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What is strategic planning? A 5-step guide

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Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. In this article, we'll guide you through the strategic planning process, including why it's important, the benefits and best practices, and five steps to get you from beginning to end.

Strategic planning is a process through which business leaders map out their vision for their organization’s growth and how they’re going to get there. The strategic planning process informs your organization’s decisions, growth, and goals.

Strategic planning helps you clearly define your company’s long-term objectives—and maps how your short-term goals and work will help you achieve them. This, in turn, gives you a clear sense of where your organization is going and allows you to ensure your teams are working on projects that make the most impact. Think of it this way—if your goals and objectives are your destination on a map, your strategic plan is your navigation system.

In this article, we walk you through the 5-step strategic planning process and show you how to get started developing your own strategic plan.

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What is strategic planning?

Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization’s mission and goals, conduct competitive assessments, and identify company goals and objectives. The product of the planning cycle is a strategic plan, which is shared throughout the company.

What is a strategic plan?

[inline illustration] Strategic plan elements (infographic)

A strategic plan is the end result of the strategic planning process. At its most basic, it’s a tool used to define your organization’s goals and what actions you’ll take to achieve them.

Typically, your strategic plan should include: 

Your company’s mission statement

Your organizational goals, including your long-term goals and short-term, yearly objectives

Any plan of action, tactics, or approaches you plan to take to meet those goals

What are the benefits of strategic planning?

Strategic planning can help with goal setting and decision-making by allowing you to map out how your company will move toward your organization’s vision and mission statements in the next three to five years. Let’s circle back to our map metaphor. If you think of your company trajectory as a line on a map, a strategic plan can help you better quantify how you’ll get from point A (where you are now) to point B (where you want to be in a few years).

When you create and share a clear strategic plan with your team, you can:

Build a strong organizational culture by clearly defining and aligning on your organization’s mission, vision, and goals.

Align everyone around a shared purpose and ensure all departments and teams are working toward a common objective.

Proactively set objectives to help you get where you want to go and achieve desired outcomes.

Promote a long-term vision for your company rather than focusing primarily on short-term gains.

Ensure resources are allocated around the most high-impact priorities.

Define long-term goals and set shorter-term goals to support them.

Assess your current situation and identify any opportunities—or threats—allowing your organization to mitigate potential risks.

Create a proactive business culture that enables your organization to respond more swiftly to emerging market changes and opportunities.

What are the 5 steps in strategic planning?

The strategic planning process involves a structured methodology that guides the organization from vision to implementation. The strategic planning process starts with assembling a small, dedicated team of key strategic planners—typically five to 10 members—who will form the strategic planning, or management, committee. This team is responsible for gathering crucial information, guiding the development of the plan, and overseeing strategy execution.

Once you’ve established your management committee, you can get to work on the planning process. 

Step 1: Assess your current business strategy and business environment

Before you can define where you’re going, you first need to define where you are. Understanding the external environment, including market trends and competitive landscape, is crucial in the initial assessment phase of strategic planning.

To do this, your management committee should collect a variety of information from additional stakeholders, like employees and customers. In particular, plan to gather:

Relevant industry and market data to inform any market opportunities, as well as any potential upcoming threats in the near future.

Customer insights to understand what your customers want from your company—like product improvements or additional services.

Employee feedback that needs to be addressed—whether about the product, business practices, or the day-to-day company culture.

Consider different types of strategic planning tools and analytical techniques to gather this information, such as:

A balanced scorecard to help you evaluate four major elements of a business: learning and growth, business processes, customer satisfaction, and financial performance.

A SWOT analysis to help you assess both current and future potential for the business (you’ll return to this analysis periodically during the strategic planning process). 

To fill out each letter in the SWOT acronym, your management committee will answer a series of questions:

What does your organization currently do well?

What separates you from your competitors?

What are your most valuable internal resources?

What tangible assets do you have?

What is your biggest strength? 

Weaknesses:

What does your organization do poorly?

What do you currently lack (whether that’s a product, resource, or process)?

What do your competitors do better than you?

What, if any, limitations are holding your organization back?

What processes or products need improvement? 

Opportunities:

What opportunities does your organization have?

How can you leverage your unique company strengths?

Are there any trends that you can take advantage of?

How can you capitalize on marketing or press opportunities?

Is there an emerging need for your product or service? 

What emerging competitors should you keep an eye on?

Are there any weaknesses that expose your organization to risk?

Have you or could you experience negative press that could reduce market share?

Is there a chance of changing customer attitudes towards your company? 

Step 2: Identify your company’s goals and objectives

To begin strategy development, take into account your current position, which is where you are now. Then, draw inspiration from your vision, mission, and current position to identify and define your goals—these are your final destination. 

To develop your strategy, you’re essentially pulling out your compass and asking, “Where are we going next?” “What’s the ideal future state of this company?” This can help you figure out which path you need to take to get there.

During this phase of the planning process, take inspiration from important company documents, such as:

Your mission statement, to understand how you can continue moving towards your organization’s core purpose.

Your vision statement, to clarify how your strategic plan fits into your long-term vision.

Your company values, to guide you towards what matters most towards your company.

Your competitive advantages, to understand what unique benefit you offer to the market.

Your long-term goals, to track where you want to be in five or 10 years.

Your financial forecast and projection, to understand where you expect your financials to be in the next three years, what your expected cash flow is, and what new opportunities you will likely be able to invest in.

Step 3: Develop your strategic plan and determine performance metrics

Now that you understand where you are and where you want to go, it’s time to put pen to paper. Take your current business position and strategy into account, as well as your organization’s goals and objectives, and build out a strategic plan for the next three to five years. Keep in mind that even though you’re creating a long-term plan, parts of your plan should be created or revisited as the quarters and years go on.

As you build your strategic plan, you should define:

Company priorities for the next three to five years, based on your SWOT analysis and strategy.

Yearly objectives for the first year. You don’t need to define your objectives for every year of the strategic plan. As the years go on, create new yearly objectives that connect back to your overall strategic goals . 

Related key results and KPIs. Some of these should be set by the management committee, and some should be set by specific teams that are closer to the work. Make sure your key results and KPIs are measurable and actionable. These KPIs will help you track progress and ensure you’re moving in the right direction.

Budget for the next year or few years. This should be based on your financial forecast as well as your direction. Do you need to spend aggressively to develop your product? Build your team? Make a dent with marketing? Clarify your most important initiatives and how you’ll budget for those.

A high-level project roadmap . A project roadmap is a tool in project management that helps you visualize the timeline of a complex initiative, but you can also create a very high-level project roadmap for your strategic plan. Outline what you expect to be working on in certain quarters or years to make the plan more actionable and understandable.

Step 4: Implement and share your plan

Now it’s time to put your plan into action. Strategy implementation involves clear communication across your entire organization to make sure everyone knows their responsibilities and how to measure the plan’s success. 

Make sure your team (especially senior leadership) has access to the strategic plan, so they can understand how their work contributes to company priorities and the overall strategy map. We recommend sharing your plan in the same tool you use to manage and track work, so you can more easily connect high-level objectives to daily work. If you don’t already, consider using a work management platform .  

A few tips to make sure your plan will be executed without a hitch: 

Communicate clearly to your entire organization throughout the implementation process, to ensure all team members understand the strategic plan and how to implement it effectively. 

Define what “success” looks like by mapping your strategic plan to key performance indicators.

Ensure that the actions outlined in the strategic plan are integrated into the daily operations of the organization, so that every team member's daily activities are aligned with the broader strategic objectives.

Utilize tools and software—like a work management platform—that can aid in implementing and tracking the progress of your plan.

Regularly monitor and share the progress of the strategic plan with the entire organization, to keep everyone informed and reinforce the importance of the plan.

Establish regular check-ins to monitor the progress of your strategic plan and make adjustments as needed. 

Step 5: Revise and restructure as needed

Once you’ve created and implemented your new strategic framework, the final step of the planning process is to monitor and manage your plan.

Remember, your strategic plan isn’t set in stone. You’ll need to revisit and update the plan if your company changes directions or makes new investments. As new market opportunities and threats come up, you’ll likely want to tweak your strategic plan. Make sure to review your plan regularly—meaning quarterly and annually—to ensure it’s still aligned with your organization’s vision and goals.

Keep in mind that your plan won’t last forever, even if you do update it frequently. A successful strategic plan evolves with your company’s long-term goals. When you’ve achieved most of your strategic goals, or if your strategy has evolved significantly since you first made your plan, it might be time to create a new one.

Build a smarter strategic plan with a work management platform

To turn your company strategy into a plan—and ultimately, impact—make sure you’re proactively connecting company objectives to daily work. When you can clarify this connection, you’re giving your team members the context they need to get their best work done. 

A work management platform plays a pivotal role in this process. It acts as a central hub for your strategic plan, ensuring that every task and project is directly tied to your broader company goals. This alignment is crucial for visibility and coordination, allowing team members to see how their individual efforts contribute to the company’s success. 

By leveraging such a platform, you not only streamline workflow and enhance team productivity but also align every action with your strategic objectives—allowing teams to drive greater impact and helping your company move toward goals more effectively. 

Strategic planning FAQs

Still have questions about strategic planning? We have answers.

Why do I need a strategic plan?

A strategic plan is one of many tools you can use to plan and hit your goals. It helps map out strategic objectives and growth metrics that will help your company be successful.

When should I create a strategic plan?

You should aim to create a strategic plan every three to five years, depending on your organization’s growth speed.

Since the point of a strategic plan is to map out your long-term goals and how you’ll get there, you should create a strategic plan when you’ve met most or all of them. You should also create a strategic plan any time you’re going to make a large pivot in your organization’s mission or enter new markets. 

What is a strategic planning template?

A strategic planning template is a tool organizations can use to map out their strategic plan and track progress. Typically, a strategic planning template houses all the components needed to build out a strategic plan, including your company’s vision and mission statements, information from any competitive analyses or SWOT assessments, and relevant KPIs.

What’s the difference between a strategic plan vs. business plan?

A business plan can help you document your strategy as you’re getting started so every team member is on the same page about your core business priorities and goals. This tool can help you document and share your strategy with key investors or stakeholders as you get your business up and running.

You should create a business plan when you’re: 

Just starting your business

Significantly restructuring your business

If your business is already established, you should create a strategic plan instead of a business plan. Even if you’re working at a relatively young company, your strategic plan can build on your business plan to help you move in the right direction. During the strategic planning process, you’ll draw from a lot of the fundamental business elements you built early on to establish your strategy for the next three to five years.

What’s the difference between a strategic plan vs. mission and vision statements?

Your strategic plan, mission statement, and vision statements are all closely connected. In fact, during the strategic planning process, you will take inspiration from your mission and vision statements in order to build out your strategic plan.

Simply put: 

A mission statement summarizes your company’s purpose.

A vision statement broadly explains how you’ll reach your company’s purpose.

A strategic plan pulls in inspiration from your mission and vision statements and outlines what actions you’re going to take to move in the right direction. 

For example, if your company produces pet safety equipment, here’s how your mission statement, vision statement, and strategic plan might shake out:

Mission statement: “To ensure the safety of the world’s animals.” 

Vision statement: “To create pet safety and tracking products that are effortless to use.” 

Your strategic plan would outline the steps you’re going to take in the next few years to bring your company closer to your mission and vision. For example, you develop a new pet tracking smart collar or improve the microchipping experience for pet owners. 

What’s the difference between a strategic plan vs. company objectives?

Company objectives are broad goals. You should set these on a yearly or quarterly basis (if your organization moves quickly). These objectives give your team a clear sense of what you intend to accomplish for a set period of time. 

Your strategic plan is more forward-thinking than your company goals, and it should cover more than one year of work. Think of it this way: your company objectives will move the needle towards your overall strategy—but your strategic plan should be bigger than company objectives because it spans multiple years.

What’s the difference between a strategic plan vs. a business case?

A business case is a document to help you pitch a significant investment or initiative for your company. When you create a business case, you’re outlining why this investment is a good idea, and how this large-scale project will positively impact the business. 

You might end up building business cases for things on your strategic plan’s roadmap—but your strategic plan should be bigger than that. This tool should encompass multiple years of your roadmap, across your entire company—not just one initiative.

What’s the difference between a strategic plan vs. a project plan?

A strategic plan is a company-wide, multi-year plan of what you want to accomplish in the next three to five years and how you plan to accomplish that. A project plan, on the other hand, outlines how you’re going to accomplish a specific project. This project could be one of many initiatives that contribute to a specific company objective which, in turn, is one of many objectives that contribute to your strategic plan. 

What’s the difference between strategic management vs. strategic planning?

A strategic plan is a tool to define where your organization wants to go and what actions you need to take to achieve those goals. Strategic planning is the process of creating a plan in order to hit your strategic objectives.

Strategic management includes the strategic planning process, but also goes beyond it. In addition to planning how you will achieve your big-picture goals, strategic management also helps you organize your resources and figure out the best action plans for success. 

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Strategic Planning

What is strategic planning.

What is a strategic plan? Strategic planning in small business management is the process of documenting and establishing a direction—by assessing both where you are and where you’re going . So, what is the purpose of a strategic plan? And what does an effective strategic plan consist of? A company’s strategic plan consists of it’s:

  • Long-term goals
  • Action plans

A well-written strategic business plan can play a pivotal role in your small business’s growth and success because it tells you and your employees how best to respond to opportunities and challenges.

In recent years, many small business owners have been focusing on long-term planning. In fact, in 2020, there were three business areas that small businesses focused on strategy for, including:

  • 46% in sales
  • 41% in advertising
  • 36% in customer service

organizational strategic planning

If you haven’t been focusing on a long-term strategic planning process, it’s not too late to think differently. Your future success depends on effective organizational strategic planning. It’s also important to remember that a strategic planning process model involves your entire business. The discussions that result can lead to meaningful changes in your business. The purpose of small business strategic planning is to also analyze your operation and set realistic goals and objectives. This leads to the creation of a formal document that lays out the company’s views and strategic goals for the future.

Ready to learn more about strategic management and planning? Keep reading through the next sections.

The 3 Step Strategic Planning Process

What are the 3 steps in strategic planning for small businesses? When it comes to the strategic planning process, think of it as having three phases:

  • Development
  • Review and updating

The goal of developing a strategic plan is to ensure everyone in the business is aligned when it comes to your small business’s goals and objectives, as well as to create a formal strategic plan document.

examples of strategic plans

1. Discussion Phase

The discussion phase is meant to gather as much information, opinions, and input as possible. Set up a regularly scheduled meeting with the employees and any other staff in your business who will be involved with strategic planning. Make sure you have an agenda and clear expectations of what you want to accomplish in each meeting. This will keep discussions on track and help prevent distractions. In the first few meetings, try to answer questions that will help you define the business’s current status, such as, “Where are we now?” and “Where are our competitors?” Once you have a good idea of where the business is, you can focus in on specific details in future meetings.

In addition to regular meetings with your employees at your business, you can also gather information from people outside your company, like:

External people will have a unique perspective on not only your business, but also the industry you’re operating in. Getting their opinions on where they think the industry is going and what they think will change in the future can help you put together your strategic plan and determine where you want your business to be down the road.

You can also conduct a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats.

When you’re conducting a SWOT analysis, you and your employees will examine what your business does well, where it can improve, any future opportunities to pursue that could help facilitate growth and success, and any competitors or external factors that could prevent the business from succeeding.

Your strengths should be pretty easy to identify. When you’re discussing your business’s weaknesses, don’t be afraid to be candid. Every business has weaknesses and things to work on. Any weakness you and your employees note means it’s something you’ll aim to improve on in the future with a detailed initiative outlined in the strategic plan.

Opportunities available to your business may be pretty clear, while identifying threats to your business can be more difficult. Speaking with people outside of the company should give you a good idea of where the industry could be heading and if there are any major competitors or challenges coming. If you can identify a number of threats and challenges to your business early on, it puts you in a better position to address them if and when you encounter them down the road.

strategic planning templates

2. Development Phase

After you’ve collected all of the information, it’s time for the development phase. This is when you’ll start putting together your business’s strategic plan. A strategic plan consists of five key components:

  • A vision statement
  • A mission statement
  • Goals and objectives
  • An action plan
  • Details on how often the strategic plan will be reviewed and updated

Decide with your employees what you will use to create the strategic plan. Are you going to purchase software to help you create and house the plan? Or are you going to create the plan yourself and save it in the cloud for easier access?

When you’re creating goals and objectives for your business, make sure they’re realistic and measurable. Work with your employees to create goals and objectives for at least the next one to three years. And discuss how these goals and objectives will be measured and tracked.

For example, if you have a goal of increasing sales by 10% in the next year, you can track this by measuring sale numbers. Equally important is having an action plan to achieve these goals and objectives. If you’re trying to increase your sales by 10% in a year, you can pursue more marketing and social media outreach as part of your action plan. If an action plan doesn’t help your business achieve its goals, the plan needs to be rewritten.

developing a strategic plan

3. Review and Updating Phase

A critical part of the strategic plan should address how often it will be reviewed and updated. Designate someone to be responsible for reviewing, updating, and sharing any changes with the rest of the company. Whether it’s you or another employee, you’ll want to make sure everyone in the business is aware of the changes and how they affect the overall strategic plan.

The strategic plan is meant to be a fluid document; don’t fall into the trap of creating the document and letting it sit on a shelf for years. If you developed meaningful objectives and action plans, they should help with regularly checking the strategic plan. For example, if your action plan requires you to put in sales numbers every quarter to track revenue, you could take that time to review the rest of the plan.

You can also set an alert to check the strategic plan on a regular basis. Whether it’s every few months, every quarter, or every year, a recurring alert can help you review and update the document.

When you’re reviewing your strategic plan, you may find that you’re not on track to meet an objective or goal that you previously set up. Don’t panic. Reassess the situation and, if you need to, discuss the issues with your employees. Figure out what went wrong and why your business isn’t on pace; maybe the goal was too ambitious or not realistic. Change the goal or objective and update the action plan to help you get back on track.

You also may find that your small business has met a goal or objective earlier than you thought you would. If so, you can create a new goal or objective to work toward, or try to maintain the progress you’ve already made. Discuss the ideas with your employees to see what they think is possible.

Strategic Plan Examples

Strategic plans can vary, depending on the type of business you operate or the industry you’re in. Here are a few examples of different strategic plans:

Strategic Planning Examples for Business

A strategic plan for a business will include the company’s mission and vision statement, as well as its goals and objectives and the action plans to achieve them.

The strategic plan is different from a business plan. The business plan is typically used to help start the business and acquire the necessary funds to open the doors. A strategic plan outlines the strategy for growth and success in the future by using existing resources.

The Canadian Soccer Association’s strategic plan for 2014 to 2018 is full of information and details. It includes an examination of the organization’s current status and what the focus in the future will be. It includes the goals and objectives of the Canadian Soccer Association, as well as the strategies it’ll use to achieve them.

According to a recent report, the top challenges for small businesses in 2021 are:

  • 23% said a lack of capital and/or cash flow
  • 15% said they anticipate marketing and advertising struggles
  • 19% said they expect challenges with recruiting and retaining employees

steps in strategic planning

Nonprofit Strategic Plan Examples

A strategic plan for a nonprofit organization will include the same key components. A nonprofit strategic plan may focus more on the internal and external factors that can pose any threats or challenges to the organization. Because the structure of a nonprofit organization can change rapidly due to different factors, the strategic plan takes this into account and aims to address possible changes ahead of time.

The  Minnesota Council of Nonprofits’  strategic plan for 2010 through 2014 outlines the organization’s:

  • Community it serves
  • Goals for the four-year period

Each goal includes an in-depth description of why it’s important to the Minnesota Council of Nonprofits, as well as the strategies involved to achieve those goals. The plan also lists the people responsible for working on the strategic plan.

IT Strategic Plans

The IT industry is constantly changing. This means a strategic plan for an IT business should identify and address the changes in the future as well as possible. While other business strategic plans may focus on the next three to four years, it’s not uncommon for an IT strategic plan to look at the next year to year-and-a-half.

When it comes to developing, reviewing, and updating your IT strategic plan, it’s important to involve your business’s Chief Information Officer. This person’s knowledge and skill set is useful in putting together a strategic plan for your tech business. In addition to the Chief Information Officer, you and your employees can look at whether you need to upgrade any part of your infrastructure to meet the goals and objectives you’ve outlined in your strategic plan.

Because of the rapidly changing circumstances, you may be reviewing your IT strategic plan more frequently than with other businesses. Adjust your plan as necessary to put your business on the best path to success. The plan also should include details on how to make a decision when it comes to investing in new equipment or technology.

strategic planning framework

Marketing Strategic Plans

A marketing strategic plan’s goal should be to generate sales for the business. Whether it’s increasing sales numbers by 15% or increasing the number of customers in the next quarter, a marketing strategic plan helps businesses generate more revenue and increase their customer base.

A marketing strategic plan can include marketing technology, software, or web-based platforms to help track your business’s progress toward its goals. The plan also could address the specific types of marketing the business will pursue—for example, whether your business will pursue traditional print advertising or digital ads.

Because a marketing strategic plan aims to increase your business’s exposure and numbers through different techniques and methods, it’s a good idea to include the budget in the document. This way, you and your employees will work toward the marketing goals and objectives you want to achieve without spending too much money.

Strategic Planning Template Checklist

Should you use strategic planning models or templates? Yes, in fact, a good strategic plan template, sometimes called a strategy mapping template is like a checklist. The template will include different sections for you to complete and help you cover a variety of topics. Using a thorough template will help ensure you have a comprehensive strategic plan for your business.

You can use computer software for your strategic planning template, or you can create your own with Microsoft Word or Excel. You can also download our Strategic Plan Example Template to use.

strategic planning process

  • What does a strategic plan include? At the top of your template, label it “Executive Summary” and provide an overview of your business. Include the time period you’re looking at for your business’s strategic plan; for example, if the strategic plan provides a three- to five-year outlook.
  • Underneath this section would be information on “Your Company.” This is where you’ll put in your mission statement, vision, values, and information on leadership.
  • A section on “Research” will include information on your clients and customers, competitors and the industry.
  • You can also create a section on “Products and Services,” which will detail any products you sell, pricing strategy, delivery systems and capabilities, and suppliers.
  • A section of your template should focus on “Measurable Goals.” These should be realistic goals or objectives that you want your business to achieve within the time period you set. Don’t forget to include details on how the progress of each goal or objective will be measured.
  • Whether you include it within the Measurable Goals section or as a stand-alone group in the template, don’t forget about your “Action Plans.” This provides an overview of how you and your employees are going to achieve your business goals and operational plans.
  • You also can put your SWOT analysis into the template. List the identified strengths, weaknesses, opportunities, and threats with your business. Remember to be honest and candid. When you are reviewing your strategic plan in the future, you can reference the initial SWOT analysis and check to see what has changed.
  • The last section should detail “Reviews and Updating.” Explain how often the plan should be checked (every few months, quarterly, annually, etc.). Provide a list of people who should be responsible for reviewing and updating the strategic plan, as well as communicating any changes with the broader business.

what is strategic planning

Why Is Strategic Planning Important?

The strategic planning process can take some time, but it’s beneficial for everyone involved. As the small business owner, you’ll have a better idea of the organizational goals and objectives you’ll want to accomplish and a path to do that. For your employees, the process can foster an increase in productivity—contributing to the success of the business.

strategic plan example

Communicating Your Strategic Plan

In a business environment, strategic planning requires you to involve your employees. Your employees are involved in the day-to-day operations and can provide you with a unique view of the company. Employees can share with you what they think is and isn’t working with the business today, which can inform your planning for the future.

In addition to your employees, it’s beneficial to reach out to people outside of your company to get their opinions. Like your employees, vendors have a unique perspective on your industry. Talk to them about the business, and get their thoughts on how they think the business landscape can change in the future.

The U.S. Small Business Administration recommends that the strategic planning process be a flexible one. When you meet with your employees and any people outside of the company, remember that the discussions should encourage new ideas and thoughts.

what is a strategic plan

Increase Productivity

Involving your employees in the strategic planning process also means they receive a sense of accountability that can increase productivity. Whether they contributed in the process or were informed of the business’s long-term goals and objectives after the strategic plan was created, they’ll be more likely to want to help you achieve those targets.

strategic plan template

Identifying Strengths and Weaknesses

As part of the strategic planning process model, you’ll examine and analyze your entire business. You’ll take a look at what your business does well and the areas where it still needs to improve. By identifying your business’s current strengths and weaknesses, the process gives you and your employees an opportunity to improve in the future and become a durable business by minimizing risks.

Although you may have a good idea about what your business excels at and areas that need to be improved upon, don’t forget to involve your employees. They may tell you something you didn’t think of.

strategy mapping

Setting the Direction of the Business and Fostering a Proactive Environment

By the end of the strategic planning process, you and your employees should have a clear direction of where you want the business to go in the future. These discussions and the planning process itself help put the business in the best position to succeed in the future.

Strategic planning gives you and your business time to figure out how to grow over the next few years and how to address new opportunities and challenges. Think about the challenges or issues your business may face in four or five years and plan accordingly, so your business doesn’t stumble down the road.

Strategic Planning Misconceptions

There are many strategic planning misconceptions. From not having enough time or thinking it only benefits larger businesses, to fearing you’ll put your business on the wrong path, there are a variety of reasons why business owners may be wary of strategic planning. But don’t be alarmed; strategic planning can help your business—big or small—and the benefits far outweigh any perceived negatives.

Regardless of the size of your business, a strategic plan is beneficial. Whether you are a small business or a large corporation with hundreds or thousands of employees, strategic planning helps you make sure the company is headed in the right direction.

But how do you know if you’re steering the company in the right direction? The beginning phases of strategic planning focus on research and discussions. The decisions you make during strategic planning aren’t based on assumptions; they’re based on research and information you’ve gathered while talking with your employees and people outside of your company.

The strategic planning process may seem daunting at first, but when you understand what’s involved and how to do it, it’s not that complicated. It takes time, but the amount you invest in the process pays off when everyone in your company works toward accomplishing the goals and objectives you’ve laid out.

The process doesn’t stymie creativity either. When you meet with your employees for strategic planning, you’re asking everyone to have a discussion and brainstorm ideas. The strategic planning process puts everyone’s minds together to think of creative ideas.

If you go through the strategic planning process once, don’t think you won’t have to do it again. The strategic plan is a living document; it should change over time. It’s not uncommon for business owners to create a strategic plan with their employees and rarely—or never—revisit the document. Reviewing and evaluating your strategic plan regularly will help keep you accountable and on track to achieve your goals and objectives.

What Makes Strategic Planning Successful?

Successful strategic planning involves a team effort among you and your employees, as well as among you and your vendors and other outside people. The more you engage your employees with strategic planning, the better they’ll understand the strategy you want to have for your business.

Strategic planning concepts also need to be flexible. While it’s necessary to have goals and objectives for your business, you also have to be able to adapt to changes. For instance, 44% of small businesses without a website, plan to create one in 2021 to adapt to the growing online shopping trend brought on by COVID-19.

strategic mapping

When strategic planning is successful, everyone in your business is on the same page with the business’s direction and goals. Each individual understands what makes the business stronger and what needs to be worked on. And it’s more likely that each person wants to contribute to the business’s growth and success.

When Should Strategic Planning Be Done?

When it comes to strategic planning, you want to start it sooner rather than later . It doesn’t necessarily have to be done in the first few days or weeks of the company’s life—you may want to be in business for a few months to give yourself a better idea of what is and isn’t working.

But even if you’ve owned your business for a long time, it’s not too late to get started on strategic planning. It’s never a bad time to sit down and think about the current status of your company and where you want to be in the next five to 10 years. When you’re ready, gather your team together and schedule regular meetings dedicated to strategic planning.

Where Do Strategic Plans Go Wrong?

Strategic planning is an ongoing commitment. Even if you go through an initial round of strategic planning and it leads to the development of your business’s first strategic plan, it’s still not finished. The plan has to be implemented.

Strategic plans also can go wrong if the goals and objectives you set are unrealistic. Every business owner wants to see their business grow and succeed, but if you set an overly ambitious growth rate, it could discourage you and your employees.

A successful strategic plan requires commitment. Your entire team needs to be focused on the business and carrying out the strategic plan. If the strategic plan isn’t being used regularly or as the foundation of the business, you and your employees can lose sight of the company’s direction and goals.

What Is Strategic Planning Implementation Leadership

The top three reasons strategy implementation fails:

  • Poor communication
  • Lack of leadership
  • Using wrong measures

Reviewing and Updating Your Strategic Plan

A strategic plan is a living document. Don’t spend the time to create a strategic plan and then put it on the shelf to collect dust. Live by it. And regularly update your strategic plan. How often you should update your strategic plan depends on how your business works.

If your business works in a fast-paced industry and can be affected by changing outside factors, you should review and update your strategic plan on a more frequent basis. For example, if your business operates within the ever-evolving tech industry, you will probably want to check on your strategic plan after each quarter.

At the very least, you should review your strategic plan every year. When you review your strategic plan, you’re looking at the assumptions made and checking to see where your business stands in relation to those assumptions. What you thought would be challenges and threats to your business a year ago may not be the same now.

Don’t be afraid to change any part of the strategic plan. In fact, only 77% of small business owners are somewhat or very confident in their ability to execute their strategy but 95% still fall short of meeting all their goals. Updating your plan can help you stay on track with your goals. And if outside factors are having a bigger impact on your business than you initially thought, you may have to change your objectives or goals.

strategic business plan

The regular review is a good opportunity to check back in with your employees. Your employees helped you create the business’s strategic plan and they’re as invested in the success of it as you are. Give them a summary of where the business currently stands. Talk with them to see if things have improved or if they still have concerns with the business—or if any of their initial concerns have changed.

After you review the strategic plan, share any changes with your team. Even if you didn’t make any changes, it’s a good opportunity to give the rest of your company your thoughts on the business’s status and confirm that things are on the right track. You also can encourage your employees to continue working hard to achieve the goals and objectives in the strategic plan.

Focusing on the long-term strategy of your business is also essential. Long-term strategic planning is as important as having a business plan and can lead to the success of your business. You and your employees will understand the current status of the company, productivity will increase as everyone works toward achieving the business goals, and you’ll put yourself in a better position to address any potential issues that may come up in the future.

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Great article, and I will be taking points for my year end strategy session. One thing that would be helpful to add here, and which I will be conducting, is the idea to present your plan to key partners or mentors to garner feedback. In my case, I am a 1-person organization and I need to hear the voice of other to assure that my plan is well rounded and not missing key elements. Again, great read! ~M~

Thank you for commenting, Michelle! We appreciate the feedback and are glad you liked the article!

It’s really helpful

We’re glad you found the article, helpful! Thanks for commenting!

This was helpful and have grown to work better as a manager.

That’s great to hear, Samuel! Thanks for commenting!

This was great and helpful. Thanks. 👍

I gained great knowledge. Thanks for teaching us about strategic planning and its benefit.

You’re welcome! We’re glad you found the article helpful.

I really needed this.

We’re glad the article was helpful!

Hi, the article is well written and worth reading. Thank you for sharing the valuable information. Please keep sharing more.

We’re glad you liked it, John! You can read more about Strategic Planning in the articles below:

https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/key-components-of-strategic-plan/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/

Very innovative and thought provoking…..interesting read….

Thanks for commenting, Reena! We’re glad you found the article interesting.

Thoroughly enjoyed this…

That’s great to hear, Melanie! You can also check out our other strategic planning articles, here:

Loved it all

That’s great to hear, Jean!

I really enjoyed this notice. Be blessed.

We’re glad you enjoyed it!

I’m very much interested in your support with the information. Thank you very much as it will help me develop my organization.

Thank you for reaching out, John! You can learn more about strategic planning with these articles from SBA: https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/

Thanks for commenting!

Very good notes. Easy to understand.

That’s great to hear, Samuel! Check out our other strategic planning articles to learn more:

lnterested in learning more about this subject.

That’s great to hear, Linnet! You can learn more by checking out these other SBA articles on strategic planning:

https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/

Good write up, very informative.

Thank you! We’re glad you enjoyed it.

Really liking this website!

That’s great to hear, Lise!

I really enjoyed reading the article about the strategy planning. There are many things I was not aware before.

We’re so glad you enjoyed it! Thank you for the nice comment!

Good stuff. Straight forward.

We’re glad you liked it!

Great article. keep it up.

Will do, thank you for the nice comment and for reading SBA!

Insightful.

Thank you, Stella!

Fantastic article!! Done with clarity. But my question has always been, at what point does the goals and objectives come in the strategic Planning process? Do we establish the goals and objectives after defining the Mission and Vision statements or do we develop goals and objectives after the analytic tool is utilized (SWOT, PEST,)? etc

Thanks for reaching out! This can depend on the business owner. While some business owners may have initial goals and objectives early on, it can also make sense to this after doing the analysis (SWOT, PEST). The information from these analyses can help create meaningful goals and objectives. The idea behind goals and objectives (both short- and long-term) is that they’re supposed to support/ladder up to the mission and vision statements.

Good article and very interesting.

Thanks for the comment! We’re happy to hear you found it interesting.

Thank you, this is a great article!

You’re welcome, Muhammad!

It was a great. Very helpful.

We’re glad you found it helpful! Thank you for the comment!

Great article. I really enjoyed reading it.

We’re glad you enjoyed reading it! Thanks for leaving a comment, Samana!

I need your coaching.

Thanks for reaching out! Check out this SBA article: https://sba.thehartford.com/business-management/small-biz-owner/build-stronger-mindset/

Under #8 in the article, you can sign up for a free 1-hour consultation!

Excellent piece of information on strategic planning!

We’re so glad you liked it! Thanks!

I appreciate this greatly. It’s helpful for small businesses especially for new initiatives and those at the mature business stage. Thank you!

We’re glad you liked it. Thank you for commenting, Adolf!

It is better to make some terms like vision, goal and mission clear.

Appreciated article.

We’re glad you liked it. Thanks for commenting!

Very informative! It helps me a lot as a student. Thank you 😊

You’re welcome, Joice! We’re always happy to help and glad to hear you find our articles informative.

I enjoyed reading the article. Thank you for providing the overview about the topic. Examples and links are very useful too.

That’s great to hear! Thank you!

Any discussion on Strategic Planning is good discussion – it is such a critical element of any organisation that aspires to be good and dares to be great.

Great point, Steve!

A very interesting article.

We’re glad you liked it! Thanks for commenting!

Informative article! You have made strategic planning so easy to understand. But how do i reference this article in an academic paper?

One way to cite this article in an academic paper is like this:

Vo, Eric. “What Is Strategic Planning.” Small Biz Ahead Blog , 2 Sept. 2020, sba.thehartford.com/business-management/what-is-strategic-planning/

I fully agree with you. The article is useful, but mostly for beginners and students. But it is informative and I liked it as well.

Thank you for sharing this very informative article. It will definitely guide me in conducting our own Strategic Planning at our office.

Thanks for the comment. We’re glad the article could help!

I definitely enjoyed every little bit of it. It is a great website and nice share. I want to thank you. Good job! You guys do a great blog and have some great content. Keep up the good work. SEO canada

That’s great to hear! Thanks for the comment!

This is helpful. Thank you.

Thanks for the comment, Patricia!

Really helpful… thanks alot.

Glad you enjoyed the article!

What is the difference between Policy development & Strategic planning?

Companies first come up with strategic plan to establish their long term goals and objectives along with general actions to be taken to support those goals and objectives. You then establish policies to ensure that your team is staying within those actions. For example, your strategic plan may say you want to increase revenues 20 percent next year in the aerospace market. Your actions will include marketing campaigns and outreach events. Your policies will then ensure that your team are not undertaking actions that are not included in these campaigns and events.

Thanks for your educative explanation on the preparation of strategic business plan.

Thank you for this article. It helped me to understand the strategic planning process, which is something I am studying and this was straightforward and to the point.

Thank you Emily!

This article is a good basic overview. Something that must be emphasized is translating the strategic plan into specific actions with measurable outcomes. If you go into work on Monday after completing your plan and do your work the way you did before the plan, then the plan has already failed. I see this frequently in the businesses with which I work. Another key is to clearly tie individual staff roles and performance expectations and goals to the strategic goals. When effectively done, you begin to harness the very real power of employees’ intimate knowledge of their work and how to do it better.

Thanks for sharing. This is very helpful to business owners and managers. As it is said, the strategic plan need to be flexible, same applies to getting knowledge of strategic plan as business environments keep changing.

Glad to hear this was helpful. Thanks for reading!

Thanks for so much for the this exciting read. I can’t wait to start doing the stuff with my team

Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. Strategic planning is a tool that is useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward. Found an another website Evolvetraining.ac.nz it has lots of valuable information for everyone

Thanks for sharing such an informative blog.

I really enjoyed reading the article.it motivates and gives direction in the business Thanks

I thank you for this platform because it is updating my knowledge on Strategic Planning

I really enjoyed reading the article. It was written in simple language and in a manner that helped me identify key points under each subtitle. I am going to use this as a guide to some strategic plans am working on, thanks.

This teaching is educative.

That’s good to hear. Glad you liked it!

This is a good and educative article. It’s very informative. Thanks.

I actually appreciate this piece. The writing is incredibly beneficial. my start up manufacturering business seems to be in better position with articles like this! My gratitude to the masterminds behind this program, Cheers.

Your article is helpful if you have employees, but how does this work if you have sub-contractors? Do you get them involved?

Now i have an insight of what strategic planning is. So what can be the sub-topics to include when writing an essay?

Great article. Thanks for the detailed information. Your blog is by far the best source I’ve found. Thanks!

Thank you, Victoria!

This is a comprehensive Strategic Planning manual.

Very interesting and valuable document. Enjoyed reading the participatory role of employees. Thanks a lot.

Thank you for the comment, Gemechu.

Love this article!! Thanks.

We are so glad you enjoyed this article! Thank you for the comment, Vanessa!

I send it to Beby.

Interesting read.

Thank you Bert!

Very practical article- thankyou very much

Thank you for reading!

Howdy! Great article on strategic planning for small businesses. I agree with the statistic you quote from Constant Contact. In my work, I find that most business owners can only think and plan about a year out. There are a couple of contributing factors to that ‘limited’ sight. For many business owners, this is the first time they have ever been where they are. They are suffering from ‘not knowing what they do not know.’ They are smart enough to recognize it, but they are cautious about the outlook because of it. The second is the rate of change in the economy, which only speeds up each year; it is just that very few businesses have the tools and expertise to keep pace with the change. Both factors lead to a general hesitation to look out too far or to dream too big.

I love the fact that you see that strategic planning needs to flexible and inclusive. It’s crucial to have a framework but to be flexible to incorporate learnings and shifts along the way. When you involve all the people who work in and on your business, there is more engagement, better ideas and a higher rate of success.

Great insights. Thank you, Leslie!

Thanks a lot for this wonderful article, Eric. You have resolved my problem of trying to know what strategic planning really is. I look forward to more up building articles. Thank you!

Thank you for the comment, Melvin!

Hi Christyne,

Your question about involving subcontractors is an interesting one. To me, a plan should involve as many of those that are strategic to your business and getting as much feedback as possible – as long at it’s relevant – should be the goal. So if you have a few good contractors (like my company does) that you think could contribute some value to the formation of your plan I say go for it.

Your article is helpful if you have employees, but how does this work if you have sub-contractors. Do you get them involved.

Hi Cristyne- please see the response below from Gene Marks.

Great job. This was very helpful.

Thank you for your feedback, John!

You have the BEST newsletter! This article was another great one. I shared it on all my social media platforms. I offer strategic planning services and this article is helpful in promoting my services. As well, most people think a strategic plan is ONLY for nonprofits. Thank you!

Hi Leslie, thanks so much for sharing!

Great summary “how-to” article for busy business owners. I often encourage our clients to start simple and achieve! This road map is an excellent way to jump in to real-life strategy setting!

Thank you, Patti!

This is an explicit, yet simple, post on strategic planning.

Thanks deeply for sharing this!

You’re welcome! We’re so glad you liked it and found it informative.

Great article, thanks for spelling this out in such easy-to-read terms.

Thanks for your feedback, Wende!

It’s a great eye opener into strategic planning process. Thank you for the great efforts.

Glad you liked the article! Thanks for the comment!

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What Is a Strategic Business Plan?

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Long-term strategic business planning is necessary for company growth and success, explains Entrepreneur magazine . Business plans provide companies with the tools to track growth, establish a budget and prepare for unforeseen changes in the market place. A strategic business plan focuses on long-term growth objectives, rather than near-term operating goals and addresses different business strategy types.

A strategic plan includes many elements a business can utilize to attract financing and manage company objectives. To optimize strategic business planning, businesses must clearly define company goals and conduct extensive research to properly understand industry trends. Looking at different strategic planning models will help you decide how to set long-term goals for your small business.

What is a Strategic Business Plan?

A strategic business plan is a written document that pairs the objectives of a company with the needs of the market place. Although a strategic business plan contains similar elements of a traditional plan, a strategic plan takes planning a step further by not only defining company goals but utilizing those goals to take advantage of available business opportunities.

This is achieved by carefully analyzing a particular business industry and being honest about your company's strength and weakness in meeting the needs of the industry. A strategic business plan is followed by tactical plans to help achieve the strategic goals.

Reasons for Strategics Plans

A strategic business plan is necessary to optimize market research and to attain optimum market share for your business. The plan allows businesses to focus on a particular niche in the marketplace, which makes sales, advertising and customer management more effective. The plan allows a company to know as much as possible about the needs of its customers and gaps in the marketplace that need to be filled. A strategic business plan helps a company provide better, more targeted service to its clients.

Strategy vs. Tactics

A strategic business plan might set a goal of diversification for the business. Tactics for achieving this strategic goal might include acquiring a business with different product lines, or adding new products to the company's line. For example, a tennis racquet manufacturer might decided to add strings to its product line, either acquiring a string maker or sourcing its own strings.

A strategic business plan includes extensive market research, industry trends and competitor analyses. A strategic plan will include the components of a traditional plan, such as an executive summary, marketing analysis and financial statements, but a strategic plan will be more specific on how the company will go about achieving company goals.

For example, a strategic business plan will attempt to identify a target market, narrow it down to a manageable size, and establish a strategy for acquiring those customers.

Benefits of Strategic Business Plans

Writing a strategic business plan has many advantages. The plan can serve as an outline for successful completion of company milestones. Company owners are in a better position to not only understand their business but become experts in their industries.

A strategic plan helps executives understand the direction in which their company is headed by reviewing past progress and making changes to improve and grow. The plan is an organizational tool that helps to keep a company on track to meet growth and financial objectives.

Misconceptions About These Plans

Many small business owners feel that strategic business plans are for large companies and big businesses. However, according to the U.S. Small Business Administration, a strategic business plan can benefit companies of all sizes and can be a great advantage to small businesses. Small businesses may utilize different types of planning activities to develop the strategies necessary to attract and retain the customers it needs to succeed.

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Sherrie Scott is a freelance writer in Las Vegas with articles appearing on various websites. She studied political science at Arizona State University and her education has inspired her to write with integrity and seek precision in all that she does.

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What is Strategic Planning? Definition, Importance, Model, Process and Examples

By Paul VanZandt

Published on: February 2, 2023

strategic planning

Table of Contents

What is Strategic Planning?

Importance and benefits of strategic planning, strategic planning models, strategic planning process: 6 key steps, what makes an effective strategic plan example, strategic planning example.

Strategic planning is defined as a pivotal organizational endeavor, meticulously charting the mission, goals, and objectives over a strategic timeframe, typically spanning 2-5 years. This comprehensive roadmap takes into meticulous consideration the current organizational landscape, navigating through the intricacies of prevailing legislation, the dynamic business environment, product portfolios, departmental dynamics, and the judicious allocation of budget resources. By weaving together these critical elements, a strategic plan becomes a guiding compass, steering the organization towards its vision with adaptability and foresight.

Strategic planning first entered business environments in the post-war period of the 1950s, and has been so effective that it is still widely used and applied across organizational spectrums, including non-profits.

While a strategic plan is the final outcome of the strategic planning process, here are the key factors and components that feed into creating this plan:

  • Profitability and balance sheet management

For any business, profitability and the adjacent balance sheet management is and always should be a key factor to be taken into consideration during strategic planning, depending on the size of the business. Both these factors are in fact co-dependent. For example, one of the key outcomes of a strategic plan is to set the revenue growth percentage to be achieved each year for, say, 3 years. This in turn will require an evaluation of the balance sheet, including any debt payments, dividend payout, shareholder expectations, etc.

Even if the business is a startup and is rich with investor cash to spend in acquiring customers in the short to medium term, it is still aspiring to be profitable and must lay out a larger strategic path to profitability.

  • SWOT analysis outcomes

Strength, weaknesses, opportunities, and threats – these are the outcomes and full terms of the abbreviated term, SWOT analysis. Strength refers to the business factors that indicate key factors that are contributing to the achievement of business outcomes. These may be factors related to sales, employee and talent retention, software stack, business efficiency, etc. Similarly, weakness refers to factors that are holding back the growth and achievement of business outcomes, such as poor margins, lack of company data management, employee attrition, etc.

Opportunity refers to areas in the business environment that the business can potentially explore. For example, one of the opportunities identified could be sales in a new market, implementing a better human resources management model, branching into new products and/ or services, etc.

  • Operations management

Operations management pertains to the cohesive movement of all moving and communicating parts to produce the company’s products or services. While creating a strategic business plan, management needs to take into account how each department and team will need to interact with each other to produce the results desired as outcomes in the strategic plan. This includes ensuring the right technology stack needed for each team including communication and collaboration technology needed for remote and on-premise task execution.

  • Human resource management

Strategic planning involves taking into account all aspects of HR and employee-related spending and policies. One of the key aspects of a strategic plan must be to ensure a harmonious work experience for employees such that it increases employee retention and helps build an environment that enhances employee productivity and workplace satisfaction.

A strategic plan is more than just a business tool, it also plays a key role in defining operational, cultural, and workplace ethics. Here are some of the key aspects of the importance of strategic planning:

1. Provides a unified goal

A strategic plan is like a unified action plan for the whole company in order to achieve common outcomes. For example, a strategic plan to achieve a certain revenue growth each year requires sales, account management, product development, and marketing teams to work together to ensure a seamless lead pipeline, customer upsells and account retention, meet customer expectations, etc.

2. Adds to management transparency

Strategic planning is more than just for direct business growth, it also helps shine clarity to employees and shareholders as to what their mid-to-long-term objectives are and how their actions are derived from these larger goals. Such a plan must always be referenced for citation and justification for key business moves and decisions to make it apparently justified and based on logic and reason. This also encourages team leads and employees to in turn be more transparent with their team members and peers with their plans and goals.

One of the issues most dreaded by investors and employees alike is management that seems to make random decisions without any clear guidance on how they help meet requirements for the final business objectives or tackle the challenges of the day. A strategic plan helps build investor and employee confidence in the management and adds to building a culture of transparency in day-to-day business operations.

3. Identifies hidden strengths and weaknesses

Many strengths and weaknesses in a company may be contributing, yet hidden factors in the path to meeting or hindering the meeting of business goals. A strategic plan’s primary input is a SWOT analysis of the company, which is conducted by auditing the firm to recognize and list strengths and weaknesses within the company. These may be a competitive product, a better monetization model, a weak employee incentive policy, etc.

The important step here is the actual deep analysis and listing down of these strengths and weaknesses and how they can be leveraged or minimized.

4. Leads to better financial health

A company with a clear strategic plan is able to better plan expenses and set the right expectations on return on investment (ROI). It takes into account balance sheets, profitability, accounting and expense management, all of which contribute to better bookkeeping and financial health of the company.

5. Improves management-employee relations

Employees and teams work in silos when the management works in silos. But when a company shares a strategic plan with employees and lays out exactly how each team will be working towards contributing to this larger plan, it gives each team and its members a sense of belonging and importance within the larger company, In today’s environment of hybrid or remote work cultures, it is a key step to ensuring that the company remains cohesive and collaborative in getting work done and meeting final objectives.

Learn more: What is Tactical Planning?

Strategic planning inputs may require one of many of the following business analysis models:

  • SWOT analysis

SWOT analysis is the process and visual template for identifying and listing a company’s strengths, weaknesses, opportunities, and threats. These are cornerstone considerations for any leadership team and play a key role in the strategic planning process.

  • Business model canvas

A business model canvas is a process used to identify and represent existing business models of an enterprise and develop new models to better meet company goals and objectives. Like SWOT analysis, the business model canvas is also a standard business template.

  • PESTEL analysis

PESTEL is an abbreviation for political, economic, social, technological, environmental, and legal, and PESTEL analysis aims to identify the impact of these external factors on a business.

  • Cost-benefit analysis

A cost-benefit analysis is a method of evaluating an investment in the business based on the benefits it would bring to the table. This is a good method for ensuring a healthy financial balance sheet where spending and budgeting are carefully analyzed to ensure only those investments bring back reasonable ROI.

Most companies have 2 or more product/service streams or even 2 or more businesses. A BCG matrix is a visual process of managing an enterprise’s portfolio by prioritizing profitable companies with good market share and growth.

An effective strategic planning process requires the following key steps:

1. Identify core business objectives

Strategic planning begins with first identifying your business objectives- what does it produce? What does it do better than the competition? What is the quality-profitability balance? These are examples of the questions that need to be asked to identify core business objectives. The strategic planning tools can be applied at any stage of the planning process to help answer these questions.

2. Identify the objectives of each department

Once the core business objective is ready, it needs to trickle down to an execution plan that involves each department. This in turn will result in breaking down of the core objectives into smaller objectives for the teams. This needs to be laid out with clarity and precision since the team leaders will further use this team goal to assign individual targets for members.

3. Identify potential roadblocks

Before formulating the final strategy, it is important to discuss it with relevant leaders in the company to ensure an error-free process that is achievable with minimal roadblocks. Of course, as the execution work begins, the management should be flexible enough to absorb unforeseen and small issues that are inevitable. The goal here is to avoid any big boulders which may cripple the strategy at a later stage, such as data security, pricing estimations, hiring new employees or expansion to new departments/ teams, investment in new product development, mergers and acquisition plans, etc.

4. Formulate the final strategy

Once the objectives and goals have been scanned for potential roadblocks and alterations/ safeguards have been accommodated, this is the first draft of the final strategic plan for the company. This strategy may be applicable for the foreseeable future or have a specific deadline, it should however be pulled up for revision annually. Small companies or startups who have much to learn on the way, need to keep an active eye on the larger strategy based on changing business realities.

5. Re-evaluate based on feedback

Before you iron out the processes and policies that will enable the execution of the new strategic plan of the company, it is important to hear back from your employees. This doesn’t have to be every single employee, especially if you have a large team, but to the extent possible. You may at first discuss the strategy with team leaders, who if needed, may take it further down the chain to their own team members and absorb their feedback. Complete agreement may not be possible, but it is important that both sides remain flexible while discussions are on but must be prepared to execute once the discussions are over.

6. Set or revise adjacent policies and processes

Now that the strategic plan for the business is complete and sealed, the leadership team needs to start the execution with necessary changes to the processes and policies as the need may be. This may need to include data management process changes, technology stack updates, issue escalation matrix, etc. In some cases, it may not require any change, and the right processes may already be in place with just a new direction based on the strategic plan.

Learn more: What is SWOT Analysis Framework?

Crafting a good example of a strategic plan involves several key elements. Here’s a breakdown of what makes a strategic plan exemplary:

  • Clear Mission Statement: A strong strategic plan starts with a clear and concise mission statement that defines the organization’s purpose and the value it aims to provide.
  • SMART Objectives: The plan should include specific, measurable, achievable, relevant, and time-bound (SMART) objectives. This ensures that goals are well-defined and actionable.
  • Environmental Analysis: A good strategic plan conducts a thorough analysis of the internal and external environment, taking into account strengths, weaknesses, opportunities, and threats (SWOT). This provides a foundation for strategic decision-making.
  • Alignment with Vision: The plan should clearly articulate how each objective contributes to the overall vision of the organization. There should be a cohesive alignment between the strategic goals and the long-term vision.
  • Resource Allocation: Effective resource allocation is crucial. The plan should outline how financial, human, and other resources will be distributed to support the strategic goals.
  • Actionable Steps: Each objective should be broken down into actionable steps or initiatives. This helps in practical implementation and provides a roadmap for achieving the goals.
  • Monitoring and Evaluation: A good strategic plan includes mechanisms for ongoing monitoring and evaluation. Key performance indicators (KPIs) should be defined, and regular assessments should be conducted to track progress.
  • Flexibility and Adaptability: The plan should acknowledge the dynamic nature of business environments. Flexibility and adaptability are essential to adjust strategies in response to changes in the internal or external landscape.
  • Communication Strategy: A strategic plan should include a communication strategy to ensure that stakeholders are well-informed about the goals, progress, and any adjustments made to the plan.
  • Inclusivity: Involving key stakeholders in the strategic planning process fosters a sense of ownership and commitment. A good plan considers input from various departments, employees, and external partners.
  • Risk Management: Anticipating and addressing potential risks is a vital aspect of a strategic plan. Contingency plans should be in place to mitigate unforeseen challenges.
  • Continuous Improvement: A strategic plan should not be static. There should be a commitment to continuous improvement, with regular reviews and updates to ensure its relevance and effectiveness.

By incorporating these elements into your example of a strategic plan, you can demonstrate a comprehensive and thoughtful approach to organizational planning, which may resonate well with both practitioners and those seeking to understand the principles of strategic planning.

A strategic plan is a detailed document that outlines an organization’s goals, objectives, and the actions required to achieve them. While the specific details of a strategic plan will vary depending on the organization, its industry, and its unique circumstances, here’s an example of a strategic plan for a fictional company:

Company: Visionary Tech Solutions (VTS)

Mission Statement: “To empower businesses through innovative technology solutions, fostering growth and sustainability in an ever-evolving digital landscape.”

Strategic Goals: Presented below are ten strategic goals that serve as excellent examples to enhance the functionality of a company.

1. Market Leadership in Tech Solutions:

Objective: Capture a 20% increase in market share within the next three years.

Action Steps:

  • Launch two new cutting-edge products catering to emerging market demands.
  • Strengthen strategic partnerships with key industry players.
  • Implement aggressive marketing campaigns highlighting VTS’s technological prowess.

2. Operational Efficiency:

Objective: Improve operational efficiency by 15% over the next two years.

  • Streamline internal processes through the implementation of advanced project management tools.
  • Invest in employee training programs to enhance skills and productivity.
  • Conduct regular process audits for continuous improvement.

3. Customer-Centric Innovation:

Objective: Introduce at least three customer-centric innovations annually.

  • Establish a dedicated R&D team focused on anticipating and addressing customer needs.
  • Implement customer feedback loops to gather insights for product enhancements.
  • Launch a customer loyalty program to foster long-term relationships.

4. Global Expansion:

Objective: Expand operations to two new international markets within the next four years.

  • Conduct thorough market research to identify viable expansion opportunities.
  • Establish local partnerships to navigate regulatory and cultural nuances.
  • Develop customized marketing strategies tailored to each target market.

5. Resource Allocation:

Budget allocation:

  • 30% for research and development.
  • 25% for marketing and promotional activities.
  • 20% for employee training and development.
  • 15% for operational improvements.
  • 10% for international expansion initiatives.

6. Monitoring and Evaluation:

  • Quarterly performance reviews with key performance indicators (KPIs) tracked against predefined targets.
  • Annual comprehensive evaluation of the strategic plan’s effectiveness and adjustments as needed.

7. Communication Strategy:

  • Regular updates through internal newsletters, town hall meetings, and an interactive company intranet.
  • External communication through press releases, social media updates, and a dedicated section on the company website.

8. Risk Management:

  • Identification of potential risks such as technological disruptions, market fluctuations, and geopolitical challenges.
  • Development of contingency plans and regular risk assessments.

9. Inclusivity:

  • Cross-functional teams involved in the strategic planning process, ensuring diverse perspectives and expertise.

10. Continuous Improvement:

  • Commitment to regular reviews and updates to the strategic plan based on industry trends, technological advancements, and feedback from stakeholders.

This example of a strategic plan for Visionary Tech Solutions outlines a roadmap that integrates the company’s mission, strategic goals, resource allocation, monitoring mechanisms, and a commitment to adaptability and continuous improvement. Adjustments should be made as needed based on ongoing evaluations and changes in the business environment.

Learn more: What is Enterprise Planning?

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What is a Business Plan? Definition, Tips, and Templates

AJ Beltis

Published: June 07, 2023

In an era where more than 20% of small enterprises fail in their first year, having a clear, defined, and well-thought-out business plan is a crucial first step for setting up a business for long-term success.

Business plan graphic with business owner, lightbulb, and pens to symbolize coming up with ideas and writing a business plan.

Business plans are a required tool for all entrepreneurs, business owners, business acquirers, and even business school students. But … what exactly is a business plan?

businessplan_0

In this post, we'll explain what a business plan is, the reasons why you'd need one, identify different types of business plans, and what you should include in yours.

What is a business plan?

A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement. Key staff who are responsible for achieving the goals may also be included in the business plan along with a timeline.

The business plan is an undeniably critical component to getting any company off the ground. It's key to securing financing, documenting your business model, outlining your financial projections, and turning that nugget of a business idea into a reality.

What is a business plan used for?

The purpose of a business plan is three-fold: It summarizes the organization’s strategy in order to execute it long term, secures financing from investors, and helps forecast future business demands.

Business Plan Template [ Download Now ]

businessplan_2

Working on your business plan? Try using our Business Plan Template . Pre-filled with the sections a great business plan needs, the template will give aspiring entrepreneurs a feel for what a business plan is, what should be in it, and how it can be used to establish and grow a business from the ground up.

Purposes of a Business Plan

Chances are, someone drafting a business plan will be doing so for one or more of the following reasons:

1. Securing financing from investors.

Since its contents revolve around how businesses succeed, break even, and turn a profit, a business plan is used as a tool for sourcing capital. This document is an entrepreneur's way of showing potential investors or lenders how their capital will be put to work and how it will help the business thrive.

All banks, investors, and venture capital firms will want to see a business plan before handing over their money, and investors typically expect a 10% ROI or more from the capital they invest in a business.

Therefore, these investors need to know if — and when — they'll be making their money back (and then some). Additionally, they'll want to read about the process and strategy for how the business will reach those financial goals, which is where the context provided by sales, marketing, and operations plans come into play.

2. Documenting a company's strategy and goals.

A business plan should leave no stone unturned.

Business plans can span dozens or even hundreds of pages, affording their drafters the opportunity to explain what a business' goals are and how the business will achieve them.

To show potential investors that they've addressed every question and thought through every possible scenario, entrepreneurs should thoroughly explain their marketing, sales, and operations strategies — from acquiring a physical location for the business to explaining a tactical approach for marketing penetration.

These explanations should ultimately lead to a business' break-even point supported by a sales forecast and financial projections, with the business plan writer being able to speak to the why behind anything outlined in the plan.

strategic business plan meaning

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Fill out the form to access your free business plan., 3. legitimizing a business idea..

Everyone's got a great idea for a company — until they put pen to paper and realize that it's not exactly feasible.

A business plan is an aspiring entrepreneur's way to prove that a business idea is actually worth pursuing.

As entrepreneurs document their go-to-market process, capital needs, and expected return on investment, entrepreneurs likely come across a few hiccups that will make them second guess their strategies and metrics — and that's exactly what the business plan is for.

It ensures an entrepreneur's ducks are in a row before bringing their business idea to the world and reassures the readers that whoever wrote the plan is serious about the idea, having put hours into thinking of the business idea, fleshing out growth tactics, and calculating financial projections.

4. Getting an A in your business class.

Speaking from personal experience, there's a chance you're here to get business plan ideas for your Business 101 class project.

If that's the case, might we suggest checking out this post on How to Write a Business Plan — providing a section-by-section guide on creating your plan?

What does a business plan need to include?

  • Business Plan Subtitle
  • Executive Summary
  • Company Description
  • The Business Opportunity
  • Competitive Analysis
  • Target Market
  • Marketing Plan
  • Financial Summary
  • Funding Requirements

1. Business Plan Subtitle

Every great business plan starts with a captivating title and subtitle. You’ll want to make it clear that the document is, in fact, a business plan, but the subtitle can help tell the story of your business in just a short sentence.

2. Executive Summary

Although this is the last part of the business plan that you’ll write, it’s the first section (and maybe the only section) that stakeholders will read. The executive summary of a business plan sets the stage for the rest of the document. It includes your company’s mission or vision statement, value proposition, and long-term goals.

3. Company Description

This brief part of your business plan will detail your business name, years in operation, key offerings, and positioning statement. You might even add core values or a short history of the company. The company description’s role in a business plan is to introduce your business to the reader in a compelling and concise way.

4. The Business Opportunity

The business opportunity should convince investors that your organization meets the needs of the market in a way that no other company can. This section explains the specific problem your business solves within the marketplace and how it solves them. It will include your value proposition as well as some high-level information about your target market.

businessplan_9

5. Competitive Analysis

Just about every industry has more than one player in the market. Even if your business owns the majority of the market share in your industry or your business concept is the first of its kind, you still have competition. In the competitive analysis section, you’ll take an objective look at the industry landscape to determine where your business fits. A SWOT analysis is an organized way to format this section.

6. Target Market

Who are the core customers of your business and why? The target market portion of your business plan outlines this in detail. The target market should explain the demographics, psychographics, behavioristics, and geographics of the ideal customer.

7. Marketing Plan

Marketing is expansive, and it’ll be tempting to cover every type of marketing possible, but a brief overview of how you’ll market your unique value proposition to your target audience, followed by a tactical plan will suffice.

Think broadly and narrow down from there: Will you focus on a slow-and-steady play where you make an upfront investment in organic customer acquisition? Or will you generate lots of quick customers using a pay-to-play advertising strategy? This kind of information should guide the marketing plan section of your business plan.

8. Financial Summary

Money doesn’t grow on trees and even the most digital, sustainable businesses have expenses. Outlining a financial summary of where your business is currently and where you’d like it to be in the future will substantiate this section. Consider including any monetary information that will give potential investors a glimpse into the financial health of your business. Assets, liabilities, expenses, debt, investments, revenue, and more are all useful adds here.

So, you’ve outlined some great goals, the business opportunity is valid, and the industry is ready for what you have to offer. Who’s responsible for turning all this high-level talk into results? The "team" section of your business plan answers that question by providing an overview of the roles responsible for each goal. Don’t worry if you don’t have every team member on board yet, knowing what roles to hire for is helpful as you seek funding from investors.

10. Funding Requirements

Remember that one of the goals of a business plan is to secure funding from investors, so you’ll need to include funding requirements you’d like them to fulfill. The amount your business needs, for what reasons, and for how long will meet the requirement for this section.

Types of Business Plans

  • Startup Business Plan
  • Feasibility Business Plan
  • Internal Business Plan
  • Strategic Business Plan
  • Business Acquisition Plan
  • Business Repositioning Plan
  • Expansion or Growth Business Plan

There’s no one size fits all business plan as there are several types of businesses in the market today. From startups with just one founder to historic household names that need to stay competitive, every type of business needs a business plan that’s tailored to its needs. Below are a few of the most common types of business plans.

For even more examples, check out these sample business plans to help you write your own .

1. Startup Business Plan

businessplan_7

As one of the most common types of business plans, a startup business plan is for new business ideas. This plan lays the foundation for the eventual success of a business.

The biggest challenge with the startup business plan is that it’s written completely from scratch. Startup business plans often reference existing industry data. They also explain unique business strategies and go-to-market plans.

Because startup business plans expand on an original idea, the contents will vary by the top priority goals.

For example, say a startup is looking for funding. If capital is a priority, this business plan might focus more on financial projections than marketing or company culture.

2. Feasibility Business Plan

businessplan_4

This type of business plan focuses on a single essential aspect of the business — the product or service. It may be part of a startup business plan or a standalone plan for an existing organization. This comprehensive plan may include:

  • A detailed product description
  • Market analysis
  • Technology needs
  • Production needs
  • Financial sources
  • Production operations

According to CBInsights research, 35% of startups fail because of a lack of market need. Another 10% fail because of mistimed products.

Some businesses will complete a feasibility study to explore ideas and narrow product plans to the best choice. They conduct these studies before completing the feasibility business plan. Then the feasibility plan centers on that one product or service.

3. Internal Business Plan

businessplan_5

Internal business plans help leaders communicate company goals, strategy, and performance. This helps the business align and work toward objectives more effectively.

Besides the typical elements in a startup business plan, an internal business plan may also include:

  • Department-specific budgets
  • Target demographic analysis
  • Market size and share of voice analysis
  • Action plans
  • Sustainability plans

Most external-facing business plans focus on raising capital and support for a business. But an internal business plan helps keep the business mission consistent in the face of change.

4. Strategic Business Plan

businessplan_8

Strategic business plans focus on long-term objectives for your business. They usually cover the first three to five years of operations. This is different from the typical startup business plan which focuses on the first one to three years. The audience for this plan is also primarily internal stakeholders.

These types of business plans may include:

  • Relevant data and analysis
  • Assessments of company resources
  • Vision and mission statements

It's important to remember that, while many businesses create a strategic plan before launching, some business owners just jump in. So, this business plan can add value by outlining how your business plans to reach specific goals. This type of planning can also help a business anticipate future challenges.

5. Business Acquisition Plan

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Investors use business plans to acquire existing businesses, too — not just new businesses.

A business acquisition plan may include costs, schedules, or management requirements. This data will come from an acquisition strategy.

A business plan for an existing company will explain:

  • How an acquisition will change its operating model
  • What will stay the same under new ownership
  • Why things will change or stay the same
  • Acquisition planning documentation
  • Timelines for acquisition

Additionally, the business plan should speak to the current state of the business and why it's up for sale.

For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased. It should also include:

  • What the new owner will do to turn the business around
  • Historic business metrics
  • Sales projections after the acquisition
  • Justification for those projections

6. Business Repositioning Plan

businessplan_6 (1)

When a business wants to avoid acquisition, reposition its brand, or try something new, CEOs or owners will develop a business repositioning plan.

This plan will:

  • Acknowledge the current state of the company.
  • State a vision for the future of the company.
  • Explain why the business needs to reposition itself.
  • Outline a process for how the company will adjust.

Companies planning for a business reposition often do so — proactively or retroactively — due to a shift in market trends and customer needs.

For example, shoe brand AllBirds plans to refocus its brand on core customers and shift its go-to-market strategy. These decisions are a reaction to lackluster sales following product changes and other missteps.

7. Expansion or Growth Business Plan

When your business is ready to expand, a growth business plan creates a useful structure for reaching specific targets.

For example, a successful business expanding into another location can use a growth business plan. This is because it may also mean the business needs to focus on a new target market or generate more capital.

This type of plan usually covers the next year or two of growth. It often references current sales, revenue, and successes. It may also include:

  • SWOT analysis
  • Growth opportunity studies
  • Financial goals and plans
  • Marketing plans
  • Capability planning

These types of business plans will vary by business, but they can help businesses quickly rally around new priorities to drive growth.

Getting Started With Your Business Plan

At the end of the day, a business plan is simply an explanation of a business idea and why it will be successful. The more detail and thought you put into it, the more successful your plan — and the business it outlines — will be.

When writing your business plan, you’ll benefit from extensive research, feedback from your team or board of directors, and a solid template to organize your thoughts. If you need one of these, download HubSpot's Free Business Plan Template below to get started.

Editor's note: This post was originally published in August 2020 and has been updated for comprehensiveness.

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

strategic business plan meaning

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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What is the difference between a business plan and a strategic plan.

It is not uncommon that the terms ‘strategic plan’ and ‘business plan’ get confused in the business world. While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting. Before beginning your strategic planning process or strategy implementation, look at the article below to learn the key difference between a business vs strategic plan and how each are important to your organization.

Definition of a business plan vs. a strategic plan

A strategic plan is essential for already established organizations looking for a way to manage and implement their strategic direction and future growth. Strategic planning is future-focused and serves as a roadmap to outline where the organization is going over the next 3-5 years (or more) and the steps it will take to get there.

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A strategic plan serves 6 functions for an organization that is striving to reach the next level of their growth:.

  • Defines the purpose of the organization.
  • Builds on an organization’s competitive advantages.
  • Communicates the strategy to the staff.
  • Prioritizes the financial needs of the organization.
  • Directs the team to move from plan to action.
  • Creates long-term sustainability and growth impact

Alternatively, a business plan is used by new businesses or organizations trying to get off the ground. The fundamentals of a business plan focus on setting the foundation for the business or organization. While it looks towards the future, the focus is set more on the immediate future (>1 year). Some of the functions of a business plan may overlap with a strategic plan. However, the focus and intentions diverge in a few key areas.

A business plan for new businesses, projects, or organizations serves these 5 functions:

  • Simplifies or explains the objectives and goals of your organization.
  • Coordinates human resource management and determines operational requirements.
  • Secures funding for your organization.
  • Evaluates potential business prospects.
  • Creates a framework for conceptualizing ideas.

In other words, a strategic plan is utilized to direct the momentum and growth of an established company or organization. In contrast, a business plan is meant to set the foundation of a newly (or not quite) developed company by setting up its operational teams, strategizing ways to enter a new market, and obtaining funding.

A strategic plan focuses on long-term growth and the organization’s impact on the market and its customers. Meanwhile, a business plan must focus more on the short-term, day-to-day operational functions. Often, new businesses don’t have the capacity or resources to create a strategic plan, though developing a business plan with strategy elements is never a bad idea.

Business and strategic plans ultimately differ in several key areas–timeframe, target audience, focus, resource allocation, nature, and scalability.

While both a strategic and business plan is forward-facing and focused on future success, a business plan is focused on the more immediate future. A business plan normally looks ahead no further than one year. A business plan is set up to measure success within a 3- to 12-month timeframe and determines what steps a business owner needs to take now to succeed.

A strategic plan generally covers the organizational plan over 3 to 5+ years. It is set with future expansion and development in mind and sets up roadmaps for how the organization will reach its desired future state.

Pro Tip: While a vision statement could benefit a business plan, it is essential to a strategic plan.

Target Audience

A strategic plan is for established companies, businesses, organizations, and owners serious about growing their organizations. A strategic plan communicates the organization’s direction to the staff and stakeholders. The strategic plan is communicated to the essential change makers in the organization who will have a hand in making the progress happen.

A business plan could be for new businesses and entrepreneurs who are start-ups. The target audience for the business plan could also be stakeholders, partners, or investors. However, a business plan generally presents the entrepreneur’s ideas to a bank. It is meant to get the necessary people onboard to obtain the funding needed for the project.

A strategic plan provides focus, direction, and action to move the organization from where they are now to where they want to go. A strategic plan may consist of several months of studies, analyses, and other processes to gauge an organization’s current state. The strategy officers may conduct an internal and external analysis, determine competitive advantages, and create a strategy roadmap. They may take the time to redefine their mission, vision, and values statements.

Alternatively, a business plan provides a structure for ideas to define the business initially. It maps out the more tactical beginning stages of the plan.

Pro Tip: A mission statement is useful for business and strategic plans as it helps further define the enterprise’s value and purpose. If an organization never set its mission statement at the beginning stages of its business plan, it can create one for its strategic plan.

A strategic plan is critical to prioritizing resources (time, money, and people) to grow the revenue and increase the return on investment. The strategic plan may start with reallocating current financial resources already being utilized more strategically.

A business plan will focus on the resources the business still needs to obtain, such as vendors, investors, staff, and funding. A business plan is critical if new companies seek funding from banks or investors. It will add accountability and transparency for the organization and tell the funding channels how they plan to grow their business operations and ROI in the first year of the business.

The scalability of a business plan vs. strategic plan

Another way to grasp the difference is by understanding the difference in ‘scale’ between strategic and business plans. Larger organizations with multiple business units and a wide variety of products frequently start their annual planning process with a corporate-driven strategic plan. It is often followed by departmental and marketing plans that work from the Strategic Plan.

Smaller and start-up companies typically use only a business plan to develop all aspects of operations of the business on paper, obtain funding and then start the business.

Why understanding the differences between a business plan vs a strategic plan matters

It is important to know the key differences between the two terms, despite often being used interchangeably. But here’s a simple final explanation:

A business plan explains how a new business will get off the ground. A strategic plan answers where an established organization is going in the future and how they intend to reach that future state.

A strategic plan also focuses on building a sustainable competitive advantage and is futuristic. A business plan is used to assess the viability of a business opportunity and is more tactical.

10 Comments

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I agree with your analysis about small companies, but they should do a strategic plan. Just check out how many of the INC 500 companies have an active strategic planning process and they started small. Its about 78%,

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Strategic management is a key role of any organization even if belong to small business. it help in growth and also to steam line your values. im agree with kristin.

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I agree with what you said, without strategic planning no organization can survive whether it is big or small. Without a clear strategic plan, it is like walking in the darkness.. Best Regards..

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Vision, Mission in Business Plan VS Strategic Plan ?

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you made a good analysis on strategic plan and Business plan the difference is quite clear now. But on the other hand, it seems that strategic plan and strategic management are similar which I think not correct. Please can you tell us the difference between these two?. Thanks

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Thank you. I get points to work on it

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super answer Thanking you

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Hi. I went through all the discussions, comments and replies. Thanks! I got a very preliminary idea about functions and necessity of Strategic Planning in Business. But currently I am looking for a brief nice, flowery, juicy definition of “Business Strategic Planning” as a whole, which will give anyone a fun and interesting way to understand. Can anyone help me out please? Awaiting replies…… 🙂

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that was easy to understand,

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Developing a strategic plan either big or small company or organization mostly can’t achieve its goal. A strategic plan or formulation is the first stage of the strategic management plan, therefore, we should be encouraged to develop a strategic management plan. We can develop the best strategic plan but without a clear plan of implementation and evaluation, it will be difficult to achieve goals.

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What Is Business Strategy & Why Is It Important?

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  • 20 Oct 2022

Every business leader wants their organization to succeed. Turning a profit and satisfying stakeholders are worthy objectives but aren’t feasible without an effective business strategy.

To attain success, leaders must hone their skills and set clear business goals by crafting a strategy that creates value for the firm, customers, suppliers, and employees. Here's an overview of business strategy and why it's essential to your company’s success.

Access your free e-book today.

What’s a Business Strategy?

Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.

According to Harvard Business School Online's Business Strategy course, an effective strategy is built around three key questions:

  • How can my business create value for customers?
  • How can my business create value for employees?
  • How can my business create value by collaborating with suppliers?

Many promising business initiatives don’t come to fruition because the company failed to build its strategy around value creation. Creativity is important in business , but a company won't last without prioritizing value.

The Importance of Business Strategy

A business strategy is foundational to a company's success. It helps leaders set organizational goals and gives companies a competitive edge. It determines various business factors, including:

  • Price: How to price goods and services based on customer satisfaction and cost of raw materials
  • Suppliers: Whether to source materials sustainably and from which suppliers
  • Employee recruitment: How to attract and maintain talent
  • Resource allocation: How to allocate resources effectively

Without a clear business strategy, a company can't create value and is unlikely to succeed.

Creating Value

To craft a successful business strategy, it's necessary to obtain a thorough understanding of value creation. In the online course Business Strategy , Harvard Business School Professor Felix Oberholzer-Gee explains that, at its core, value represents a difference. For example, the difference between a customer's willingness to pay for a good or service and its price represents the value the business has created for the customer. This difference can be visualized with a tool known as the value stick.

The value stick has four components, representing the value a strategy can bring different stakeholders.

The value stick framework

  • Willingness to pay (WTP) : The maximum amount a customer is willing to pay for a company's goods or services
  • Price : The actual price of the goods or services
  • Cost : The cost of the raw materials required to produce the goods or services
  • Willingness to sell (WTS) : The lowest amount suppliers are willing to receive for raw materials, or the minimum employees are willing to earn for their work

The difference between each component represents the value created for each stakeholder. A business strategy seeks to widen these gaps, increasing the value created by the firm’s endeavors.

Increasing Customer Delight

The difference between a customer's WTP and the price is known as customer delight . An effective business strategy creates value for customers by raising their WTP or decreasing the price of the company’s goods or services. The larger the difference between the two, the more value is created for customers.

A company might focus on increasing WTP with its marketing strategy. Effective market research can help a company set its pricing strategy by determining target customers' WTP and finding ways to increase it. For example, a business might differentiate itself and increase customer loyalty by incorporating sustainability into its business strategy. By aligning its values with its target audiences', an organization can effectively raise consumers' WTP.

Increasing Firm Margin

The value created for the firm is the difference between the price of an item and its cost to produce. This difference is known as the firm’s margin and represents the strategy's financial success. One metric used to quantify this margin is return on invested capital (ROIC) . This metric compares a business's operating income with the capital necessary to generate it. The formula for ROIC is:

Return on Invested Capital = Net Operating Cost After Tax (NOCAT) / Invested Capital (IC)

ROIC tells investors how successful a company is at turning its investments into profit. By raising WTP, a company can risk increasing prices, thereby increasing firm margin. Business leaders can also increase this metric by decreasing their costs. For example, sustainability initiatives—in addition to raising WTP—can lower production costs by using fewer or more sustainable resources. By focusing on the triple bottom line , a firm can simultaneously increase customer delight and margin.

Increasing Supplier Surplus & Employee Satisfaction

By decreasing suppliers' WTS, or increasing costs, a company can create value for suppliers—or supplier surplus . Since increasing costs isn't sustainable, an effective business strategy seeks to create value for suppliers by decreasing WTS. How a company accomplishes this varies. For example, a brick-and-mortar company might partner with vendors to showcase its products in exchange for a discount. Suppliers may also be willing to offer a discount in exchange for a long-term contract.

In addition to supplier WTS, companies are also responsible for creating value for another key stakeholder: its employees. The difference between employee compensation and the minimum they're willing to receive is employee satisfaction . There are several ways companies can increase this difference, including:

  • Increasing compensation: While most companies hesitate to raise salaries, some have found success in doing so. For example, Dan Price, CEO of Gravity Payments, increased his company's minimum wage to $80,000 per year and enjoyed substantial growth and publicity as a result.
  • Increasing benefits: Companies can also decrease WTS by making working conditions more desirable to prospective employees. Some offer remote or hybrid working opportunities to give employees more flexibility. Several have also started offering four-day work weeks , often experiencing increased productivity as a result.

There are several ways to increase supplier surplus and employee satisfaction without hurting the company's bottom line. Unfortunately, most managers only devote seven percent of their time to developing employees and engaging stakeholders. Yet, a successful strategy creates value for every stakeholder—both internal and external.

Business Strategy | Simplify Strategy to Make the Greatest Business Impact | Learn More

Strategy Implementation

Crafting a business strategy is just the first step in the process. Implementation takes a strategy from formulation to execution . Successful implementation includes the following steps :

  • Establish clear goals and key performance indicators (KPIs)
  • Set expectations and ensure employees are aware of their roles and responsibilities
  • Delegate work and allocate resources effectively
  • Put the plan into action and continuously monitor its progress
  • Adjust your plan as necessary
  • Ensure your team has what they need to succeed and agrees on the desired outcome
  • Evaluate the results of the plan

Throughout the process, it's important to remember to adjust your plan throughout its execution but to avoid second-guessing your decisions. Striking this balance is challenging, but crucial to a business strategy's success.

How to Formulate a Successful Business Strategy | Access Your Free E-Book | Download Now

Learn More About Creating a Successful Business Strategy

Business strategy constantly evolves with changing consumer expectations and market conditions. For this reason, business leaders should continuously educate themselves on creating and executing an effective strategy.

One of the best ways to stay up-to-date on best practices is to take an online course, such as HBS Online's Business Strategy program. The course will provide guidance on creating a value-driven strategy for your business.

Do you want to learn how to craft an effective business strategy and create value for your company's stakeholders? Explore our online course Business Strategy , or other strategy courses , to develop your strategic planning skills. To determine which strategy course is right for you, download our free flowchart .

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Strategic Planning in Business

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Table of Contents

What is business strategic planning, the strategic planning process in 3 steps, what is a business strategic plan, key components of a business strategic plan, business strategic plan example, strategic plan vs. business plan.

Strategic planning is key for success in business. By planning strategically for the future, a business can achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.

Business strategic planning is the process of creating a business strategy and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. The main goal of strategic planning is to take a company from its current state to its desired state through a series of business actions.

The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company’s business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company.

strategic business plan meaning

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Strategic Plan Template

Use this free Strategic Plan Template for Word to manage your projects better.

Strategic Planning is one of the three levels of organizational planning, which is the process that allows organizations to define its objectives for the future and make action plans to guide the efforts of each of its departments, employees and management levels .

The other two levels of organizational planning are tactical and operational planning. Let’s see how these three types of organizational planning differ from each other.

Strategic Planning vs. Tactical Planning

While a strategic plan is created by the top management team and defines the high-level strategic goals of an entire organization, a tactical plan has a narrower scope. A tactical plan is created by the middle management level of a business and describes the specific goals, initiatives, challenges and resources for each department and how its efforts contribute to the completion of the larger strategic plan of the business.

Strategic Planning vs. Operational Planning

An operational plan allows you to establish guidelines, procedures and best practices for the daily operations of your business. The main objective of operational planning is to ensure that your business operations contribute to the accomplishment of the strategic objectives defined in the strategic plan.

Strategic planning is very important, but it doesn’t need to be overly complex. Let’s simplify this process by breaking it down into three simple steps.

1. Set Business Goals

A business goal is simply an accomplishment that a company wants to achieve in the short, medium or long term. Business goals can take many forms such as increasing sales, revenue, customer satisfaction levels and brand positioning, among many other things.

2. Conduct a SWOT Analysis

The goal of a business strategy is to leverage the strengths of a business and minimize the impact of its weaknesses. Those two things are internal factors. The strengths of a company can become competitive advantages that can lead to business growth. There are many types of business strengths and weaknesses such as scale, speed, or R&D, just to name a few.

Threats and opportunities refer to external factors such as competitors or an untapped market. A successful business strategy considers all of these factors to define how a product or service will be created, marketed and sold, and a SWOT analysis is a great starting point.

3. Develop a Business Strategy & Strategic Plan

Once you’ve completed your SWOT analysis, you can create a business strategy that’s designed to help position your company in the market. Your business strategy guides how you produce, market and sell your product or service based on internal and external analysis.

Then, you’ll need a strategic plan to explain how you plan to execute that business strategy. To oversee the execution of a business strategic plan, managers need to manage time, costs and tasks. ProjectManager is a project planning tool that allows managers to plan, schedule and manage their team’s work. Plan your work with professional tools such as Gantt charts, kanban boards, task lists and calendars. Then track your progress in real time to stick to your strategic plan. Get started for free.

Gantt chart in projectmanager

A business strategic plan is an implementation plan that’s meant to turn a business strategy into action items that can be executed over time. Business strategic plans are usually executed over the course of 3-5 years.

How to Develop a Strategic Plan

To develop a strategic plan, you should ask yourself the following three questions.

  • Where Is the Business Now? Gather as much information on your business as possible including internal operations and what drives its profitability. Compare the business to competitors and note the similarities and differences in detail. This isn’t a day-to-day operational study, but a broader look at the business in context to itself and its environment. But don’t go crazy; stay realistic in terms of your business goals. Be detached and critical in your analysis.
  • Where Do You Want to Go? Now it’s time to decide what your top-level objectives are for the future. Start with a vision statement , objectives, values, techniques and goals. Look forward to five years or more to forecast where you want the business to be at that time. This means figuring out what the focus of the business will be in the future. Will that focus differ from what it is now, and what competitive advantages do have you in the marketplace? This is where you build the foundation and initiate changes.
  • How Can You Get There? Once you know where you are and where you want to go, it’s time to plan. What are the changes to the structure, financing, etc., necessary for the business to get there? Decide on the best way to implement those changes, the timeframe with deadlines and how to finance it. Remember, this is looking at the business at large, so consider major endeavors such as diversification, existing growth, acquisition and other functional matters. A gap analysis can be a big help here.

Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.

That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.

To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following foundational elements:

  • Mission Statement: The mission statement describes what your company does.
  • Vision Statement: The vision statement explains where your company expects to be in the future.
  • Core Values: Guiding principles that shape your company’s organizational culture.
  • Business Objectives: Consider using the SMART goal-setting technique . This simply means setting up specific, measurable, attainable, relevant and time-bound objectives that your company wants to achieve.
  • SWOT Analysis: External and internal factors that make up your company’s business competitive environment.
  • Action Plan: A plan outlining steps that will be taken to achieve the business objectives of your organization.
  • Financials: A section that shows the financial performance expectations, the budget and the resources that will be required to implement the action plan.
  • Performance Measurements: Performance indicators that will be used to measure the effectiveness of the action plan.

Never forget to check your strategic plan against reality. In addition to being achievable, it must be practical for your business environment, resources and marketplace.

Now let’s look at a simple business strategic plan example. This is a strategic plan for a small construction company.

1. Mission, Vision & Core Values

  • Mission Statement: To build residential spaces that provide wellbeing for our clients.
  • Vision Statement: To offer the best construction experience for our clients and expand our brand throughout the globe.
  • Core Values: Sustainable innovation and respect for the environment.

2. Business Objectives

  • Business Objective 1: Grow operating margin from 15% to 20% over the next year.
  • Business Objective 2: Reduce operating costs by 5% over the next quarter
  • Business Objective 3: Increase the number of new contracts generated by 10% over the next year

3. SWOT Analysis

  • Strengths: Available financing, brand visibility and know-how.
  • Weaknesses: Lack of PPE, human capital and expertise in construction areas such as plumbing, electrical work and masonry, which requires subcontractors.
  • Opportunities: Lack of environmentally-friendly construction companies in the market.
  • Threats: Larger construction companies compete for contracts in the area.

4. Action Plan

  • Business Objective 1: To grow operating margin, new employees with plumbing, electrical work and masonry experience will be hired to cut down subcontractor costs. This must be done by the end of the first quarter.
  • Business Objective 2: To reduce operating costs, the company will acquire property, plant and equipment. By doing this, the company will no longer rent equipment from third parties, which will reduce operating costs significantly in the medium and long term.
  • Business Objective 3: To increase the number of new contracts generated, the leadership team will invest more in the PR, marketing and advertising departments. The company will also invest in key positions for the construction bidding process such as contract estimators.
  • Financials: This section will explain in detail what are the costs associated with the work items in the action plan as well as the expected financial benefits for the company.

Our free strategic plan template helps leadership teams gather important information about their business strategy, which makes it the perfect tool to start shaping a strategic plan for your business or project.

strategic business plan meaning

More Free Strategic Planning Templates

Here are some free strategic planning templates for Word and Excel that will help you with key aspects of the strategic planning process. Use them individually or add them to your strategic plan template for Word so you don’t miss any detail about your organizational strategy.

Strategic Roadmap Template

This strategic roadmap template allows you to map the activities, strategic projects and initiatives that each business department will execute to accomplish the objectives defined in the strategic plan of an organization.

strategic business plan meaning

Strategic Map Template

This strategic map template it’s a strategic planning tool that allows you to visualize all the strategic objectives of your organization and understand how they’re interrelated.

strategic map template

Balanced Scorecard Template

A balanced scorecard is a chart that allows you to set strategic objectives that will benefit your business in one of four key areas, its finances, internal processes, customer satisfaction and organizational learning.

Balanced Scorecard Template

Vision Statement Template

The vision statement is one of the most important aspects of the organizational strategy of a business. It’s a short but powerful statement that describes the overall direction of a company and what it intends to achieve in the future. This free vision statement template will help you focus on what matters most and define the vision of your business.

Vision Statement Template

A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.

A business plan is used primarily to get funding for the venture or direct the operation, and the two plans target different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.

A Different Intent

A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.

With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.

So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.

Related Strategic Planning Content

  • Strategic Project Management: Planning Strategic Projects
  • Strategic Planning Models: An Introduction to 5 Popular Models
  • A Quick Guide to Strategic Initiatives
  • How to Create a Strategic Roadmap for Your Organization
  • Project Alignment: Aligning Your Project to Business Strategy

Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is online project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.

Click here to browse ProjectManager's free templates

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What is a Strategic Plan in Business?

strategic business plan meaning

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.

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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. 

WHAT'S THE DIFFERENCE BETWEEN A STRATEGIC AND BUSINESS PLAN

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. 

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 f or 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. 

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.

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. 

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.

  • 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. 
  • 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.
  • 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.

  • 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.
  • 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.
  • 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. 

  • 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.

  • 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.
  • 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. 

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. 

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.

  • Modification 

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 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. 

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: T arget 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: B road 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:

  • 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. 

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.

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strategic business plan meaning

AT&T outage? Here’s what we know and when service could be back up

WASHINGTON - AT&T cell phone users across the U.S. reported outages on Thursday morning. Tens of thousands of customers reported the disruptions to their home phone, internet and mobile phone services, according to Downdetector. The outages began around 3:30 a.m. ET, according to a graph shown on the website that tracks outages. 

Downdetector also showed a spike in reported T-Mobile outages around 4:00 a.m. According to Fox Business, a Verizon spokesperson told them customers are only experiencing issues when trying to contact users who have AT&T, which operates FirstNet. 

AT&T, Cricket Wireless, Verizon, T-Mobile outages Thursday

A number of Americans are dealing with cellular outages on AT&T, Cricket Wireless, Verizon, T-Mobile and other service providers, according to data from Downdetector.

AT&T released the following statement:

"Some of our customers are experiencing wireless service interruptions this morning.  We are working urgently to restore service to them.  We encourage the use of Wi-Fi calling until service is restored."

READ MORE: AT&T outage: What to do if your iPhone or Android is stuck on SOS mode and you can't call 911

AT&T national outage? Here’s what we know and when service could be back up

FOX 5 is following breaking news as we learn more about a possible AT&T nationwide outage.

Some employees at FOX 5 in Bethesda have also reported not being able to use their devices for calls, texts or to connect to Wi-Fi. The app is also reportedly having issues.

Here’s what’s known about the cellular outages reported. 

AT&T phone outage

DownDetector.com, an outage tracking site, showed thousands of outages reported starting around 4 a.m. ET, mostly impacting mobile phone users. 

Outages were reported in many major U.S. cities, including New York, Los Angeles, Atlanta, Houston, Dallas, Chicago, and Philadelphia. 

AT&T appeared to have the most reported outages, followed by Cricket, Verizon, T-Mobile, Boost Mobile and others, according to DownDetector. 

iPhone ‘SOS’ only – what does it mean?

During the outage, iPhone users reported seeing SOS or "SOS only" in the status bar. 

This means the device isn't connected to a network, but the phone users can still make emergency calls.

What to do if your iPhone or Android is stuck on SOS mode and you can’t call 911

Law enforecement and officials nationwide are sharing information on how to call in for emergency services if 911 is not working for you.

Ready Fairfax says the Fairfax County 911 center is still operational. They suggest calling from a landline or asking a friend or family member to call 9-1-1 on your behalf.

Can a solar flare be to blame for the AT&T nationwide outage?

With AT&T having been victim to a solar flare back in 1972 – can the same issue happen again?

According to our sister-station in Orlando, the important distinction here is that AT&T was made up of landlines. The solar flare back in the 70s created a voltage on the physical lines.

FOX 35 Meteorologist Brooks Garner said the issue Thursday morning seems to stem from a SIM card database registry issue, Brooks said.

"Now, it is possible the X_class flare had impacts to the voltage on some electronics, but since this is so specific to AT&T and not other carriers, it's likely not space weather related," said Brooks. 

This is a developing story. Stay with us for updates.

IMAGES

  1. 7 Elements of a Strategic Plan in 2020

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  2. How to create a One Page Strategic Business Plan

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  3. The Best Components of a Strategic Business Plan

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  4. 32 Great Strategic Plan Templates to Grow your Business

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  5. FREE Strategic Business Plan Template

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  6. 32 Great Strategic Plan Templates to Grow your Business

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VIDEO

  1. Strategic Management

  2. Annual Business Planning Workshop with Rhonwyn

COMMENTS

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    Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company's overall long-term goals or desires.

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    Strategic planning is a business process that helps you define and share the direction your company will take in the next three to five years. During the strategic planning process, stakeholders review and define the organization's mission and goals, conduct competitive assessments, and identify company goals and objectives.

  3. What is Strategic Planning? Definition and Steps

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  4. What To Include in a Strategic Business Plan (With Template)

    1. State information that defines the company One of the first things a strategic business plan should identify is the company's mission and the principles and values that guide the decision making of the organization. The company's mission statement should explain what the business is trying to achieve long-term.

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    Strategic planning in management is the process of documenting and establishing the direction of your small business—by assessing both where you are and where you're going. So, what is the purpose of a strategic plan? And what does an effective strategic plan consist of? A company's strategic plan consists of it's: Mission Vision Values

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  8. What is a Business Plan? Definition, Tips, and Templates

    A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement.

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    A strategic plan defines who you are as a business and lists concrete actions to achieve your goals. When the unexpected occurs, a strategic plan helps your business survive and find new opportunities while staying true to your values and mission.

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    Definition of a business plan vs. a strategic plan A strategic plan is essential for already established organizations looking for a way to manage and implement their strategic direction and future growth.

  15. What is Strategic Planning: A Definition

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    Business strategy is the strategic initiatives a company pursues to create value for the organization and its stakeholders and gain a competitive advantage in the market. This strategy is crucial to a company's success and is needed before any goods or services are produced or delivered.

  17. PDF How to write a strategic plan

    Overcoming Challenges and Pitfalls. Challenge of consensus over clarity. Challenge of who provides input versus who decides. Preparing a long, ambitious, 5 year plan that sits on a shelf. Finding a balance between process and a final product. Communicating and executing the plan. Lack of alignment between mission, action, and finances.

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    Coupling Strategy to Operating Plans. Operations strategy Magazine Article. John M. Hobbs. Donald F. Heany. In recent years a growing number of companies have expended considerable amounts of time ...

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