The maxim, he who fails to plan plans to fail is as true in business of any size as it is in all other human endeavors.
Thank you, dear reader for bearing with me on the last two articles as I diverted twice from the earlier promise to delve into the elements of the ‘Law of MSMEs Success Foundations’-LMSF.
Micro, Small and Medium Enterprises-MSMEs are not exempt to planning if success is to be given a fairer chance to be birthed. The need for a clear Business Plan cannot be over-emphasized!
It is important to firstly be clear that an overarching Strategic Plan must precede any business plan. Strategic plan? A strategic plan is difficult to define as it is often “thrown around” at business cocktails by showy businessmen! It is only when one is asked to actually define it dawns on one that it is not a small feat to define in one or two words!
Perhaps this is when it is allowed to borrow from more enlightened management consultants and gurus.
Writing in TechTarget, a digital article by Katie Terrell Hanna, Stephen J. Bigelow & Mary K. Pratt, Strategic Planning is defined as: “A process in which an organization’s leaders define their vision for the future and identify their organization’s goals and objectives. The process includes establishing the sequence in which those goals should be realized so the organization can reach its stated vision. Strategic Planning is forward looking. It differs from traditional business planning, which typically focuses on short-term, tactical goals such as how a budget is divided up. The time covered by a Business Plan can range from several months to years. Organizations conduct strategic planning periodically to consider the effect of changing business, industry, legal and regulatory conditions.”
Well finally, this article begins to look at the first element of the Law of MSMEs Success Foundations-LMSF, namely the importance of a clear Business Plan in any undertaking! A business plan-BP is a document that explains in detail how the business model will operate in a particular year towards the achievement financial strategic objectives.
Two terms in that definition are worthy of explanation, namely Business Model-BM and Strategic Plan. A Business Model is the whole way in which the inputs of a business are actually turned saleable value in demand. In other words, a Business Model is a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.
The focus of a business plan focuses operational details and financial aspects of starting and running a business, while a strategic plan outlines the long-term vision and direction for an organization’s growth and competitive positioning. Think of the business plan as a roadmap for the immediate journey, while the strategic plan is the overall map showing where you want to end up and how to get there.
As earlier stated, a Business Plan indeed focuses on day-to-day operations, financial projections, marketing strategies, and securing funding whose purpose is to provide a detailed blueprint for launching and managing a business, often used to attract investors and partners.
The scope of a business plan is more specific and detailed, focusing on the immediate tasks and goals. For example, marketing tactics, sales targets, financial forecasts, organizational structure, and management team description.
On the other hand, a Strategic Plan focusses on the Long-term vision, competitive advantage, and overall direction for the organization or business.
The purpose of a Strategic Plan is to guide the company’s overall growth and development, ensuring alignment with its mission and values with the scope of high-level focus on the big picture and future direction.
Typically, an example of Strategic Plan talks includes reference to the Mission statement, SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), Long-term goals, and strategic initiatives.
The key differences between an SP and a BP are time horizon, scope and audience
When it comes to the time horizon difference a business plan often covers a shorter timeframe (1-5 years), while strategic plans are long-term (5+ years).
As for Scope, Business Plans are more detailed and operational, while strategic plans are broader and more visionary.
Under the Audience key difference Business Plans are often used to attract external
stakeholders like investors, while strategic plans are more internal, guiding the organization’s
leadership.
Indeed, Strategic and Business Plans are different but closely related. In my experience and business conversations those said plans are used interchangeably!
In summary, the relationship between a strategic and business plan is often informed by the strategic plan, providing the operational details necessary to achieve the strategic goals.
Business Models are the core and motivations of both strategic and business plans.
Napita mukwai!
The Author is Victor PM Nyasulu T/A VICTOR NYASULU Consultants & Partner at NS-CGMA in charge of Management Accounting. +260 955 746 997 or vpmn69@gmail.com
