what is the difference between strategic planning and business planning

Looking for AI in local government? See our newest product, Madison AI.

More Like this

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.

Get the Free Guide for Setting OKRs that Work (with 100 examples!)

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

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%,

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.

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..

Vision, Mission in Business Plan VS Strategic Plan ?

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

Thank you. I get points to work on it

super answer Thanking you

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…… 🙂

that was easy to understand,

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.

Comments Cancel

Join 60,000 other leaders engaged in transforming their organizations., subscribe to get the latest agile strategy best practices, free guides, case studies, and videos in your inbox every week..

Leading strategy? Join our FREE community.

Become a member of the chief strategy officer collaborative..

Free monthly sessions and exclusive content.

Do you want to 2x your impact.

Business Plan Vs Strategic Plan Vs Operational Plan—Differences Explained

Noah Parsons

5 min. read

Updated October 27, 2023

Many business owners know and understand the value of a business plan.  The business plan is a key component  of the startup and fundraising process and serves as a foundation for your organization. However, it only tells part of the story. To get the whole picture and have a framework on which to build your business you also need a strategic plan and an operational plan.

• What is a business plan?

In its simplest format, a  business plan  describes the “who” and the “what” of your business. It lays out who is running the business and what the business does. It describes the products and services that your business sells and who the customers are. 

• What is a strategic plan?

A  strategic plan  looks beyond the basics of a business plan to explain the “how”. It explains the long-term goals of the business and how it expects to achieve those goals over the long term. A strategic plan explores future products and services that your business might offer and target markets that you might expand into. The plan explains your strategy for long-term growth and expansion.

• What is an operational plan?

An operation plan zooms into the details of your business to explain how you are going to  achieve your short-term goals . It is the “when” and “where” of your planning process. The operational plan covers the details of marketing campaigns, short-term product development, and more immediate goals and projects that will happen within the next year.

• What is the difference between a strategic plan and a business plan?

First, let’s look at the difference between a business and a strategic plan. For review:

A  business plan  covers the “who” and “what” of the business. The  strategic plan  gives us long-term goals and explains “how” the business will get there, providing a long-term view.

In broader terms, the business plan tells us who by showing us:

• Who is running the business? What makes them qualified? What do they bring to the table that adds value?
• Who is the competition? What do they offer and what makes you different?
• Who is your customer? How big is the market? Where are they? What do they want and how will you give it to them? Also, how will you connect with your market?

The business plan answers the “what” by telling us:

• What the business provides and how it’s provided. 
• Product, services, and operations are all explained so that readers understand how customer needs are met.

The strategic plan, on the other hand, outlines long term goals and the “how”, focusing on the following:

• Where will the business be in 3, 5, or even 10 years?
• How will you expand to offer different products and services over time?
• Will your market and industry change over time and how will your business react to those changes?
• How will you grow your market and reach new customers?
• What needs to happen so you can achieve your goals? What resources do you need to get there?
• How will you measure success? What metrics matter and how will you track them?

So, your business plan explains what you are doing right now. Your strategic plan explains long-term aspirations and how you plan to transition your business from where it is today to where you want it to be in the future. The strategic plan helps you look more deeply into the future and explains the key moves you have to make to achieve your vision.

Brought to you by

Create a professional business plan

Using ai and step-by-step instructions.

Secure funding

Validate ideas

Build a strategy

• What is the difference between strategic planning and operational planning?

While strategic planning looks at the long term and explains your broad strategies for growth, an operational plan looks at the short term. It explains the details of  what your business is going to do  and when it’s going to do it over the next twelve months or so. An operational plan covers details like:

• What activities need to happen to achieve your business goals?
• When will each activity take place, who will do it, and when do you need to reach specific milestones?
• How will your business operate? What suppliers will you work with? When do you need to have them in place?
• What marketing campaigns will you run and what will they cost?
• What investments will you make in your products and services this year?

The bottom line, your operational plan is the short-term action plan for your business. It’s the tasks, milestones, and steps needed to drive your business forward. Typically an operational plan provides details for a 1-year period, while a strategic plan looks at a  3-5 year timeline , and sometimes even longer. The operational plan is essentially the roadmap for how you will execute your strategic plan.

• How to use your business plan for strategic development and operations

A great business plan can encompass both the basic plans for the business, the long-term strategic plan, and the near-term operational plan. Using a lean planning method, you can tackle all three phases of planning and make the process easy to review and revise as your business grows, changes, and adapts.

Start with a simple plan

The lean planning methodology starts with a simple,  30-minute business plan  that outlines the fundamentals of your business: who you are, what you are doing, and who your customers are. It’s a great way to provide a brief overview of your business.

Expand your plan

From there, you can expand your plan to include your longer-term strategy. Adding greater detail to elements of the plan to explain long-term goals, milestones, and how your products and services will change and expand over time to meet changing market conditions.

Finally, your lean plan will cover  financial forecasts  that include monthly details about the short-term revenue and expenses, as well as longer-term annual summaries of your financial goals, including profitability and potential future loans and investments.

• Use your business plan to manage your business

Regardless of the type of plan, you are working on, you need a team of players on hand to help you plan, develop, and execute both the operational and strategic plans. Remember, your business needs both to give it a clear foundation and a sense of direction. As well as to assist you with identifying the detailed work that has to happen to help you reach your long-term goals. 

Learn how  LivePlan  can help you develop a business plan that defines your business, outlines strategic steps, and tracks ongoing operations. You can easily share it with your team and all of the right stakeholders, explore scenarios and update your plan based on real-world results. Everything you need to turn your business plan into a tool for growth.

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

Related Articles

2 Min. Read

How Long Should a Business Plan Be?

10 Min. Read

When Should You Write a Business Plan?

12 Min. Read

Do You Need a Business Plan? Scientific Research Says Yes

3 Min. Read

11 Key Components of a Business Plan

The LivePlan Newsletter

Become a smarter, more strategic entrepreneur.

Your first monthly newsetter will be delivered soon..

Unsubscribe anytime. Privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

• Certifications
• Associate Business Strategy Professional
• Senior Business Strategy Professional
• Examination
• Partnership
• For Academic Affiliation
• For Training Companies
• For Corporates
• Help Center
• Associate Business Strategy Professional (ABSP™)
• Senior Business Strategy Professional (SBSP™)
• Certification Process
• TSI Certification Examination
• Get your Institution TSI Affiliated
• Become a Corporate Education Partner
• Become a Strategy Educator
• Frequently Asked Questions

Business plan vs Strategic Plan - What You Must Know

Like everything else in life, the nature of business needs a plan in place to follow and measure. Crafting a strategic roadmap isn't just a suggestion—it's a necessity.

This is one of the key elements of a startup or even a business division within an organization that is expanding or diversifying. It has every resource element and needs to be mapped out for the business, including projected milestones for the future.

However, every business strategist needs to know that there are some subtle differences between what constitutes a business plan, and the several differences it has with a strategic plan. Let’s walk through the different elements that comprise each and understand the outcome each aims to achieve.

Introducing The Business Plan

A business plan is exactly what the name suggests— a plan to start and run a business or a new entity of an existing business; usually either an expansion in a newer region or a diversification into a new market. Business plans are mainly created for internal reference purposes or external funding purposes, with the latter being the common usage. They form the basis of all business strategies and decisions made at the ownership level in an organization. The most essential components of a business plan include:

Organizational Plan - This is the core of a business plan, and it includes the mission and vision statement, along with the market in which the company plans to operate. This plan also encompasses thorough market research to gauge the potential of the business, crucial for securing funding or sponsorship. It articulates the rationale behind the business's growth trajectory, outlining clear timelines for achieving milestones along the way.

Financial Plan - A robust financial plan is the bedrock of any successful business venture, where cash flow reigns supreme, and a meticulously crafted balance sheet serves as the ultimate scorecard. A financial plan includes some of the most important elements of the entire business plan and includes elements like projected cash flow statements, capital requirements, a summary of projected overheads, a projected balance sheet including assets and liabilities, and income and expense statements.

Remember to regard this as the central nervous system, for it permeates and influences almost every aspiration the enterprise hopes to attain.

Sales and Marketing Plan - We mentioned “almost” everything above for this very reason. Sales and marketing form the other significant component of the business plan. These include sales forecasts and overheads, marketing and brand management summaries, and market share projections that the business hopes to achieve within a time frame.

Business plans are indeed comprehensive and all-encompassing. They form the basis of the business's existence or the rationale for investments in it. But what about translating these plans into action? How do we ensure that the sky-high goals set forth are actually achievable?

The Actionables- A Strategic Plan

Strategic plans constitute the basis of operations and responsibilities within the business. These plans lay the paths out for each member of the organization to follow and define the functional outline and the key outcomes for every project and process within the business. A strategic plan goes on to define the operations and their outcomes within the organization, its departments, and its employees. The single thread connecting strategic planning with the business plan is the vision of the organization, and for obvious reasons— vision serves as the guiding light for strategy formation, which, in turn, directs the day-to-day operations of the business.

Why A Strategic Plan is Crucial to The Organization

In a word— synchronization. A robust and well-laid-out strategic plan establishes the much-needed sync between teams and their objectives. Not only that, it also provides a guide for daily operations alongside the focus and direction that teams often need to get the job done, on time and within budget. When all these components are integrated into a cohesive network, the true value of a strategic plan emerges—a seamless and grand orchestration of departments, teams, and individuals using the resources allocated to them to achieve the key performance indicator that they are responsible for.

Elements to Consider in a Strategic Plan

When tasked with creating a strategic plan for your business, you will need to incorporate certain components that will ensure that the stakeholders are aligned completely with the organization’s goals and objectives. These include:

Vision and Values - The vision statement is the most important component of the strategic plan and the most overarching. It propels the organization towards established goals and the values that every employee and stakeholder must incorporate.

Goals - These are short, medium, or long-term, depending on the scope of the strategic plan. They provide the much-needed context for the organization to undertake initiatives that meet the vision while maintaining the values.

Guiding Principles - Often, organizations face crossroads where they must decide which steps to take next, to reach their vision. Principles are included in strategic plans to align teams towards the vision when faced with a dilemma and form a critical part of strategic planning.

Action Plans - A sum of key initiatives, processes, and projects that are required to be performed on a pre-determined periodic basis for the goal to be accomplished. These also include the time frames for each stakeholder responsible for each option. They usually follow the DACI format for each action (Driver, Approver, Contributor, Informed)

SWOT Analysis - The quintessential component, the Strength, Weaknesses, Opportunities, and Threats analysis of the strategic plan lends context to all business actions vis-a-vis the external environment. This includes competitors, market forces and conditions, identification of internal and external threats, and several other factors.

Read This - SWOT Analysis: How to Strengthen Your Business Plan

Here’s a table highlighting the main differences between a Business Plan and a Strategic Plan with a focus on the key components of each—

Learning All About Strategic Planning

In all businesses, a strategic plan serves as the foundational blueprint, akin to a meticulously drawn map for a general. It provides the essential guidance and direction needed for the entire organization to navigate toward success. It is crucial, therefore, to acquire the necessary skills and certifications for employment as a business strategist who would be entrusted with creating it. Know more about how to become a successful and sought-after business strategist today!

Recent Posts

How Data Analytics Can Revolutionize Your Business - A Strategist's Guide

Download this Strategist's Guide to empower yourself with resourceful insights:

• Roadblocks to Data Usage
• Advantages that Data Analytics offer for businesses
• Elements of a Data Analytics Strategy
• Top reasons why businesses must adopt a Data Analytics Strategy
• Case studies, Scenarios, and more

CredBadge™ is a proprietary, secure, digital badging platform that provides for seamless authentication and verification of credentials across digital media worldwide.

CredBadge™ powered credentials ensure that professionals can showcase and verify their qualifications and credentials across all digital platforms, and at any time, across the planet.

Verify A Credential

Please enter the License Number/Unique Credential Code of the certificant. Results will be displayed if the person holds an active credential from TSI.

Stay Informed!

Keep yourself informed on the latest updates and information about business strategy by subscribing to our newsletter.

Start Your Journey with The Strategy Institute by Creating Your myTSI Account Today.

• Manage your professional profile conveniently.
• Manage your credentials anytime.
• Share your experiences and ideas with The Strategy Institute.

Account Login

• Remember Password
• Forgot Password?

Forgot Password

The magazine of Glion Institute of Higher Education

• Strategic planning vs business planning: how they’re both key to success

Any thriving hospitality business needs thorough planning to make sure it succeeds. If you’ve heard the terms business planning and strategic planning, you might think they’re interchangeable, but they’re actually two distinct things companies need at different times for continued success.

The biggest difference is that business plans are mostly used when you are starting to build a business so you can quickly and smoothly create your vision. Strategic planning is what existing companies use to grow and improve their businesses.

If you’re looking for a career in hospitality management, it’s important to know the difference between the two and how to use them to best effect. In this article, we’ll go over what strategic planning and business planning are and how they are important to running a successful hospitality business.

We’ll also look at how you can learn to harness different planning methods and get the skills needed to develop your career.

Business planning

A business plan is one of the first things a fledgling business will draft. Alternatively, it can be used to set business goals when launching a new product or service.

The business plan will usually look at short-term details and focus on how things should run for around a year or less. This will include looking at concepts such as:

• What the business idea is
• Short-term goals
• Who your customers are
• What your customers need
• What investment or financing you will need to start your business
• How you make revenue
• What profitability to expect
• How you can appeal to potential shareholders
• What the short-term operational needs of the business are
• What the company’s values are
• What the budget is for different parts of the business

This means market analysis and research are vital when you are making a business plan.

What are the objectives of business planning?

The primary objective of a business plan is to have all the main details of your business worked out before you start. This will give you a roadmap to use when you launch your business or when you start offering a different product or service.

For example, if you wanted to become an event planner   and open your own event planning business, your plan might include how to get funds to rent an office and pay staff.

Strategic planning

A strategic plan is where you set out the company’s goals and define the steps you will need to take to reach those goals.

A strategic plan would include:

• What current capabilities the company has
• Making measurable goals
• A full strategy for business growth
• How the company’s values, mission and vision tie in with the services and products the company intends to offer
• Who in the organization will handle certain roles
• What the timeline is for reaching certain goals
• A SWOT analysis, looking at the strengths, weaknesses, opportunities and threats in the company
• Examining the external environment for factors that will affect your company using a PEST (political, economic, social and technological) analysis

A strategic plan can be a long-term blueprint. You might find you use basically the same strategic plan for several years.

What is the objective and strategy of planning?

The aim of a strategic plan is to provide a tool that allows you to improve your business, grow the company, streamline processes or make other changes for the health of your business. Strategy implementation and meeting strategic objectives should generally lead to growth.

What is the difference between business planning and strategic planning?

There are a few major differences between strategic planning and business planning, which are outlined below.

Scope and time frame

A strategic plan is usually long-term, typically covering at least two to five years. By contrast, a business plan usually covers a year or less, since this is roughly how long it usually takes for a business to become established.

A business plan focuses on starting a business in its early stages. A strategic plan is used to guide the company through later stages. Put simply, the business plan is about direction and vision, while the strategic plan focuses on operations and specific tactics for business growth.

Stakeholders

A strategic plan will be presented to stakeholders and employees to make sure everyone knows what is going on in the company. This will help reassure everyone with a stake or role in the business.

By comparison, a business plan will often be shown to investors or lenders to help show the business idea is worth funding.

Flexibility and adaptability

A strategic plan typically has more flexibility. This is because it is meant to be in place for a longer period of time and the company should already be established. There is more leeway for refining strategy evolution, while your business plan should remain stable.

Similarities between business planning and strategic planning

Both of these activities will require some of the same analytical components, such as market analysis, financial projections and setting objectives you can track. Of course, both also require you to be highly organized and focused to ensure your business model or strategy development is appropriate for your business.

When to use strategic planning vs business planning

As we’ve already mentioned, you’ll generally use a business plan when you’re setting up a business or moving in a new direction. This will dictate much of the day-to-day running of a business. You would use strategic planning when you want to work on growth and drive innovation.

Can a business plan be used for strategic planning?

No, a business plan and a strategic plan are two different concepts with specific goals. While a business plan outlines short or mid-term goals and steps to achieve them, a strategic plan focuses on a company’s mid to long-term mission and how to accomplish this.

If you want to prepare for success, you need to make sure you are using the right type of plan.

Integrating strategic planning and business planning

While the two plans are different, you may end up using them together to ensure optimal success. As with any type of management role, such as hotel management , strategic and business plan management requires effective communication between different departments.

This includes different strategy managers as well as strategic and operational teams. You also need to make sure that, when you are using either plan, you find the right balance between flexibility and strict adherence to the plan. With strategic planning, this means constant strategy evaluation to assess your tactics and success.

Can strategic planning and business planning be used simultaneously?

In many hospitality careers ,  you’ll want to juggle growth and new directions, so you could end up using both planning types. However, it’s most common for the two to be distinct. This is because you’ll generally be using a business plan only when you are starting a new venture.

What are the career prospects in strategic and business planning?

There are plenty of options for what you can do if you have skills in strategic planning and business planning. Almost every management role will require these planning skills, including how to write strategic planning documents and measure success.

If you want to work in the hospitality sector, you could look into hotel planning and other careers with a business management degree . These will enable you to grow and nurture a business, but there is also a lot of scope to start your own business. Great planning skills can give you a real competitive advantage.

World-class degrees for making your mark in business

If you want the skills and insider knowledge to guide a business from inception to expansion, our courses provide expert teaching and real-world experience.

What skills do I need for a career in planning?

If you want to work in planning and management, you should work on various skills, such as:

• Decision-making
• Analytical skills
• Risk assessment knowledge
• Market analysis and forecasting
• Team management
• Communication, both written and verbal
• Organization

What qualifications can help with a career in strategic planning or business planning?

If you want to work in hotel planning and management, the most common route is to get a hospitality degree from a well-respected hospitality school in Switzerland . This will help you get the skills and knowledge you need to properly plan businesses as well as handle the execution of these plans.

Business degrees also teach you many transferable skills, such as good communication with your strategy team or data analysis, that you can use in almost any role in hospitality. They can also reduce the need to work your way up through the hospitality industry.

How can hospitality school help with planning careers?

Attending hospitality school can help you learn skills dedicated to hospitality as well as more general management, business and planning skills. This includes everything from how to handle a team to specifics such as hotel revenue management strategies .

If you find a hospitality school offering professional hospitality internships , you’ll also get experience in managing hotels and hospitality venues, helping you leap ahead in your career.

Hospitality degrees to kickstart your career

Our international business course combines leading industry expertise with essential internships to provide an exceptional foundation for a thriving career in the hospitality industry.

Both strategic and business planning are vital to build and grow a business. While business planning focuses on setting up the business and handling investment, vision and overall goals, strategic planning concentrates on growing the business and processing operational efficiency and resource allocation on a longer-term basis.

If you want to learn how to develop a hotel business plan  or manage a hospitality venue, one of the best ways to get started is to study for a hospitality degree. This will give you hands-on experience of the strategic planning process or business management as well as the skills you need to succeed.

Photo credits Main image: Westend61/Westend61via Getty Images

HOSPITALITY UNCOVERED

Hospitality careers

BUSINESS OF LUXURY

LIVING WELL

WELCOME TO GLION.

This site uses cookies. Some are used for statistical purposes and others are set up by third party services. By clicking ‘Accept all’, you accept the use of cookies

Privacy Overview

AI ASSISTANTS

Upmetrics AI Your go-to AI-powered business assistant

AI Writing Assist Write, translate, and refine your text with AI

AI Financial Assist Automated forecasts and AI recommendations

TOP FEATURES

AI Business Plan Generator Create business plans faster with AI

Financial Forecasting Make accurate financial forecasts faster

INTEGRATIONS

QuickBooks Sync and compare with your QuickBooks data

Strategic Planning Develop actionable strategic plans on-the-go

AI Pitch Deck Generator Use AI to generate your investor deck

Xero Sync and compare with your Xero data

See how easy it is to plan your business with Upmetrics: Take a Tour  →

AI-powered business planning software

Very useful business plan software connected to AI. Saved a lot of time, money and energy. Their team is highly skilled and always here to help.

- Julien López

BY USE CASE

Secure Funding, Loans, Grants Create plans that get you funded

Starting & Launching a Business Plan your business for launch and success

Validate Your Business Idea Discover the potential of your business idea

E2 Visa Business Plan Create a business plan to support your E2 - Visa

Business Consultant & Advisors Plan with your team members and clients

Incubators & Accelerators Empowering startups for growth

Business Schools & Educators Simplify business plan education for students

Students & Learners Your e-tutor for business planning

• Sample Plans

WHY UPMETRICS?

Reviews See why customers love Upmetrics

Customer Success Stories Read our customer success stories

Blogs Latest business planning tips and strategies

Strategic Planning Templates Ready-to-use strategic plan templates

Business Plan Course A step-by-step business planning course

Help Center Help & guides to plan your business

Ebooks & Guides A free resource hub on business planning

Business Tools Free business tools to help you grow

Business Plan Vs Strategic Plan: What’s the Difference?

Business Plan Template

• May 6, 2024

Strategic and business plans are both different sides of the same coin! Some entrepreneurs use it interchangeably but they have a significant difference.

Now the question might arise, when to use which, and what is the difference, right?

Worry not—we’re here to guide you through it all. In this article, we’ll learn the differences between a business and a strategic plan, understand their meanings, and know how to use them effectively.

So, let’s kick-start this journey by exploring a business plan vs. strategic plan . Get ready to unlock everything about both!

What is a Business Plan?

A business plan is a written document that outlines a company’s goals, timeline, finances, and strategies for achieving them. It provides a roadmap for the future of your business.

Generally, it includes sections such as an executive summary, company description, market analysis, products & services, financial plan, and much more. Your business plan is a must-have document when it comes to securing funds for your business.

Okay! And what about the strategic plan?

What is a Strategic Plan?

A strategic plan is a document that communicates an organization’s vision, mission, and core values. It focuses more on specifics about how a business will operate and generate profits.

Strategic plans are typically long-term documents, covering a period of three to five years or more, and are used to guide decision-making and resource allocation within the organization.

Key Difference Between a Business Plan and Strategic Plan

It was all about the basic definition of business and strategic plan. Now, let’s compare them side-by-side to understand their use case, and how they are distinct from each other:

Level of detail

A business plan is usually considered a granular and in-depth document. It outlines the tactics and actions necessary to achieve operational objectives. Business plans are usually 15-30 pages long .

A strategic plan typically provides a high-level overview of the organization’s goals and the strategies to achieve them without going deep into the business operations. Strategic plans are generally 10-15 pages long, but the length depends on various factors of the business.

Time horizon

A business plan focuses on a shorter time frame, often one to three years, and is more operational. It focuses on things like product development, marketing strategies, financial projections, etc.

A strategic plan answers the questions related to a longer time frame, usually five or more years. It sets the direction of the company for the future by mentioning the mission, vision, and objectives.

Audience and use

A business plan is primarily used to attract investors, bankers, or partners for securing funding or partnership.

Whereas, internal members, such as senior management or a board of directors, use a strategic plan to guide decision-making.

A business plan explains all the sections like market analysis, products & services, management team, target market, sales & marketing strategies, financial projections, and more.

While a strategic plan has a vision statement, mission statement, core values, action plans, and more. Some of the strategic planning models are SWOT analysis , PESTLE (political, economic, social, technological, legal, and environmental) analysis, Porter’s five forces, and more.

Entrepreneurs and startups use business plans to create a strategy to build a successful business. It is used for assessing how marketable a business idea is and also helps them gauge how they can get the funding to turn this idea into reality.

Established companies use the strategic plan to give them a clear direction for where they want the company to change or develop.

For instance, decisions like changing the products they provide or moving into a nonprofit can be made with the help of a strategic plan.

Create winning business and strategic plans with our

AI Business Plan Generator

Plans starting from $7/month

Now that we know the key differences between strategic and business planning, let us understand the common pitfalls. 

Common Pitfalls in Execution

Despite the benefits of business planning as well as the strategic planning process , organizations often face many challenges in their strategy implementation. Here are some common pitfalls:

Disparity between strategy and execution:  Without effective execution, even the strategic plan that is the most well-crafted may fail to give results.

Lack of alignment:  Failure to align the business plan with strategic objectives often results in missed opportunities and misallocation of resources.

Inadequate marketing analysis:  Insufficient analysis of external factors leads to missed opportunities or strategic blind spots that can cause more harm to a company.

To overcome these challenges, organizations need to foster a culture of communication, continuous improvement, and collaboration.

The Bottom Line

There is no one-fits-all solution when it comes to this decision! Choosing between a business and a strategic plan solely depends on the needs & objectives of your business.

Moreover, know this planning is not a one-time process! As your business evolves and external factors change, you will need to revise your plans accordingly.

A business and a strategic plan are crucial for guiding any organization to success. By using both methods effectively, businesses can navigate uncertainties, achieve steady growth, and grab opportunities in a constantly changing business world.

Build your Business Plan Faster

with step-by-step Guidance & AI Assistance.

Frequently Asked Questions

Which comes first, strategy or business plan.

Before making a business plan, you should create a strategic plan. A business should know all its long-term growth goals before actually defining how to reach them.

So, first, create a strategic plan, then a business plan, and then edit both of them when needed according to the circumstances.

Can a business plan be used for a strategic plan?

No, both are different. While a business plan details the operational and financial aspects of a business, a strategic plan defines goals and the strategies to achieve them. Therefore, serving different purposes, a business plan can not be used to make a strategic plan.

Is there a sample business plan or strategic plan template available online?

Yes, there are many sample business plans and strategic plan templates available online. You can find such templates on:

• Upmetrics – An AI-powered business plan software
• Small Business Administration Website
• SCORE business plans

Do I need both a business and strategic plan?

Yes, both a business plan and a strategic plan are essential for a company’s growth. A business plan focuses on the initial stages of a business, aiming to get it started. In contrast, a strategic plan focuses on the business’s distant goals and strategies to achieve them.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

Reach Your Goals with Accurate Planning

Business Plan vs. Strategic Plan: What’s the Difference?

by Ken D. Foster | Jul 26, 2023 | Business

A business plan and a strategic plan are both essential frameworks for any type of business. Whether you want to start your business or grow your existing one, formulating these plans is necessary to achieve your business goals.

A business plan and a strategic plan serve different purposes and focus on various aspects of a business. In this article, let’s explore the differences between the two.

Table of Contents

What Is a Business Plan?

A business plan is a comprehensive framework that outlines a company’s vision, mission, and goals, as well as how they plan to achieve them. It is usually created when starting a new business or making significant changes to an existing business.

A business plan helps business owners and management to stay focused on their objectives.

What Is a Strategic Plan?

A strategic plan, on the other hand, is a long-term, high-level framework that outlines a company’s strategic direction and goals. It focuses on defining a company’s vision and implementing strategies to achieve it. A strategic plan is made for an extended period, usually five years.

A strategic plan is developed by a company’s owners, top-level executives, and board members.

Difference Between Business Plan and Strategic Plan

Here are the differences between a business plan and a strategic plan.

Key Elements of a Business Plan

• Company Description: Detailed information about a company’s history, mission, and objectives.
• Executive Summary: A concise overview of the entire business plan, highlighting the most critical points.
• Products (Or Services): A description of the product or services offered by a company. 
• Market Analysis: Analysis of the target market, industry trends, and competitors.
• Marketing and Sales Strategy: An overview of how a company intends to market and sell its products.
• Operational Plan: Details about the day-to-day operations, resources, and logistics.
• Financial Projections: Forecasted financial statements, including revenue, expenses, and cash flow.

Key Elements of a Strategic Plan

• Vision and Mission: Detailed information about the purpose and aspirations of a company. It should also include the core values of a company. 
• SWOT Analysis: An assessment of a company’s strengths, weaknesses, opportunities, and threats.
• Strategic Goals: The objectives that a company aims to achieve in the long term. The goals set should be specific and measurable. 
• Strategic Initiatives: The actions a company should undertake to achieve its strategic goals. Make sure to also formulate the Key Performance Indicators (KPIs) to track progress. 
• Resource Allocation: Identifies the necessary financial, human, and technological resources for implementing the goals. 

A business plan is a comprehensive framework that provides a detailed roadmap for the entire business, while a strategic plan is a high-level framework that focuses on defining the long-term direction and objectives of the company. Both plans are vital for business success and should complement each other to make a company achieve its goals.

If you want help to frame a business plan or strategic plan for growing your company, book a coaching session with Ken D Foster . Ken has over 35 years of experience in personal and business development. He can help you define your company’s vision and accelerate its growth.

Recent Posts

• 22 Questions to Get to Know Yourself Better
• 8 Challenges Small Businesses Face
• The Importance of Interpersonal Skills in Leadership
• 9 Powerful Robin Williams Quotes
• How to Escape the Matrix and Become Rich

Latest News and Articles

Subscribe and get exclusive tips from Ken to accelerate your business and life.

Grow Your Business

Strategic Planning vs. Business Planning. Yes, There’s a Difference.

Too often when companies embark on a strategic plan, the results are disappointing. A common error involves assembling a long-term business plan, calling it a strategic plan, and complaining about how the exercise is mostly ‘financial,’ with limited use beyond the one-time rollup.  In fact, a 2018 Chief Strategy Officer Survey noted, “Despite the vast effort put into the strategic planning process – 82% of survey participants say that it is a ‘very important’ area – most CSOs are dissatisfied with its output.”

So, what’s causing these frequent unsatisfactory results?

In “ Strategic Planning: You’re Probably Doing It Wrong ,” I outline five common pitfalls of flawed strategic planning efforts. As important as avoiding these pitfalls is understanding there is a significant difference between a strategic plan and a business plan.

Strategic plans center on choice around a company’s most critical go-forward imperatives, with resource tradeoffs inherent in those choices. They are about saying No more than saying Yes to business-as-usual funding and selective investments. Because of their very mechanics, business plans cannot contemplate these tradeoffs.

But first, what is Business Planning and its purpose?

Business Planning

Business planning processes – whether one-year Annual Operating Plan processes or longer-term three-to-five-year plans – are financial vantage points by product and service line, by market. They answer the What for a business: What financial outcomes are you targeting or projecting? Yet, they do little to answer the How , beyond calling out clear expectations and gaps.

As an FP&A discipline, business planning is useful for several purposes:

• Topline and Profit Targeting: Painting an aspirational and more realistic targeted revenue and profit trajectory by business segment and by market. Such targets are assigned to leadership incentive plans, both on one-year and three-year (as in LTIP) bases.
• Gap Identification: Highlighting, with current information, where certain business segments or markets will have a significant gap vs. aspiration or recent history. These gaps elevate critical operational and marketplace challenges.
• New Product Lines/New Market Expectations: Bringing attention to larger unknowns within the core business, such as new product line launch expectations or emerging market revenue trajectory. While uncertain projections, their identification is helpful in revealing higher-volatility aspects of a business.
• Margin and Profit Mix : With segment-level profitability assumptions, the above margin-weighted aspirational targets and more realistic projections can highlight where natural business evolution will enhance or pressure targeted profitability. Typically, a growing, subscale emerging market presence, as well as new product launches, will pressure profit mix and highlight the need for higher profitability in the incumbent core business.
• Long-Term Overhead Budgeting: The above topline projection and profit mix analysis can appropriately shape the scope and scale of a business’ total budget. However, business planning exercises rarely solve how this budget should be allocated between core and adjacent business opportunities, a common frustration of business planning.

With all the framing benefits above, misunderstanding a business plan as a strategic plan can yield damaging outcomes. For example:

• Multiplication rather than Real Choice among strategic imperatives : Frequently, the financial exercise in a business plan paints an aspiration, and business segment owners know a business-as-usual approach will not realize the intended revenue and profit outcomes of that aspiration. This causes business owners to launch more product lines or services, adding multiplicative complexity to the enterprise. Instead, more strategic, enterprise-wide discussions are required to appropriately callout why the core business-as-usual will not generate the aspiration, and what choices must be made to address challenges and change the trajectory, including drawing resources away from business-as-usual pools. Launching more offerings in more markets is not typically an optimal answer.
• Perpetuation of Misalignment : Like an Annual Operating Plan, multi-year business plans tend to engage the commercial P&L owners of the business on inputs within their respective business segment siloes. Functionally, they fail to force cross-business tradeoffs and choices. Worse, they may reinforce a business segment owner’s perception that they have their multi-year budgets as a given reflection of their numbers submission, without a transcendent view on funding and reallocation around decisive imperatives.

Spotlight Example : Nearly all branded consumer businesses are wrestling with how to grow their owned omnichannel differently in the 3-5 year horizon, to offset the pressure from wholesale channel consolidation, and from the Amazon price-matching, profit pool compression effect. Many of these businesses construct multi-year business plans annually without addressing the difficulties of the ‘How:’

• What new capabilities are required to build a different omnichannel approach,
• With what upstream product development to reinforce one’s own omnichannel offering,
• With what re-prioritization and de-prioritization of wholesale partners, and
• With what reallocation of funding from the core business?

When businesses do plan for bolder omnichannel plays, they often do so without a choice-driven reallocation.   Real, sustainable choices come in reallocating product development, field sales, and marketing funding from traditional wholesale channels, amplifying select product line offerings to align with consumer shifts and to drive traffic to preferred channels, including owned and more advantageous omnichannel endpoints than where that traffic will otherwise naturally migrate.

None of the above challenges get solved in a business plan, and business planning in the absence of strategic planning may make certain outcomes worse .

How do organizations move from Business Plan to decisive Strategic Planning outcome?

Initially, divorce the Business Plan entirely and attack the top three to four-year enterprise challenges.

Decouple the strategic plan from a multi-year business planning exercise. Instead, ask each of your business leaders to address corporately defined (by the CEO management team or CSO consortium) top strategic questions facing the company over the next three to five years. Don’t ask for more than a handful of areas; even three to four is a heavy ask. Their considerations should contemplate the a) magnitude of the challenge, b) likely solutions, c) magnitude of the response, and d) potential capability build/partnerships and funding requirements inherent in that response. With that thought pattern, assemble your business leaders in an effort that begins with enterprise-wide trade-offs and debate, rather than within silo business plan projections and incremental solutions.

Crystallize solutions to enterprise challenges, translating them into strategic imperatives.

There are a variety of approaches to ensure the core leadership team is informed, derives realistic solutions, and makes hard decisions against the top enterprise challenges, whether with mutual presentation, small-group forums, facilitated debates, outside support, or other mechanisms. Whatever the strategic planning methodology, aligning executives around strategic choices is not only a necessity for strong strategic planning, but also a pre-requisite for linking any business plan process to a decisive strategic direction.

With strategic imperatives in place, re-visit the Business Plan and link for accountability .

Once the mandate of the top strategic imperatives is clear – with the corresponding magnitude of solution required – only then can a business plan effectively be commissioned. Often, these strategic imperatives necessitate organizational change and a different structure for constructing the business plan. Regardless of whether there is organizational change, the business plan should include critical forcing mechanisms and reallocation targets upfront, prompting business owners to understand that business-as-usual budgets will not be available for select aspects of the business. Their business plan projections should reflect the corresponding impacts, both on the benefits of the focal imperative activations and on the businesses receiving less resource. Seeing decisive strategic choices translate into the more visible “cold hard steel” of the multi-year business plan will bring them to life. This is where the business plan graduates from a modest-value financial exercise to a rallying force behind the strategic imperatives.

In business as in life, one would never define the “what” without first considering the “why” or “how.” Yet that is what flawed multi-year business planning forums may do. Contact HighPoint to move from business planning frustration to impactful strategic planning.

Justin Moser is COO of HighPoint Associates , a strategy consulting firm headquartered in El Segundo, CA. Previously, Justin served as Group CFO and SVP at Mattel over its global commercial finance, brand finance, FP&A, and Investor Relations functions, and headed its North American Online/Amazon Sales and Corporate Strategy teams. He began his career as a Consultant with Bain & Company.

• Get Started

Home >> #realtalk Blog >> Manage a business >> Business plan, strat…

Business plan, strategic plan, operational plan: why all 3 are important

By Homebase Team

When you’re in the early stages of running your business, it’s easy to get lost when thinking about all the things you need to organize in order to grow. This is where making a business plan, strategic plan and operational plan comes into play. 

A business plan outlines the “what” and “how” of your business, while a strategic plan sets the long-term vision. Operational plans dive into day-to-day tasks. We’ll explain their roles, differences, and how they work together. 

In this post, we’ll break down these concepts, explain the difference between them and why all three are important.  By understanding these plans, you’ll gain the tools to steer your ship, set big goals, and navigate the everyday waters with confidence and success.

Get your team in sync with our easy-to-use, all-in-one employee app.

What is a Business Plan?

A business plan, just like a blueprint for building a house, shows the general path for your business to follow. Besides the essential facts, it’s the tool that conveys your vision to potential investors, partners, and your own team.

A business plan is your business’s roadmap to success. It’s a detailed guide that helps you understand where your business is headed and how to get there. In this plan, you outline your business goals, what products or services you offer, who your customers are, and how you’ll reach them. 

Writing a business plan is one of many tips for starting a business you can tap into to get off the ground. 

Your business plan includes financials 

Your business plan also includes financial details, like how much money you’ll need and how you’ll make money. It’s important to outline everything because it helps you make smarter decisions, attract investors or loans, and stay on track as you grow. 

Think of your business plan as a game plan that keeps you focused and prepared for whatever comes your way.

What is a Strategic Plan?

A strategic plan is a detailed plan that lays out where you want your business to be in the future and how you’ll get there. In this plan, you outline your long-term goals, the actions you’ll take to move towards those goals, and the major steps to reach those goals.

A strategic plan helps you make smart choices about things like which products to focus on, how to stand out from competitors, and where to expand. It’s like your compass for making decisions that match your vision. 

Goal setting in your strategic plan 

Setting SMART goals (Specific, Measurable, Achievable, Relevant, Time bound) is a clear way to put your strategic plan into actionable tasks. 

This plan also keeps you flexible – you can adjust it as your business grows and the market changes. By having a solid strategic plan, you’re setting yourself up for success, making sure all your actions lead to reaching those big dreams you have for your business.

What is an Operational Plan?

An operational plan is where the nitty-gritty of running your business happens. An operational plan is like your playbook for your day-to-day tasks . 

It spells out exactly how you’ll execute your strategies outlined in your strategic plan and reach your goals outlined in your business plan.

In your operational plan, you break things down: who’s doing what, when and how. It’s like giving clear instructions to your team on tasks, deadlines, and responsibilities.

From managing the kitchen in a restaurant to handling customer orders in a salon, it’s all in the operational plan.

It also covers how you’ll maintain quality, manage resources, and handle any bumps along the way. Think of it as your action plan – turning your grand ideas into reality, step by step. 

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

Business plan.

• Focus: This is the big blueprint for your entire business. It explains what your business does, who your customers are, how you’ll make money, and your long-term goals.
• Timeframe: Usually covers a few years and includes financial projections.
• Use: It’s your pitch to investors and guides your business decisions.

Strategic plan:

• Focus: This is the long-term vision. It’s about where you want your business to go and the major steps to get there.
• Timeframe: Often covers 3-5 years.
• Use: It guides big choices like expanding, new products, and setting direction.

Operational plan:

• Focus: This is the detailed game plan for your day-to-day business operations. It’s about how you’ll execute your strategies.
• Timeframe: Covers the short term, usually a year or less.
• Use: It’s the instructions for your team on tasks, deadlines, and responsibilities.

In short, a business plan is your overall roadmap, a strategic plan sets the direction for growth, and an operational plan makes sure everything runs smoothly day by day. They work together to keep your business on track and thriving.

Why is Having a Business Plan, Strategic Plan and Operational Plan Important?

Having a business plan, a strategic plan, and an operational plan is like having a superhero trio for your business. Here’s why they’re so important:

Business Plan:

• Clarity: It gives you a clear path for your business journey. You know what you’re doing, who your customers are, and how to make money.
• Guidance: It helps you make smart choices and stay on track to reach your goals.
• Attractiveness: Investors and lenders like to see a solid plan before supporting your business.

Strategic Plan:

• Direction: It’s like a compass for your long-term vision. It tells you where your business is headed and how to get there.
• Big Goals: It sets ambitious goals like growing big, launching new things, and standing out from the crowd.
• Adaptation: It helps you adjust when things change, keeping your business aligned with your dreams.

Operational Plan:

• Smooth Sailing: It’s your step-by-step guide for daily tasks. You know who does what and when.
• Efficiency: It makes things run smoothly and helps you manage resources well.
• Quality Control: It ensures your products or services are top-notch and consistent.

Together, these plans are like your business’s superpowers. They make sure your business is not just surviving, but thriving..

Strategic Plan Example

Let’s say your restaurant, Brenda’s Bistro, wants to become the ultimate dining spot in your community, celebrated for your fantastic dishes and top-notch hospitality.

Brenda’s Bistro’s mission is to create unforgettable dining experiences by offering a diverse menu crafted from locally sourced ingredients, while delivering outstanding customer service.

• Achieve a 20% increase in revenue within the next two years.
• Expand the customer base by targeting families and young professionals through special promotions.
• Introduce a new themed menu every season to keep customers excited and engaged.

Strategies and Initiatives:

• Strengthen Brenda’s Bistro online presence by sharing engaging content on your website and social media accounts regularly.
• Partner with local farmers to ensure your ingredients are fresh, sustainable, and support the community.
• Launch loyalty programs and offer discounts to encourage repeat visits.

Key Performance Indicators (KPIs):

• Monitor revenue growth every quarter to track progress toward your goal.
• Collect customer feedback through surveys and online reviews to measure satisfaction.
• Evaluate the success of your seasonal menus based on the number of orders and positive feedback.

How to Make a Strategic Plan

Crafting a strategic plan isn’t a one-size-fits-all deal; each company’s unique goals require a tailored approach. 

Let’s break down the essential steps to shape that core plan.

1. Gather the key people

Start by bringing together the important voices. This usually includes your executive board, managers, and sometimes outside investors. 

Their insights and suggestions are like puzzle pieces that fit into a successful strategic plan.

2: Find your business’ strengths and weaknesses 

Your strategy needs to know where your company stands both inside and out. Begin with a SWOT analysis, checking your internal strengths and weaknesses, plus external opportunities and threats. 

Gather insights from gap analysis, looking at competitors, and listening to customer and employee feedback give you the bigger picture.

3. Set Goals

Now, create goals from all that info. Match these goals with your mission, vision, and values. 

Pick the ones that make a big impact, make sense for the long haul, and line up with your values. Examples can be reaching certain sales targets, or a certain number of followers on your business’ social media. 

4.Make a game plan 

Time for an action plan. Break down each goal into strategies, initiatives, and tactics. Depending on your goals, these could be marketing plans , tech upgrades, or smart partnerships. 

You don’t need tons of details here; that’s what the operational plan covers. Also, set up key performance metrics to measure your progress.

5. Review and and tweak

Schedule regular check-ins to review your plan. This is where you reflect and adjust if needed. Good financial info comes in handy here. 

How often you do this depends on your business’s rhythm – maybe monthly for new businesses or yearly for more established ones.

Remember, your strategic plan is your map to success. Tailor it, review it, and let it guide you toward your goals.

Now that your strategic plan is sorted, let’s dive into the power of operational planning to make those goals a reality.

How to Make an Operational Plan

It’s time to take that big-picture strategic plan and break it into doable steps. First, check out the long-term goals. 

Figure out which departments need to team up to reach which goal. Ask questions like: What kind of resources does the business already have access to? 

What’s missing? Any money financial risks coming up? This helps you see which parts of your business need a boost to hit those goals.

1. Nail down your budget

Make a budget based on what each department in your business needs to reach the big goals. What does your kitchen staff need? How about front-of-house staff?

With your match-up between goals and areas, spread your budget where it’ll give the best bang for your buck. 

Remember to keep some cash aside for surprises and changes. A solid budget is like a shield against unexpected stuff.

2. Set targets

Each goal you’re chasing needs a target. Think carefully here – not too wild that your team loses heart, but not too tiny that the big plan stays out of reach. 

Realistic targets are your secret weapon. An example target could be selling 100 orders’ worth of a certain dish by the end of the month.

3. Check in with your team regularly 

Don’t just set and forget. Schedule regular check-ins with your staff to see how things are going. 

Are you hitting those targets? Are things humming along? 

These feedback sessions with your employees are like checkups for your plan. If things are off, you can tweak the plan to get back on track.

Homebase’s free mobile app has a built-in messenger tool to make it easy to stay connected. Send messages to individuals, groups, or your entire team.

3. Stay open and data-driven

Keep communication flowing during reviews. And don’t forget the data – it’s your treasure map. 

Numbers show where you’re doing well and where there’s room to improve. Use your POS software or an employee management tool like Homebase to help you make data-informed decisions on how to improve your business operations. 

With Homebase’s workforce forecasting and smart scheduling tools, you can save on labor costs for your business. 

With all this, your operational plan becomes a real powerhouse, making sure your business charges ahead toward those big dreams.

Make Your Business Plan, Strategic Plan and Operational Plan Work for You

In the bustling world of business, having a roadmap is essential for success. The triumphant trio of a business plan, strategic plan, and operational plan work together to steer your ship towards greatness. 

These plans aren’t just fancy paperwork – they’re important tools that guide your every move. 

By understanding each plan’s role and significance, you’re armed with the superpowers needed to navigate the complex business waters. 

A business plan provides clarity, a strategic plan offers direction, and an operational plan ensures smooth sailing. Together, they fuel your business’s journey from survival to thriving, making sure you’re not just a player in the game, but a true champion.

Here are 10 small business tools you can use to put these three plans into action.

FAQs About Business Plan, Strategic Plan and Operational Plan

Why do i need a business plan.

A business plan acts as a roadmap for your business journey. It outlines your goals, customers, and how you’ll make money. It’s crucial for attracting investors and making smart decisions. 

What’s the purpose of a strategic plan?

A strategic plan sets your long-term vision and goals. It guides big choices like expanding and standing out. It’s like a compass, helping you stay on course towards success.

What’s the difference between a strategic plan and an operational plan?

While a strategic plan sets long-term goals, an operational plan focuses on day-to-day tasks. It’s like a playbook that tells your team exactly what to do to reach those goals.

Remember:  This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.

Related posts

September 6, 2024

How To Calculate Annual Income: A Complete Guide + Examples

Whether you’re hiring for your small business or managing your own finances, knowing how to calculate annual income is a…

Salon Booth Rental: 3 Steps to Maximize Profit in 2024

So, you’re a new salon owner wondering whether to rent out booths to increase revenue. Or maybe you’re already renting…

September 5, 2024

How To Train Restaurant Employees: A Comprehensive Guide 

Running a restaurant is no walk in the park, which is why knowing how to train restaurant employees could make…

September 4, 2024

How to Start a Business in Oklahoma

Starting a business in Oklahoma can be an exciting and rewarding venture, but it requires careful planning and execution. You’re…

How to Do Payroll in Wisconsin

You’ve decided to handle payroll in Wisconsin. Smart move! Understanding the ins and outs of the process can save you…

How to Do Payroll in Wyoming

You’re running a business in Wyoming and need to handle payroll. You might feel overwhelmed by the different taxes and…

Subscribe to our newsletter

Looking for ways to stay up to date on employment laws and small business news?

Homebase makes managing hourly work easier for over 100,000 local businesses. With free employee scheduling , time tracking , and team communication , managers and employees can spend less time on paperwork and more time on growing their business.

• Hiring & onboarding
• Team communication
• Employee happiness
• HR & compliance
• Integrations
• Food & beverage
• Beauty & wellness
• Medical & veterinary
• Home & repair
• Hospitality & leisure
• Education & caregiving
• Contact sales
• Become a Partner
• Careers – We’re hiring!
• #realtalk Blog

• What Is TAB
• Advisory Boards
• Business Coaching
• StratPro Leadership Transformation Program
• Strategic Leadership Tools
• Our Members
• Case Studies
• White Papers
• Business Diagnostic

The Alternative Board Blog

The difference between a strategic plan and a business plan.

Every business needs a strategic plan. Every business needs a business plan. It’s knowing precisely what each plan entails and when that plan can be of most use that makes the difference between these two essential documents.

Let’s start by defining the purpose behind each type of plan. This can help both budding entrepreneurs and veteran CEOs avoid the mistake of pursuing the wrong kind of plan at the wrong time in the growth cycle of their companies.

The Strategic Plan

As we have noted before, a strategic plan “is a written document that points the way forward for your business.” The focus of a strategic plan can include (but isn’t limited to):

• Expanding business operations
• Reaching into new market segments
• Solving organizational problems
• Potential restructuring a business

By staying focused on your original purpose, goals, and objectives, strategic planning reintroduces you to “the big picture.” It’s the basis for business owners to achieve their vision, which they communicate to stakeholders in a strategic business plan and program.

A strategic plan serves as a roadmap for determining what will likely lie ahead for your business in the next 3-5 years, while also including a series of actions or activities that can turn strategy into operational reality.

Want additional insight? Read 4 Step Guide to Strategic Planning now to learn more

The Business Plan

Generally speaking, a business plan is needed when a company is in its earliest phase of growth. This plan offers a description of how your business will operate, its objectives for growth and financial success, and how it aims to get there. Essentially, it articulates the  why  behind a business. Key elements include:

• Executive summary and mission statement
• Projected staffing and equipment needs
• Short- and long-term marketing strategy
• Financial statement, including anticipated startup expenses and capitalization
• Outline of management structure and operational processes

A business plan “is a broader, more preliminary document that sets your course when your company may still be nothing more than a twinkle in your eye,” notes BDC of Canada. This plan “not only accurately summarizes what your business is all about, but why it’s a viable proposition.”

Strategic Business Planning

Strategic planning is the systematic process for developing an organization’s direction. This includes pinpointing objectives and actions required to achieve that future vision, and metrics to measure success.

A business plan, as described by the Center for Simplified Strategic Planning, Inc., aims to define “the initial goals and objectives of the company, its structure and processes, products and services, financial resources [and] all of the basics that go into forming a company ” and getting it up and running.

TAB offers its members a different kind of approach— strategic business planning . It’s the basis for business owners to achieve their vision, which they will then communicate to stakeholders in a strategic business plan and program.

Action steps embodied in a strategic business plan include:

• Understanding your business. Assess where your business is today. Review core business information and revisit your vision, mission statement, and core values.
• Analyzing your strengths, weaknesses, and threats. Conduct a SWOT analysis to evaluate where your business is operating at peak efficiency and where organizational weaknesses (and threats from competitors) might stunt future growth.
• Defining objectives and set goals. Drill down into specific objectives that will help you achieve your vision—everything from developing new marketing strategies and launching a new product to re-allocating key financial resources.
• Putting the plan in action . Take action steps to translate the plan from paper to reality. Break tasks down into small steps, assign a responsible party to be accountable for each task, and establish a schedule for reviewing your overall plan on a regular basis.

As we enter into a new year, strategic business planning is more urgently needed than ever before. Want to learn more? Register for our free TAB white paper, “4 Step Guide to Strategic Planning.”

Read our 19 Reasons You Need a Business Owner Advisory Board

Written by The Alternative Board

Related posts, seasonal swot analysis: reevaluating strengths, weaknesses, opportunities, and threats, unlearning conformity: how to overhaul old business paradigms, top 3 strategic musts for the coming year, 5 “must-have” elements of a strategic plan, what does the future of remote work look like, tips on future-proofing your business, what can predictive analytics do for your business, subscribe to our blog.

• Sales and marketing (140)
• Strategic Planning (135)
• Business operations (129)
• People management (70)
• Time Management (52)
• Technology (41)
• tabboards (39)
• Customer Service (38)
• Entrepreneurship (36)
• company culture (27)
• businessleadership (26)
• Business Coaching and Peer Boards (24)
• Money management (24)
• employee retention (23)
• Work life balance (22)
• business strategy (21)
• Family business (17)
• leadership (15)
• communication (13)
• human resources (13)
• employee engagement (11)
• employment (11)
• businesscoaching (10)
• strategy (10)
• innovation (9)
• productivity (7)
• remote teams (7)
• strategic planning (7)
• adaptability (6)
• artificial intelligence (6)
• cybersecurity (6)
• professional development (6)
• salesstrategy (6)
• businessethics (5)
• leadership styles (5)
• marketing (5)
• networking (5)
• peeradvisoryboards (5)
• socialmedia (5)
• Mentorship (4)
• branding (4)
• business vision (4)
• employeedevelopment (4)
• hiring practices (4)
• supplychain (4)
• Planning (3)
• collaboration (3)
• culture (3)
• environment (3)
• future proof (3)
• newnormal (3)
• remote work (3)
• sustainability (3)
• work from home (3)
• worklifebalance (3)
• workplacewellness (3)
• business owner (2)
• customerengagement (2)
• ecofriendly (2)
• globalization (2)
• recession management (2)
• salescycle (2)
• salesprocess (2)
• seasonality (2)
• #contentisking (1)
• #customerloyalty (1)
• accountability partners (1)
• blindspots (1)
• building trust (1)
• businesstrends (1)
• customer appreciation (1)
• data analysis (1)
• digitalpersona (1)
• exitstrategies (1)
• financials (1)
• globaleconomy (1)
• greenmarketing (1)
• greenwashing (1)
• onlinepresence (1)
• post-covid (1)
• risk management (1)
• riskassessment (1)
• social media (1)
• successionplanning (1)
• talent optimization (1)
• team building (1)
• transparency (1)

Do you want additional insight?

Download our 19 Reasons Why You Need a Business Advisory Board Now!

TAB helps forward-thinking business owners grow their businesses, increase profitability and improve their lives by leveraging local business advisory boards, private business coaching and proprietary strategic services.

Quick Links

• Find a Local Board
• My TAB Login

keep in touch

• Privacy Policy
• Terms & Conditions

• Study Abroad
• Experiential Learning
• English Foundation Program
• Immersion Foundation Program
• Industry Immersion Year

• COVID-19:   LATEST NEWS

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

Mastering Strategy and Business Planning

# Academics

By Swiss Education Group

Understanding the distinctions between a business plan and a strategic plan is most important. These documents serve as fundamental tools for organizational growth and effective decision-making.

A business plan outlines a company's objectives, strategies, and financial projections, both in the short and long term. It typically encompasses an array of elements, including market analysis, product/service offerings, operational details, and financial forecasts.

In contrast, a strategic plan offers a broader perspective, the overarching direction for the organization. It articulates the vision, mission, and core values. This plan takes into account various factors such as market trends, competitive dynamics, and industry forces.

Delving Deeper: Business Plan and Strategic Plan Components

Although both a business plan and a strategic plan are indispensable for organizational success, they serve distinct purposes and focus on different facets of business operations and goals. A thorough comprehension of the primary components of each plan facilitates the crafting of a comprehensive strategy for success.

Key elements of a business plan include:

• Executive summary : A concise overview of the business, its mission, and key aspects of the plan. 
• Company description : Details regarding the organization's history, structure, and offerings. 
• Market analysis : Research findings concerning the target market, competition, and consumer needs.
• Marketing and sales strategies : Plans for promoting and selling the company's offerings.
• Operations and management : Information pertaining to daily operations and key personnel.
• Financial projections : Forecasts for revenue, expenses, and profitability.
• Funding requirements : Present and future financial needs of the company.

On the other hand, essential components of a strategic plan comprise:

• Mission and vision statements : Articulation of the organization's purpose and desired future state.
• SWOT analysis : Evaluation of the organization's strengths, weaknesses, opportunities, and threats.
• Goals and objectives : Clear, measurable targets that the organization aims to achieve.
• Strategies and tactics : Specific actions and plans designed to accomplish goals and objectives.
• Performance measurement : Metrics and key performance indicators (KPIs) utilized to assess progress.
• Resource allocation : Determination of necessary resources, including budget, personnel, and technology, required to execute strategies. 

Business Plan vs Strategic Plan

The fundamental differnce between a business plan and a strategic plan lies in their respective focuses and purposes. A business plan primarily attends to the day-to-day operations and financial aspects of a business, aiding entrepreneurs and managers in understanding operational efficacy, securing funding, and attracting investors or lenders.

Conversely, a strategic plan is predominantly concerned with the long-term direction and growth trajectory of an organization. It assists leaders in setting priorities, making informed decisions, and aligning resources to actualize the company's overarching vision.

Time Frame Considerations

Two distinct temporal strategies come into play when planning for the future of businesses: short-term planning and long-term planning. Short-term planning prioritizes immediate goals and objectives, while long-term planning contemplates the broader horizon and sets the trajectory for future endeavors.

A business plan predominantly addresses short-term goals and objectives, detailing specific steps and actions required to achieve immediate targets. Typically spanning one to three years, a business plan serves as a roadmap for the day-to-day operations of the business.

In contrast, a strategic plan adopts a more expansive approach, focusing on long-term objectives. It establishes the vision and trajectory for the organization over an extended period, often spanning three to five years or more. A strategic plan encompasses broader market trends, competitive dynamics, and overall business environment considerations, guiding decision-making and resource allocation accordingly.

Target Audience Differentiation

Each business plan and strategic plan caters to distinct target audiences with divergent informational requirements. Understanding these audiences is pivotal for crafting effective plans that align with organizational objectives and goals.

The target audience for a business plan typically comprises investors, lenders, and other financial stakeholders interested in assessing the financial viability and potential return on investment of a business venture. Conversely, the primary audience for a strategic plan consists of senior management and the board of directors responsible for steering the organization's direction and decision-making processes.

Alignment of Content and Presentation

Tailoring the content and presentation of business plans and strategic plans to their respective target audiences enables organizations to effectively communicate, secure investments, and align stakeholders toward a common vision. By ensuring alignment with organizational objectives and goals, businesses can enhance strategic execution and drive sustainable growth.

Resource Allocation Dynamics

Resource allocation constitutes a critical aspect of both business plans and strategic plans, albeit with divergent approaches depending on the nature and objectives of each plan.

In a business plan, resource allocation primarily focuses on identifying and allocating resources to support daily operations and achieve short-term goals. This encompasses financial capital, human resources, technology, equipment, and facilities. The overarching objective of resource allocation in a business plan is to ensure efficient and effective utilization of available resources to drive profitability and growth.

Conversely, resource allocation in a strategic plan entails a broader and more long-term perspective. Strategic plans are centered on defining the organization's direction and objectives over an extended period, necessitating the alignment of resources with long-term goals such as market expansion, product development, or strategic partnerships. Strategic resource allocation requires a meticulous assessment of the organization's current and future needs to allocate resources in a manner conducive to achieving strategic objectives.

A fundamental challenge in resource allocation lies in balancing short-term imperatives with long-term investments. While a business plan primarily caters to meeting immediate operational requirements, a strategic plan necessitates consideration of the long-term sustainability and growth trajectory of the organization. Striking a balance between short-term needs and long-term investments is imperative to ensure organizational stability and competitiveness in the marketplace.

Mastering Strategy and Business Planning with César Ritz Colleges

While business plans fulfil unique roles within a company's structure, they operate synergistically to form the business strategy. Business plans delve into the operational and financial blueprints of a company, whereas strategic plans provide a wider lens, outlining the organization's grand vision and pathway toward enduring growth and prosperity. Particularly within the hospitality industry, understanding these concepts is crucial for cultivating a successful enterprise. César Ritz Colleges excels in equipping students with the knowledge and skills to become adept entrepreneurs, emphasizing innovation, entrepreneurship, and business within their curriculum. The curriculum teaches the components of business and strategy and a culminating project, the business plan, teaches student how to put what they have learned into action, preparing them to lead and innovate in the exciting business environment. Through this integrated approach, César Ritz Colleges graduates are poised to achieve strategic excellence and navigate the intricate business terrain with precision and effectiveness.

Discover how you can master the art of business and strategic planning in the hospitality industry with César Ritz Colleges. Download your brochure today to set your own path toward innovation, entrepreneurship, and unparalleled success in your career.

• Pricing Customers Get a Demo
• Platform Data Reporting Analytics Collaboration Security Integrations
• Solutions Strategic Planning Organizational Alignment Business Reporting Dashboards OKRs Project Management
• Industries Local Government Healthcare Banking & Finance Utilities & Energy Higher Education Enterprise

Strategic VS. Operational Planning: The 7 Main Differences

Angel works alongside the product team to help build new features and improve customer experience.

Uncover the 7 key differences between strategic and operational planning, how each impacts your business and guides you in aligning them for success.

Table of Contents

Distinguishing between strategic planning and operational planning is crucial for organizations aiming to achieve both long-term goals and day-to-day efficiency.

ClearPoint Strategy offers a powerful platform that helps you seamlessly integrate and manage both types of planning, ensuring comprehensive alignment and execution.

In this blog, we will explore the differences and synergies between strategic planning and operational planning. As you examine these concepts, consider how ClearPoint Strategy can support your planning efforts.

Our software provides intuitive tools that streamline the development, implementation, and monitoring of both strategic and operational plans, helping your organization stay focused and agile.

See ClearPoint Strategy in action! Click here to watch a quick DEMO on the software

What is a strategic plan.

A strategic plan outlines your mission, vision, and high-level goals for the next three to five years. It also takes into account how you’ll measure those goals, and the major projects you’ll take on to meet them.

What Is an Operational Plan?

An operational plan (also known as a work plan ) is a highly detailed outline of what your department will focus on for the near future—usually the upcoming year. The plan will answer questions - who, what, when, and how much - regarding daily or weekly tasks.

Simply put, your strategic plan shares your vision for the future, while your operational plan lays out how you’ll get there on a daily to weekly basis.

Both concepts describe your company's plans for the future, but in different contexts.

Strategic & Operational Planning Examples

Take Meta, for example (formerly Facebook). The company recently announced that an important part of its strategy will be building a new computing platform called a metaverse—a shared virtual world environment.

This is a long-term goal that leader Mark Zuckerberg says is “critical to [the company’s] mission.” The creation of this new metaverse would be considered part of the company’s strategic plan.

To accomplish that goal, Meta needs to derive an operational plan outlining tasks that need to be done. Numerous components are involved in creating such a platform—everything from creating standards and protocols for the virtual world to developing the necessary hardware and software to determining how to monetize the experience, and much, much more.

Meta has to detail which specific activities its people need to do in each area and when they’ll need to do them. This operational plan will ensure they meet certain milestones and that the company continues moving in the right direction over the long term.

A simpler strategic and operational planning example: Say you have a strategic plan modeled after the Balanced Scorecard. It names the high-level goals your organization is trying to accomplish in each of the four perspectives. It also includes aligned and linked measures and projects designed to help you achieve your objectives.

Based on that strategic plan, each department in your company will then need to develop an operational plan for the projects they are responsible for to determine how the work will get done. Completing those projects will help you stay on track to accomplish your goals.

Claim your FREE eBook on 8 effective strategic planning templates here

Strategic planning vs. operational planning: 7 differences.

To clarify the concepts of strategic vs. operational—and help you put them into practice—take a look at seven of the most significant differences between the two ideas:

1. Time Period

Your strategic plan outlines long-term goals for the next three to five years. What you’ll be doing to achieve those goals in the shorter term (typically the next fiscal year) is outlined in your operational plan.

2. Modification

Your strategic plan should be fairly weatherproof, but that doesn’t mean it won’t occasionally require modifications. Evaluate your strategic plan yearly to see if it still makes sense in case of dramatic changes happening inside or outside the organization, for example, or unexpected performance results.

It’s also possible that new opportunities (or threats) may have arisen in the past year that require consideration.

In contrast, you should reevaluate your operational plan monthly. While your strategy may be able to handle the unexpected, the path to reaching your long-term goals is somewhat fluid.

The goal of your strategic plan is to outline the company’s long-term vision and how all departments should work together to achieve it. Because goals are company-focused, strategic plans are more broad in scope than operational plans.

The goal of an operational plan applies to specific departments, not the company as a whole. There can be overlap between departments, but that’s the exception rather than the rule. Large departments may require multiple operational plans.

Because of its narrower focus, an operational plan is inherently more detailed than a strategic plan—it outlines how you’re going to get it all done!

4. Plan Generation

Your organization’s high-level leadership team—the executive team or city council, for instance—is responsible for creating the strategic plan. Once it’s created, the strategic plan will be pushed forward by cross-functional teams who work together to ensure the strategy is successful.

Download your FREE 41-page Strategy Execution Toolkit for enhanced strategic performance

Every department should have a leader or team of leaders responsible for creating their operational plan. Although each operational plan is designed for a single department, its successful implementation will lead to organization-wide success.

For example, your marketing team has a set of activities they use to increase visibility. These activities should translate to more sales opportunities and ultimately more revenue for the organization (which could be goals in your strategic plan).

Having the right people in the room no matter what type of planning you are doing is key. This is especially true if your organization ever needs to adjust their strategic or operational plans because of an unexpected change in the operating environment.

The budget for your strategic plan comes from your strategic budget, not your operational budget. Your organization may implement a Strat-Ex budget that aligns part of your project budget directly to your strategic initiatives.

This is a different approach than putting a budget against each of your divisions or departments.

The budget for your operational plan comes from your department’s annual budget. If your annual department budget needs to be cut, consider which elements don’t align to your strategic plan and cut those first.

For example, if your strategic plan defines a marketing goal of establishing a strong online presence, your trade show budget should receive budget cuts before blog writing does.

6. Reporting

When you report on your strategic plan (typically both annually and quarterly), your strategic planning committee or executive team will want to look at how your company is performing on its chosen measures.

Depending on the meeting, these discussions should remain fairly high-level so you don’t get bogged down on details.

Your operational reports, on the other hand, outline hundreds of projects or tasks people in the department are working on. Monthly operational reporting meetings give the leadership—and the rest of the department—an indication of each project’s status.

Unlike your strategic report, updates on operational projects can be anecdotal or qualitative (as it’s often difficult to quantify actions that aren’t tied to measures). Some organizations have a running text commentary either in an Excel field or a Word document.

This commentary is updated weekly or monthly, even if there are no direct measures for that part of the operational plan.

Your strategic plan revolves around how your organization can be different . What sets you apart from other organizations is your mission and vision; the goals you set tie into those concepts. Thus, a strategic plan distinguishes your organization’s direction as being different from that of other companies.

In contrast, your operational plan revolves around being better operationally. If you can implement and execute your strategy efficiently and effectively, your chances of successfully reaching your business objectives increase significantly.

ClearPoint Strategy: Simplify Strategic & Operational Planning With A Single Tool

To be a strategy-focused company, you need both a strategic plan and departmental operational plans. You also need a tool to help manage these aspects.

Notice we said “a” tool—not multiple tools. Many organizations struggle to stay on top of performance in these areas in part because they’re using separate tools that create data silos, making it more difficult to see the big picture, which is simply: Are we on track to reach our long-term goals?

ClearPoint is designed to help your organization track its strategic plan. Our software also has some critical functionality that serves to help you manage your operational plan. ClearPoint is considered the most comprehensive strategy reporting software available on the market because users can:

• Link and align goals to measures and projects to see progress on their strategic plan.
• Track project statuses to see how they impact the strategic plan.
• Set up all strategic projects to track the same information for purposes of “big-picture” reporting that reveals trends and gaps.

ClearPoint also makes it easy to create and share strategy progress reports— we’ve automated 70% of the reporting process! Whether you (or your cohorts) want a quick glance at progress or a detailed report, you can get the information you need without wasting time or manpower on menial reporting tasks.

Put It Into Practice

If all this sounds like a lot of work, don’t worry—you’re probably already farther along than you think! Most departments have some form of operational work plans in place already. So you shouldn’t need to start from scratch; simply put your current plan into a framework or format that helps you perform at a higher level.

Similarly, if your company doesn’t have a fully fleshed-out strategic plan, we have you covered. By the time you’ve filled out this free toolkit, you’ll have a change agenda ready and a strategy map created—complete with your top-priority goals!

Align Strategy and Operations with ClearPoint Strategy

Maximize your organization's potential by unifying strategic and operational planning. ClearPoint Strategy provides the platform to make it happen.

Book a demo today and start your journey towards integrated excellence.

Book your FREE 1-on-1 DEMO with ClearPoint Strategy

What are the differences between strategic and operational planning.

The differences between strategic and operational planning are:

Time Frame: - Strategic Planning: Focuses on long-term goals and objectives, typically spanning 3 to 5 years or more. - Operational Planning: Concentrates on short-term goals, usually within a year, detailing day-to-day operations.

Scope: - Strategic Planning: Broad and overarching, addressing the organization’s vision, mission, and long-term direction. - Operational Planning: Narrower in scope, focusing on specific processes, tasks, and activities required to achieve strategic goals.

Purpose: - Strategic Planning: Sets the overall direction and priorities for the organization, guiding resource allocation and decision-making. - Operational Planning: Implements the strategic plan by detailing specific actions, resources, and timelines.

Level of Detail: - Strategic Planning: High-level, with broad objectives and key initiatives. - Operational Planning: Detailed, with specific tasks, timelines, and responsibilities.

How are strategic plans and operational plans related?

Strategic plans and operational plans are related in that:

- Alignment: Operational plans are designed to achieve the goals and objectives set out in the strategic plan. - Implementation: The strategic plan provides the overarching framework and direction, while the operational plan specifies the actions needed to execute the strategy. - Coordination: Operational plans ensure that all parts of the organization are working towards the strategic goals in a coordinated manner. - Measurement: Operational plans include metrics and KPIs that track progress towards the strategic objectives .

What is strategic and operational planning?

Strategic and operational planning are processes that help organizations set and achieve their goals:

- Strategic Planning: Involves defining the long-term vision, mission, and goals of the organization. It includes analyzing internal and external environments, setting strategic objectives, and determining the actions needed to achieve those objectives.

- Operational Planning: Involves creating detailed plans to execute the strategic objectives. This includes defining specific tasks, assigning resources, setting timelines, and establishing performance metrics to ensure day-to-day operations align with the strategic goals.

How do strategic, operational, and tactical planning differ?

Strategic, operational, and tactical planning differ in scope, time frame, and purpose:

Strategic Planning: - Scope: Organization-wide, long-term goals and direction. - Time Frame: Long-term (3 to 5 years or more). - Purpose: Sets the vision, mission, and overarching goals.

Operational Planning: - Scope: Specific departments or functions, short-term goals. - Time Frame: Short-term (typically one year). - Purpose: Details the actions and resources needed to achieve strategic goals.

Tactical Planning: - Scope: Specific projects or initiatives, medium-term goals. - Time Frame: Medium-term (months to a year). - Purpose: Bridges the gap between strategic and operational plans by outlining specific tactics to achieve operational goals.

What are strategic, tactical, and operational decisions?

Strategic, tactical, and operational decisions vary by their focus and impact:

Strategic Decisions: - Focus: Long-term direction and overall strategy of the organization. - Impact: Broad and significant, affecting the entire organization. - Examples: Entering a new market, mergers and acquisitions, setting organizational goals.

Tactical Decisions: - Focus: Implementation of strategies through specific projects and initiatives. - Impact: Moderate, affecting specific areas or functions. - Examples: Marketing campaigns, product development projects, resource allocation for specific initiatives.

Operational Decisions: - Focus: Day-to-day operations and processes. - Impact: Immediate and specific, affecting daily activities. - Examples: Scheduling staff, managing inventory, handling customer service issues.

Latest posts

ClearPoint Strategy at the 2024 ICMA Annual Conference

The ClearPoint Strategy Success Framework: Managing Projects

The ClearPoint Strategy Success Framework: Aligning Organizations

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Strategic Planning Should Be a Strategic Exercise

• Graham Kenny

Don’t create a plan. Create a system.

Many managers complain that strategy-making often reduces to an operational action plan that resembles the last one.  To prevent that from happening they need to remember that strategy is about creating a system whereby a company’s stakeholders interact to create a sustainable advantage for the company.  Strategic planning is how the company designs that system, which is very different from an operational action plan in that it is never a static to-do list but constantly evolves as strategy makers acquire more insights into how their system of stakeholders can create value.

Over the years I’ve facilitated many strategic planning workshops for business, government, and not-for-profit organizations. We reflect on recent changes and future trends and consider how to engage with them for corporate success.

• Graham Kenny is the CEO of Strategic Factors and author of Strategy Discovery . He is a recognized expert in strategy and performance measurement who helps managers, executives, and boards create successful organizations in the private, public, and not-for-profit sectors. He has been a professor of management in universities in the U.S. and Canada.

Partner Center

• Key Differences

Know the Differences & Comparisons

Difference Between Planning and Strategy

In business, one might come across with the terms planning and strategy, end number of times. Planning is the basic function of management that tries to take a peep into the future. On the other hand, strategy is one of the components of planning and is also known as interpretative planning. The two terms have different meanings and usage in the business world. So, have a glance at the article that explains the difference between planning and strategy.

Content: Planning Vs Strategy

Comparison chart.

Definition of Planning

Planning is an organized process of thinking in advance about a future action. It means the preparation of the plan, i.e. the sequence of steps which will help in achieving organizational objectives. Planning is among the five management functions apart from organizing, controlling, motivating & leading and decision-making.

Planning is a future-oriented activity that takes place in routine decisions of a family, a friend group, a college, government and most importantly, in business management. It requires good judgment skills to choose which action is to be done earlier or later to avoid overlapping in actions.

Planning process

Planning needs goal setting for which planning needs to be done. After that, alternative courses of action are found, and finally, deciding which plan will lead to your destination successfully. It doesn’t mean that everything will go according to your plan, or it may also happen that the plan may fail midway, so the second list of plans is also prepared, which act as a complementary plan to the original plan if it fails, for achieving the goals successfully in the limited time.

The creation of complementary plans is also a part of the planning procedure. Planning needs to be flexible in nature so that any change can be done if required by the organization. With the help of planning, an organization can exercise control over the action, i.e. whether everything is going as per plan or not.

Video: Planning

Definition of Strategy

The strategy is a master game plan designed to achieve the objectives of an organization. It is a mix of competitive moves and actions made by the top-level management for the accomplishment of goals successfully. They are dynamic and flexible in nature. Strategies are based on practical experiences, not on theoretical knowledge, i.e. they are realistic and action-oriented activities. It requires deep analysis of the managers on any move or action, implementation timing, the sequence of actions, outcome, competitors’ reactions, etc.

In the business world, corporate strategies are made for the expansion and growth of entities, which include mergers, diversification, divestment, acquisition and many others. Strategies are made according to the present situations and conditions prevalent in the business environment, but it can’t be said that they are perfect because of the changing needs and demands of the people; strategies may fail.

Moreover, the market scenario will take an unexpected turn any time in the blink of an eye, and nothing lasts forever. Therefore the organization has to be ready for such unpredictable changes and develop a strategy for overcoming these situations. So, the organisation’s corporate strategy combines proactive and reactive strategies.

Video: Business Strategy

Key Differences Between Planning and Strategy

The major differences between Planning and Strategy are as under:

• Planning is anticipation and preparation in advance for uncertain future events. The strategy is the best plan chosen among the various alternatives for accomplishing objectives.
• Planning is like a map for guidance, while strategy is the path which takes you to your destination.
• Strategy leads to planning, and planning leads to programs.
• Planning is future-oriented, whereas Strategy is action-oriented.
• Planning takes assumptions, but Strategy is based on practical experiences.
• Planning can be for short-term or long-term, depending upon the circumstances, unlike Strategy, which is for the long term.
• Planning is a part of the managerial process. Conversely, Strategy is a part of decision-making.

Planning is a forethought of what is to be done in future, but Strategy is a blueprint of what you want to be and where you want to be. Both Planning and Strategy are made by the top-level managers as they know the mission and vision of the organization clearly, so they will make their plans and strategies to take a step forward towards their mission and vision. Planning is preventive in nature, whereas Strategy is quite competitive, but both aim at the optimum utilization of scarce resources.

You Might Also Like:

UCHENDU I. M. WOGU says

March 29, 2017 at 8:11 pm

Good explanation!!

Arun Kumar says

May 19, 2017 at 10:13 am

Thank you for sharing.

Dr. C. H. Rao says

December 21, 2017 at 7:03 pm

Very explicitly detailed and easily understood

Behailu says

March 27, 2019 at 1:20 pm

Good clarification!!

mikael ahmad says

May 25, 2019 at 4:19 pm

thanks for your effort.

Mohammad Halla says

June 14, 2019 at 5:42 pm

simply explained as insprational as any knowledge seeker requires to delve deeper. thank you so much

Kamaraj says

December 4, 2021 at 10:17 pm

Good comparison and examples

Denise says

June 12, 2022 at 9:56 pm

Great comparisons and examples. Simplified and made easy to understand

muhdin says

December 13, 2022 at 8:23 pm

really a good explanation

REYNALDO R CABILIN says

August 29, 2023 at 9:11 am

Thank you for your answer.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Strategy And Planning Are Both Essential … But Don’t Confuse Them

SANTA CLARA, CALIFORNIA - OCTOBER 29: Brock Purdy #13 of the San Francisco 49ers checks his playbook ... [+] during the fourth quarter of the game against the Cincinnati Bengals at Levi's Stadium on October 29, 2023 in Santa Clara, California. (Photo by Loren Elliott/Getty Images)

Corporate planning season is upon us. With only about a hundred days left in the year, execs are limbering up for the annual marathon of meetings to decide next year’s goals, metrics, and resource allocations. Even those with financial years that don’t start in January are feeling the pull to plan.

In doing so, though, they risk falling into a common trap: confusing planning with strategy.

Make no mistake, good planning is a crucial factor in any company’s success. But that planning should only be the result of a separate effort to review and revise the overall company strategy. With any luck, that strategy, in turn, grows out of a bigger vision of why the company exists and its place in the world.

Unfortunately, though, these very distinct ideas tend to get merged together under the comforting rubric of “strategic planning,” which in reality just means …planning. Strategy doesn’t get more than a cursory glance. And vision gets relegated to Super Bowl ads and success posters.

I recently had a conversation with a chief strategy officer at a media company that perfectly captured the issue. She wanted help figuring out how to confront her business’s growing competitive challenges. Core revenue is declining. New businesses have been slow to develop. And a raft of new competitors have appeared. In other words, she needed a strategy. But she needed to be finished in two weeks because that was the deadline for next year’s planning cycle.

My advice to leaders in that situation is to just go ahead with the planning, assuming whatever strategy is in place now. But once that’s underway, it’s time to take a step back and face the bigger questions head-on.

The Dangerous Comfort of Planning

Planning is the implementation of a strategy. It’s the process of agreeing and measuring specific actions, such as product launches, cost cuts, or geographical expansion, that over the next year should move an organization toward its longer-term strategic goals. My friend, the renowned management guru Roger Martin, describes planning as a “thoroughly doable and comfortable exercise” that doesn’t question assumptions.

Strategy is a very different beast. If planning is about templates and trade-offs, strategy is about insights and ideas.

A winning strategy should focus on how a business can play and win in a changing and uncertain world over a longer time horizon of 5-7 years. This makes it an inherently uncomfortable process, involving experimentation, risk, and coming face-to-face with painful scenarios such as how competitors or other threats could kill you.

Beyond that lies vision—the bigger “why” of a company’s existence. That could be a higher social purpose—such as Patagonia’s “to save our home planet”—or a more practical vision of where a company sees itself in the world over a longer time horizon stretching out a decade or more.

In short, if you know what you're going to do and when, you have a plan. If you know what might kill you and what you're going to do about it, you have a strategy. And if you know why you should even exist, you have a vision.

Strategy is the crucial bridge between vision and planning, but very few companies spend enough time on it and even fewer are really good at it. In a society that prizes doing things over learning things, planning feels good. It makes leaders and teams feel productive. It enables them to focus on the present rather than the future, which most of us are wired to do . And it’s much easier and more comfortable to tackle than the deep learning required for strategy work.

To be sure, strong planning and execution are vital qualities for businesses to have, and are more important at some times and in some industries than others. During the pandemic, many companies succeeded by just focusing on execution issues like overcoming supply chain challenges. Good planning was a differentiator.

For pharma companies Novo Nordisk and Eli Lilly, the big challenge right now is the planning and operational one of meeting exploding demand for Ozempic and Zepbound, their respective GLP-1 weight-loss drugs. Similarly, Nvidia’s main challenge now is to make enough of its GPU chips to satisfy booming demand for AI capabilities. These companies can focus on execution because they have a winning strategy.

But many companies in a range of industries are crying out for a strategy rather than a plan.

For example, dating apps are struggling as Gen Z singles desert them in droves, jaded by endless swiping and the lack of human connection provided by these sites. The Bumble CEO’s recent pitch for a near future in which personalized AI bots will “date” other users’ bots seemed tone-deaf to the fundamental reason why subscribers are leaving.

Companies like Hinge, Tinder, and Bumble don’t lack a vision—they see their place in the world as helping people to hook up and form relationships. And they have plans, which aren’t working so well. What they desperately need are new strategies centered on somehow restoring trust and humanity to the online dating experience.

Streaming platforms are in a similar mess. Many platforms spent big on content to compete with Netflix but are now losing subscribers who are overwhelmed with viewing choices and are only willing to pay for a couple of services rather than four or five. They need a strategy that differentiates themselves in a crowded market of similar services.

Why Planning Leads to Sameness

Therein lies one of the biggest problems of focusing solely on planning: when you focus solely on execution, you often end up copying the strategy of everyone around you. And that can lead to a sea of sameness.

Novo Nordisk and Nvidia may be coasting right now, but only thanks to a defining vision and strategy that were set years ago.

In Novo Nordisk’s case, the Danish firm’s development of Ozempic was born out of its decades-old push to become the leading developer of more effective ways to treat diabetes. The seeds of Nvidia’s dominance were sown by CEO Jensen Huang’s strategy of differentiating the chipmaker at least as far back as 2006 when he announced the CUDA software technology. That enabled Nvidia’s GPUs to go from chips used in video gaming to more general purpose ones that could be used to power a range of computing functions.

But no company can rest easy in the planning phase and ignore strategy for long. Novo Nordisk needs to be strategically wary of recent progress by other pharmaceutical firms to develop GLP-1 treatments that can be swallowed as pills instead of being injected. AMD’s recent $4.9 billion acquisition of AI infrastructure company ZT Systems is the latest signal that Nvidia’s dominance may be under threat and that it will need a revised strategy to defend it.

For leaders who are crashing into their annual planning cycles now, this isn’t a call to tear everything up and begin a strategy and vision quest. That would likely be a recipe for confusion and chaos. They should go ahead with the planning, but with a clear awareness that it is just planning. Planning season is upon us. But strategy and vision need their own seasons, too.

Dev Patnaik is the CEO of Jump Associates.

Playing now

Enterprise Resource Planning (ERP) explained

• Money Matters
• Technology & Innovation
• Accountants
• Strategy, Legal & Operations
• People & Leadership
• Free guides & templates

We explain the benefits of ERP systems and the different types of ERP deployment, so you can decide which approach will be the best for your business.

One of the biggest business challenges in today’s fast-paced world is maintaining real-time connection and integration between teams.

Enterprise Resource Planning  provides a foundation for business operations and growth strategies and should be a key focus for any business, especially SMEs.

The ERP software market is projected to reach a staggering $117.09 billion by 2030, in response to increasing demand across virtually all sectors such as manufacturing, construction, utilities, retail, healthcare, IT and telecoms, financial services and insurance.

In this article, we cover the main characteristics and benefits of ERP systems.

We also explain the different types of ERP deployment so you can decide which approach will be the best for your business.

After reading this article you’ll have a good understanding of what ERP is and if it’s right for your business.

Here’s what we’ll cover

What is erp, what are the key  features of erp systems, what functions does erp optimize, what are the main types of erp modules, advantages and disadvantages of erp, is erp right for my business, erp deployment models: how to roll out erp in your organization, the future of erp.

Enterprise Resource Planning, or ERP, is a process that a business can use to manage, integrate and automate the core parts of its day-to-day operations.

An ERP system is software that integrates the management of day-to-day business operations.

It’s typically made up of a central, unified database that allows information to be shared across departments such as finance, human resources, customer relations, inventory purchasing, product management, manufacturing, and sales.

This ensures that every team is working with the same data, to maintain accuracy and consistency.

On top of this, what makes ERP systems invaluable to SMEs is their ability to increase efficiency and productivity across these different teams.

This could be through the integration of various business processes, or through the automation of daily/repeatable tasks, or it could be providing real-time data insights to enable senior leadership teams to make quicker, more informed decisions.

In a recent survey, 97.7% of organizations claimed ERP improved their business processes.

“ ERP is first an attitude; second a process, and only third, a set of tools. ” Alexis Leon, bestselling author and software consultant

How did ERP evolve?

The term ERP first appeared in the 1990s , although the first electronic systems for planning resources—the forerunner of the technology we use today—emerged several decades earlier.

Initially, ERP began life as a process known as Material Requirements Planning (MRP) in the 1960s and 70s.

At the time, these systems were designed specifically to automate inventory and production planning in the manufacturing sector.

This included tasks such as calculating material requirements based on production schedules and bills of materials (BOMs).

Fast forward to the 1980s and MRP systems evolved into MRP II, which included additional functions such as finance, HR, and distribution.

By integrating these new functions, MRP II provided workers with a much more holistic view of their daily tasks, dependencies and deadlines.

By the 1990s, the technology had evolved again, into what we now recognize as ERP. At this point, they had the power to streamline and automate a far wider range of processes than ever before.

Systems started to provide a consolidated database with data flowing seamlessly across departments. This improved collaboration and ultimately, productivity.

By the late 1990s, ERP systems transitioned online, further improving collaboration between teams.

ERP systems inevitably moved towards the cloud in the mid-2000s, which brought with it further benefits such as lower infrastructure costs and scalability.

As technology progressed, ERP systems also embraced mobile technology, followed by AI and machine learning to further automate tasks and provide deeper insights through powerful analytics, giving us the ‘intelligent ERP’ we know and rely on today.

While the specific features can vary from one ERP system to the next, the main characteristics include:

Seamless integration

ERP systems store huge volumes of data in a single, unified database, ensuring de-duplication and consistency across all departments.

They also streamline processes that span multiple departments, such as order-to-cash, procure-to-pay, and production planning.

Automation as standard

ERP systems optimize workflows by automating routine tasks, reducing the manual effort required, but also minimizing the chance of errors.

This improves efficiency and frees up your teams to focus on higher-value activities.

Real-time data for real-time decision-making

ERP systems provide up-to-the-minute visibility of key business metrics, enabling managers and other stakeholders to make more informed decisions based on live information.

Scalability and flexibility

An ERP system can be scaled up or down to accommodate any changes that might occur in your business, such as a sudden spike in growth, and can easily be configured to support your business processes as they evolve over time.

Reporting and analytics

An ERP system can be used to generate comprehensive reports and analytics in a few clicks, which provide invaluable performance insights that you can use to justify budgets, identify trends, optimize processes, and drive continuous improvement for the company.

As we mentioned above, ERP systems are invaluable to any business.

Not only are they built around a robust and unified data asset, but they are also flexible in that they can sit across a number of different teams and processes and be reconfigured as those teams evolve.

Given the multitude of ERP use cases, there are many ways to categorize the various modules of an ERP system.

Each ERP module interconnects within an ERP system to provide a 360-degree view of operations, which fosters transparency and efficiency across each function as follows:

Financial management

Automates financial operations, such as budget and cash flow management and provides your teams with real-time insight into the financial status of the company to help them “make more informed decisions and optimize financial activities” .

A built-in CRM functionality helps you manage your customer data easily in one place.

This, in turn, will help you deliver far more personalized and engaging customer experiences and, ultimately, drive sales.

Streamlines the entire sales process by automating tasks including order scheduling, processing and shipping, ensuring efficiency across all sales operations.

Business intelligence

Analyze large data sets and translate them into actionable insight, giving team leaders the confidence they need to make pivotal decisions.

Human resources

Covers all aspects of your employee relations and workflows, from recruitment to retirement.

An ERP system can automate processes such as payroll, employee performance tracking, and the management of personnel data, helping HR manage the company’s workforce more effectively.

Automates end-to-end procurement and logistics processes to maximize cost savings wherever possible—invaluable when you need to negotiate more favorable terms with suppliers.

Manufacturing

Helps you plan and optimize manufacturing processes and material resources so you can stay on top of product lifecycle management, all the way from design right through to production to maintenance.

Distribution

Warehouse processes and movements, so you can respond quickly to changes in supply and demand, optimize logistics, and make sure your products are delivered on time.

Supply chain management

Streamlines logistics and reduces lead times through improved demand forecasting and inventory management.

This means you get access to more accurate and timely information, so you can continually optimize inventory levels and reduce costs.

Project management

This is a core function of an ERP system, as it sits across multiple teams and processes, and can aid project management in many ways.

For example, it can provide tools such as resource allocation, time scheduling, and risk management to help you plan, execute, and monitor project tasks more efficiently.

Marketing automation

Automates a whole host of marketing processes such as building out personalized nurture campaigns, creating relevant social media content, or measuring the impact of marketing campaigns across different channels.

Helps SMEs build and launch a fully operational B2B or B2C website, complete with integrated payment, order and inventory information feeds, so you can start selling products or services online.

As with any software, there are pros and cons for the teams who use it, and for the wider organization.

In a 2024 survey , respondents using ERP across a range of sectors reported the key advantages of ERP software as:

• Improved customer experience: 95.1%
• Standardization: 90.7%
• IT maintenance costs: 90.5%
• Productivity and efficiency: 90.4%
• Interactions with suppliers: 87.5%
• Real-time data: 86.6%
• Compliance: 83.6%
• Removing silos: 80.0%

Naturally, without having all the right tools and support in place, ERP can also present disadvantages:

Complexity and resource intensity

Implementing ERP can be challenging, time-consuming, and expensive, placing significant stress on corporate time and resources.

What’s more, ERP implementation projects can end up requiring substantial investment and effort from both a business and engineering perspective, which in turn can pose challenges in terms of deployment and management.

User adoption and training challenges

While it’s natural for users of the platform to show some level of resistance, especially during the testing phase, this can severely impact adoption and can hinder the successful implementation of the system.

What’s more, ‘training transfer’ after the ERP system has been implemented can play a crucial role in ensuring everyone uses it effectively.

In fact, according to one study, over two-fifths ( 42.7% ) of the variance in ERP training transfer can be explained by:

• Mastery goal orientation (striving to master the task according to the standards the user has set for themself).
• Computer self-efficacy (the user’s own judgment of their capability to use a computer).
• Transfer motivation (how willing the user is apply the learnings from their ERP training in their day-to-day work).

Concerns about planning and customization

The selection and implementation of ERP systems require careful consideration and planning, not least because of challenges such as issues with taxonomy or complexities when it comes to implementing a cloud ERP system, but also because of the level of customization you might need to meet the specific needs of an individual organization.

Lack of real-time ERP data

The challenges and complexities with integration can also lead to problems with data access.

In fact, data automation firm Fivetran recently reported that 99% of companies implementing ERP encounter a range of data-related issues at some point.

Meanwhile, 86% of employees say that they’d benefit from tools which make information more easily available .

Before investing in any ERP solution, it’s important to:

• Break down your business needs. Has your SME grown so quickly that you need more integrated systems, streamlined processes, and data visibility? Could your business benefit from a centralized system that connects various departments and functions?
• Familiarize yourself with the capabilities of ERP systems , such as how they can be used to automate different processes or manage your data.  Do these features align with your business objectives, and can they address your operational challenges?
• Consider the scalability of different ERP systems. Will they accommodate your business growth and expansion, as well as support future development?
• Calculate the total costs , including software licensing, customization, training, and maintenance. Does the investment align with your budget and expected ROI?
• Consider how well it integrates with your existing software applications and systems used in your organization. Can the ERP solution seamlessly integrate with other tools to ensure data consistency and efficiency?
• Evaluate the user-friendliness of the ERP system interface and its functionalities. Is it intuitive and easy for teams to adopt, with minimal training?
• Research the reputation and track record of ERP vendors in the market. Are they stable? Do they have good customer reviews?
• Look at the customization options available to tailor the solution to your specific processes and requirements. Can it be configured to align with your workflows?
• What data security measures are in place to protect sensitive business information? Does it comply with data protection regulations?
• Consider the level of support and training provided during and after implementation. Do they offer comprehensive training programs and ongoing support to assist your team?
• Evaluate the reporting and analytics capabilities to generate insights and drive informed decision-making. Does it provide you with real-time data visibility and tools for customizable reporting?
• Look for case studies of businesses that have implemented ERP systems. How have they benefited organizations in your industry?

Fundamentally, there are four distinct strategies you can choose to roll out deployment in your company.

Depending on the specific needs, size, and capabilities of your SME, as well as the complexity of the ERP you’re implementing, and of course the timeframe and budget you have available.

1. ‘Big Bang’ approach

This approach involves transitioning from a legacy system to a new system in a single switchover, with all of your team moving to the new system on a set date.

It requires extensive planning, training, and resources to ensure a smooth and successful transition to the new system.

The pros? It is typically quicker and less expensive than other methods because it involves a single, major effort rather than a series of smaller, prolonged efforts.

However, the risk is potentially higher, because it can cause significant disruptions if you encounter any problems during the transition.

To mitigate this risk, you need to be set up to handle such a sudden change and be capable of fixing issues swiftly as they arise.

2. ‘Phased Rollout’ approach

The phased approach involves implementing the new system in stages, with each stage focusing on different modules, or business functions, or locations, transitioning them from the legacy to the new system gradually.

The pros? There is less risk because any issues can be identified and resolved in one phase before you move on to the next. It also allows everyone to adapt to the new system over time.

However, it can be more costly and time-consuming, because you need to manage multiple transitions and maintain support for both the new and old systems during the implementation period.

3. ‘Parallel Adoption’ approach

This involves running both the legacy and new systems simultaneously for a certain period, which gives everyone a chance to get accustomed to a new way of working while still having the legacy system as a backup in case they encounter any issues.

The pros? It offers a safety net because you can continue to operate the legacy system if significant issues arise that prevent your teams using the new ERP system properly.

Also, you can easily compare the performance of the new ERP system with the legacy system, mitigating risks associated with a sudden switch.

However, operating two systems at once can be a drain on your resources.

What’s more, it can be confusing, and therefore inefficient, to use two systems at the same time for a prolonged period.

4. ‘Pilot Implementation’ approach

A pilot implementation tests the ERP system with a smaller subset (i.e. department or location) of your organization using it extensively before a full rollout takes place.

The pros? Similar to phased rollout, this allows you to identify any potential challenges, gather everyone’s feedback, and make necessary adjustments before you sign off on a full-scale implementation.

However, if the pilot doesn’t fully represent your business’ wider needs, issues that are specific to other areas might not be identified until later phases.

Integration with advanced technologies

Right now, AI is rolling out into our lives and workplaces faster than we can keep up and smart technologies are already being adopted into ERP systems.

In the future, however, we’ll see even more advanced integrations using AI, Internet of Things (IoT) and blockchain to further enhance their capabilities.

In fact, this new era of generative AI will enable ERP systems to provide more intelligent insights and automation in business processes.

For example, by analyzing historical data to forecast future trends and behaviors, SMEs will find particularly useful in areas such as inventory management or strategic planning.

Cloud-based ERP solutions

The adoption of cloud-based ERP systems is on the rise , allowing SMEs in particular to leverage the scalability, flexibility, and cost-effectiveness of cloud computing.

This shift will continue to grow, enabling better and quicker access to data and applications—anytime, and from anywhere.

Sustainable software

As we become more aware of the need to implement low-emission or carbon-offsetting technologies and processes, there is a growing emphasis on Sustainable Enterprise Resource Planning (S-ERP) systems to manage more sustainable business practices.

What’s more, future ERP systems are likely to incorporate more features that support environmental sustainability and green initiatives.

Meeting the needs of SMEs

As the demand for ERP soars, novel frameworks for choosing and implementing the right ERP systems are emerging to inform best practices and—for the first time—create industry standards for ERP.

These frameworks are agile to meet the needs of SMEs (or indeed global organizations), based on their sector, size, and individual objectives.

In particular, we’re seeing a growing focus on ERP implementation in SMEs , to help them overcome the challenges of today and seize the opportunities of tomorrow.

Future ERP systems will offer even more tailored solutions and frameworks designed for small , medium and large enterprises, marking a new dawn of scalable, customizable, smart business solutions for all.

In a world where technology is driving efficiencies across all pockets of the organization – from sales and marketing to finance and HR and everything in between – it’s important to embrace the right tools for the best outcomes. To find out more about how cloud solutions can help transform your business, visit Sage Intacct .

Or for more information on how to choose the right ERP software for your teams’ individual needs, visit Sage X3 .

What are the signs I need ERP software?

If your business operations are becoming too labor-intensive and time-consuming, it might be time to rethink your current systems and processes.

Start by asking yourself the following questions:

• Is my data becoming more and more fragmented?
• Do I have increasingly limited visibility into—and control over—my data and/or operations?
• Am I struggling to scale operations?
• Has my reporting become inconsistent?
• Am I feeling overwhelmed by regulatory compliance?
• Could I improve the company’s customer support capabilities?
• Are my operational costs spiraling out of control?
• Am I struggling to keep on top of inventory management?
• Are my current project management tools too basic for my needs?

If the answer to any of these is ‘yes’, it’s time to consider implementing ERP for your business.

What’s the difference between ERP and CRM?

ERP and Customer Relationship Management (CRM) both manage different aspects of your day-to-day operations, but in different ways.

The main difference is that ERP software automates back-office functions such as admin, accounting or regulatory compliance.

While CRM software automates the client-facing ‘front office’ of your business.

ERP software integrates transaction-based data and processes across your business.

This means it typically handles internal data related to product planning, cost, manufacturing, fulfillment, sales and marketing.

CRM software focuses on managing customer interactions, by processing external data related to customer accounts, lead generation, sales opportunities, and customer support.

This helps customer success teams enhance service quality, increase customer advocacy, and provide competitive advantages.

Modern ERP systems often include CRM modules to help manage customer relationships more effectively.

Therefore, opting for an ERP system with a built-in CRM module allows you to:

• Align business logic—which is already embedded in your ERP—with the more customer-focused functions of your CRM. This type of integration can add real business value because it helps to improve core metrics such as return on assets and sales.
• Manage your business opportunities .
• Accurately predict performance.
• Optimize your overall profits.

What is cloud ERP?

Cloud-based ERP refers to ERP software hosted on a cloud computing platform rather than on-site servers.

The main advantages of hosting ‘in the cloud’ include lower upfront costs, scalability, and the ability to access the platform from any location with internet access.

This means you can be agile and quickly adapt to changing needs without heavy investment in your IT infrastructure.

What’s more, cloud ERP systems are typically updated automatically by the service provider.

You know you’ve always got access to the latest features and security improvements without the need for manual intervention.

What’s the difference between ERP and financial software?

As we have gone into detail above, ERP is a system that integrates functions across an organization into a single platform.

This allows real-time data to be shared across departments.

By nature, ERP systems are scalable and customizable.

Financial software is focused specifically on the financial management of a company.

The software offers tools that assist with core accounting such as:

• general ledger
• accounts payable and receivable
• financial reporting
• forecasting

Financial management software can ensure compliance with accounting standards and tax regulations, and helps with financial reporting.

While ERP systems encompass multiple business processes across all departments, financial software is tailored to the finance department.

Subscribe to the Sage Advice Newsletter

Get a roundup of our best business advice in your inbox every month.

Browse more topics from this article

• Cloud financial management
• midsized business

Explore more wisdom

3 ways performance management has changed

Check out how shorter feedback cycles, co-creation of goals, and a focus on potential changed performance management.

More on this Topic

What is Just In Time inventory and when should you use it?

Winning attitude: 6 sporting lessons to give your business a competitive edge

Days payable outstanding – defined

Why blending tech with talent can help CFOs build the ultimate finance team 

Ask the author a question or share your advice

When you leave a comment on this article, please note that if approved, it will be publicly available and visible at the bottom of the article on this blog. Whilst your email address will not be publicly available, we will collect, store and use it, along with any other personal data you provide as part of your comment, to respond to your queries offline, provide you with customer support and send you information about our products and services as requested.  For more information on how Sage uses and looks after your personal data and the data protection rights you have, please read our Privacy Policy .

Related Categories

• Business process
• Planning globally

See advice specific to your business