Business plans are very familiar to me. I receive calls from time to time to design one for individuals who have potential investors. In doing so, I try to incorporate some form of a strategic plan in the product because new entrepreneurs rarely think on that level.
Business plans and strategic plans are different though. Take Johnson and Smith’s book 60 Minute Strategic Plan for instance. They state that, “a business plan is [used] to evaluate teh viability of a business…Business plans keep the company on its rails as it relates to key tactical financial and operational ratios…In a word, a business plan explains the ‘what.’
Johnson and Smith contrast strategic plans as “requiring leadership and inventive thinking and assume higher risks, leading to higher rewards. The strategic plan is an internal leadership tool used to plan a course of action to address unanticipated problems or opportunities…” In other words, it explains the “why and how.”
Bill Birnbaum, author of Strategic Thinking distinguishes the two types as strategic thinking and tactical thinking. I would have to side with his distinction between a strategic plan and business plan. The strategic plan is used to help you decide what to do, and the business plan (or company budget forecast) is used to decide how to do it.
If you are a small business owner, or an entertainer, the concept is the same. Strategic thinking will make you focus on the needs of your customer, how your product benefits your customer, and the reason why a customer would want to buy your service. Or as Birnbaum states it, “In thinking strategically, you’ll be concerned with doing the right things, rather than doing things right.”
Let’s take an entertainer for instance. I am meeting next week with a recording artist who wants to stand out. What we will not look at in the recording industry is what is being done now. The reason why is that why duplicate things that are working in an industry that is moving a break-neck speed, or duplicate business models that are not working? No, instead, we will be exploring her talents not only in the recording industry, but other industies with the vision of producing a specific message about who she is.
The same goes for small business. If you want to be an industry leader, you must distinguish your strategic plan from your business plan. Using Jim Collin’s phrase, you will never achieve your “Big Hairy Audacious Goal” (BHAG) if you are 1) duplicating what others have done in your industry, or 2) just doing an annual budget. The annual budget is contained in the Annual Operating Plan (OAP) which must move an organization towards teh BHAG.
If you want to move your career and/or business beyond your competitors, you must start thinking strategically by implementing and executing a strategic plan. If you are one who only focuses on the future business plan or budget by looking in the past, you will be on operating on a financial treadmill. You may seem like you are moving forward, but all you will be doing is spinning your wheels.