We often get this question: Do we need a strategic plan or a business plan?
Frankly, they are similar in many ways, and since each plan has to be tailored to the organization it is prepared for, one can easily blur into the other. Both types of plans typically include a vision for the future, research into trends and opportunities, and, of course, clear goals and strategies to achieve that vision. Both create road maps for the future.
JVA’s Earned Income for Nonprofits workshop on February 23-24 is specifically designed for nonprofits that are exploring or expanding their social enterprise efforts to increase impact and financial sustainability, a critical component of many business and strategic plans. Find out more here.
What sets a strategic plan apart is its focus on the organization and its impact. What changes would we like to see in the world, and what should our role be in accomplishing those changes? Strategic plans are visionary documents, although they also need to be practical. Such as: what strategies do we need to pursue to find the funding we need to achieve that impact?
Strategic plans typically involve the board of directors, who contribute their knowledge about the community and the needs the organization could address. They clarify the long-term direction for the organization, often looking out five or more years.
While some strategic planning is done internally, typically, nonprofits work with a skilled consultant to facilitate the process, who brings in an outside perspective and provides best-practice techniques for strategic planning.
In contrast, the emphasis of a business plan is on the enterprise (the nonprofit or a program of that organization), and what revenues and financial condition is both desirable and achievable. It often looks at a shorter period of time, typically two to three years. It does that by carefully analyzing its likely customers, the market where it will operate, likely competitors and how feasible its goals are. It includes information on what kinds of marketing strategies will be required to attract those customers.
A business plan is very much a business-oriented document, typically less visionary compared to a strategic plan. It usually contains detailed market analysis and comprehensive financial projections. It may also include social goals (such as for a social enterprise); but ultimately, the business plan needs to demonstrate if and how the business will succeed financially. Often business plans are preceded by feasibility studies, to assess whether the proposed venture is viable or how it needs to change to become viable.
Business plans are implementation plans, and they are typically prepared by a consultant with expertise in business planning, in partnership with staff with subject-area knowledge.
The Bottom Line
Whether you are looking to create a strategic plan or a business plan, or a hybrid of the two, the bottom line is to create something that’s clear about where you are today (assessment), where you want to be at some point in the future (vision with goals), and, finally, how you plan to get there (strategies). Be sure to create the road map that works best for your organization and then follow it!