans often span 3 to 5 years and can sometimes cover a longer period.
This is because it is usually made for mid-term and long-term goals.
The plan itself can be represented in any media form choice of the company.
But it is best to have it in a media that can be shared easily.
This will make it accessible to those who need to go through it, like employees, business partners/investors, and even customers.
Aside from accessibility, the plan must be easy to read and understand.
Typically, a company would review and update its strategic plan as often as may be necessary.
Business Plan Vs. Strategic Plan
People confuse strategic plans with business plans.
While these two plans have certain similarities, they aren’t the same.
They have certain differences despite their similarities.
As a business owner, you should have these two plans for your business.
You can adequately use both of them to the advantage of your company.
However, you cannot do this if you do not know their differences.
Therefore, this section will take a closer look at these two types of plans to make you understand them better.
So, what is a business plan?
A simple definition of a business plan is that it describes a business and its processes.
It focuses on the type of business, the industry it belongs to, what it does to make its profit, its daily processes, and its resources and budget.
A company typically writes its business plan when it is about to kick-start.
A business plan also comes in handy when a company is making a new venture.
For instance, when it wants to enter a new market or launch a new product.
Business plans aim to educate the reader about everything they need to know about a business.
Companies use it to solicit business loans or investments from banks, partners, and investors.
On the other hand, strategic plans define a business’s goals and objectives and the strategies the company intends to carry out to achieve these goals and objectives.
The audience for a strategic plan is the employees that will help the company implement the strategies to reach its goals.
Similarities Between a Business Plan and a Strategic Plan
Business plans and strategic plans are all about making plans for a company.
Therefore, they share certain similar features.
The notable similarities between strategic and business plans are an executive summary, the company’s description, mission, value statements, and vision.
Dissimilarities Between a Business Plan and a Strategic Plan
When it comes to the dissimilarities between these two types of plans, there are quite a lot of them.
Knowing these differences will make it easier for you to distinguish one from the other.
Let’s look at some of these differences below.
A Business Plan Contains:
- The company’s sales and marketing plan.
- Lists of key company players such as the owner, management, and even key employees.
- The business operating plan.
These are some things you would find in a business plan, but you most likely won’t find in a strategic plan.
A Strategic Plan Contains:
- The company’s goals and strategies on how to achieve the goals.
- The company’s SWOT (strengths, weaknesses, opportunities, and threats) analysis.
- A one-year action plan that discusses the company’s strategies and initiatives. Also, those that would carry out the initiatives, the strategy’s timeline, and KPIs to help track the initiative’s progress.
These are some features that a strategic plan will have in contrast to a business plan.
Strategic Plans Types – What is Strategic Planning in Business
You can classify strategic plans into 3 different categories.
These categories are based on the area that the strategic plan focuses on.
Therefore, the different strategic plan types are business, cooperative, and functional strategic plans.
Let’s take a closer look at them below.
Business
This type of strategic plan focuses on the company’s competitive area.
It creates a competitive edge for a company, opening it to better opportunities and growth levels.
Therefore, this type of strategic plan will research and analyze the business’s external environment, set goals, and allocate resources to help it reach its goals and objectives.
This is the typical type of strategic plan and is mostly what people talk about when discussing strategic plans.
It is mostly what this article is about.
Functional
Functional strategic plans usually focus on particular sectors or departments within a company.
For instance, your company’s marketing department may develop a strategic plan to help it achieve a particular marketing goal.
Therefore, a functional plan will focus on both processes and policies.
Cooperate
This type of plan is all about the workings of the company.
Its focus is the company’s structure; how to align and organize the company, including its policies, structure, management, and processes, to help it reach its goals.
Sometimes, strategic plans may have features that cover all three areas.
However, the plan will still have a particular focal area, even in this case.
So, while it has elements of other areas, it will mostly be about one area.
Importance of Strategic Planning – What is Strategic Planning in Business
Strategic planning is crucial, regardless of the type of business you are running.
But what makes strategic planning so important?
Well, it is because a company needs to have a direction.
It has to know what it is working toward and how it can achieve what it wants.
This is what strategic planning can offer a company.
It provides the guidance that a company needs to get what it wants.
And this is what makes it an essential aspect of any business.
If there’s no strategic planning, a company will lack guidance.
Additionally, it won’t know whether or not it is on the right track to achieving its goals and vision.
Advantages of Strategic Planning – What is Strategic Planning in Business
Strategic planning is vital for any business and will benefit your company in the following ways:
Helps a Company Develop Good strategies
The best advantage your company will benefit from strategic planning is that it will make better strategies.
This is because strategic planning uses systematic and logical approaches that allow a company to arrive at the best strategy.
Even if a particular strategy is not as successful as it was projected, the whole strategic planning process will significantly improve the company’s performance and efficiency.
Improves Communication in the Workplace
Another great benefit of strategic planning is the proper flow of communication.
Strategic planning cannot be successful without proper communication between employees and employers.
Both parties will be actively involved in ensuring the company meets its goals, and this would only be possible through active dialogue and participation.
Makes Employees More Involved with the Company’s Strategies
Everyone in the workplace will clearly understand the company’s goals and vision if communication flows well in all stages of the organization’s hierarchy.
Proper strategic planning will make the organizational goals real to a company’s employees.
They will see how important it is for the company to reach its goals.
They will also understand the role they are playing to help improve the chances of the company’s success.
When employees understand their performance’s importance to the company’s success, they will be more involved with the company’s processes.
They would be more inclined to put in their best efforts.
This will increase productivity, efficiency, creativity, and even collaboration in the workplace.
All of which will help improve the company’s growth.
The Process of Strategic Planning – What is Strategic Planning in Business
To get all the benefits discussed in the section above, you need to do your strategic planning right.
Now, there are different approaches people take when it comes to strategic planning.
You cannot say that one approach is better or superior.
Besides, the strategic planning approach you choose for your company will largely depend on your business type.
That is why there isn’t one sure way to make a strategic plan.
However, all of the different approaches to strategic planning have similar traits in common.
It is because of these similarities that we can break down the whole process of strategic planning into five distinct steps.
Now, these steps are typically the same regardless of the strategic planning approach you want.
Let’s look at these steps below.
Identify
The first step in strategic planning is identifying the company’s current position.
This step is essential because it will inform the type of goals and objectives the company has to set.
In this stage, you should focus on determining the company’s situation.
You would assess every aspect of the business, including its external environment (the market).
Take your time to review the company’s current strategic plan, long-term goals, and mission statement.
You can also carry out a SWOT analysis to help determine the business’s current state and where it is heading.
Prioritize Goals
Once you have figured out the current standing of the company, you will know the company’s goals and objectives.
Now, you likely have several goals and objectives at hand, and you won’t be able to achieve them at the moment.
In this case, the next thing you have to do is to prioritize your goals.
You need to consider all the goals you have at hand and then streamline them by picking out the most urgent and relevant ones.
When you have a list of your most important and relevant goals, you can then ride with them.
Developing the Plan
Now, you know the goals you need to achieve at this point.
The next step would be looking for the best ways to achieve the goals.
This is where you need to develop the steps and strategies your business must take to meet the desired goals.
You can start by developing several short-term tactics that, when combined, will create a great strategy to meet the long-term goal.
Several tools can help you in this stage; for instance, you can use a strategy map.
This will help you visualize the plan you can come up with and help you adjust it accordingly until you arrive at a viable strategy.
Implement the Strategy
Strategic planning continues beyond making the plan.
Once you have the strategic plan, the next step would be to implement it.
Putting your plan to work isn’t the easiest part of strategic planning, as you will have to do the work at this stage.
There has to be proper communication across every sector of the company.
Every employee must understand their role to actualize the new strategy.
You may need to adjust processes and policies and invest in certain areas.
Also, put KPIs in place that will help you measure the plan’s success and ensure it is on the right track.
At this point, strategic management and reviews will have to come into play.
This is the best way to ensure everything goes as it should.
Update
One thing that is constant in life and business is change.
As time goes on, you will need to revisit and reevaluate your strategic plan.
Just because you made the plan for 5 years does not mean you will leave it unchecked for the entire 5 years.
Ensure you review your strategic plan from time to time and update it to match your current business conditions.
Strategic Management – What is Strategic Planning in Business
After reading the implementation step in strategic planning, you are most likely wondering what strategic management is.
Strategic management is the process of ensuring that a company’s current practices are in line with the goals and mission of the strategic plan.
You can consider strategic management as the strategic plan implementation.
Hence, strategic management is otherwise known as strategic execution.
This process involves properly allocating a company’s resources so that the company can reach its goals.
You will employ a descriptive or prescriptive approach to strategic management.
The prescriptive approach is all about the creation of strategies using analytical techniques, and the descriptive approach is about strategy implementation.
It focuses on principles and general guidelines.
Strategic management and strategic planning are very similar, so people use them interchangeably.
Strategic Planning Frequency – What is Strategic Planning in Business
A frequently asked question about strategic planning is how often a business should do it.
The truth is, your business’s strategic planning frequency is all in your hands.
There is no time requirement for how frequent your company’s strategic planning should be.
However, a common approach to strategic planning is quarterly reviews.
A lot of companies often review their strategic plan every quarter.
During this time, those in charge of the plan would check some forecasting they did when making the plan and see how they checked out.
They will also analyze the KPIs and ensure everything is on track.
Another common approach is annual reviews.
During the annual reviews, those in charge of the plan will assess certain KPIs to gauge the success of the plan.
They will also make adjustments if necessary.
However, you should know that there is no timetable for how you should work regarding your business’s strategic planning process.
You should do what works for your business based on its current situation.
For instance, if you used to review your strategic planning quarterly and realize that you can do it annually, you should not hesitate to change it and vice versa.
You can also review your plan monthly, depending on your business needs.
Conclusion on What is Strategic Planning in Business
Strategic planning is creating strategies that help a company achieve its goals and vision.
It does not just stop at coming up with these strategies but also covers how the company implements the strategies.
This process is vital in business because it provides guidance that a company needs to achieve what it wants.
If this process is not yet a priority in your business, this article has helped you see why you should rectify this.
Goodluck coming up with strategies for your business!
