Business Plan vs Business Strategy: What You Need To Know To Keep Your Business On Track

Business Plan vs Business Strategy: What You Need To Know To Keep Your Business On Track

Business Plan vs Business Strategy: What You Need To Know To Keep Your Business On Track

27 Nov 2018

Business Plan vs Business Strategy: What You Need To Know To Keep Your Business On Track teaser

Ever heard the old saying “if you fail to plan, plan to fail”? This is never truer than in the business world. Going into any kind of business without a clearly defined plan and strategy is a recipe for failure. Both business plans and business strategies are vital for success, but what’s the difference?

While there is a lot of overlap between the two concepts, there are some crucial differences you should understand if you’re going to get them right. 

A Business Plan: is all about defining the business and assessing its viability. It includes the business idea, financial needs for starting the business, forecast sales and profitability, SWOT analysis, analysis of the target market and a go to market plan.

In addition to providing a roadmap for operating the business in its foundation years, it provides banks, lenders and investors with the information they need when making decisions about loaning startup capital to the business and its founders.

A Business Strategy: is used to provide focus and direction. It sets out a plan of action to move the organisation from where it is now to where it could potentially be in the future. It is a plan of action that organises resources (time, money and people) with the ultimate goal of growing the business. 

Your Business Strategy: A Roadmap For Growth

Once your business is up and running, your business strategy is the roadmap you should follow to achieve your growth objectives. It’s the process of figuring out where you are now, where you want to be and how you’re going to get there.

The aim of a strategic plan should be to build a sustainable competitive advantage for your business.

It needs to contain an action plan with specific activities, KPIs and due dates, and it should list exactly who’s responsible for each activity to create accountability. Doing this helps to ensure that any growth happens in a coordinated, systematic and informed way, thus giving your business the best possible chance of success.

Lots of businesses never get around to formulating a strategic plan, and that’s why lots of businesses never grow and achieve the levels of success that they hope for. A business plan will probably keep a new company going for about 12 months, but after that, if you don’t have a strategic plan to follow, you’re essentially flying blind.

Review & Maintain

To be truly effective, a new business strategy should be created approximately every three years and reviewed every 12 months. To get a good idea regarding which parts of your strategy are working and which parts require adjusting, you need to be tracking your performance against the key objectives, goals and KPIs set out in the strategy. This will help to make sure that things are moving forward at the desired pace and that your business is on the right track.

Ideally, your business strategy should also be reviewed every time there’s a major event that affects your business, such as a new product launch or a new competitor entering the market. This will allow you to adjust your focus and ensure your business continues to succeed in the new business environment.

How Your Accountant Can Help

People often think of accountants as people who help you look backwards, not forwards. But, they can actually play a much bigger role than this and can work in conjunction with you to develop your business strategy and help your business achieve its true potential.

One of the most important roles your accountant should play in providing business advisory services is the development and monitoring of KPIs. They can help you make sense of the numbers behind your business to set realistic goals. They can also keep you on track to reaching these goals, acting as an outsourced CFO with regular management meetings.

When it comes to the business world, effective planning is the difference between success and failure. If you have big dreams for your business and want to see them come to life, you’re going to need the smarts to formulate an effective business strategy and the discipline, dedication and data to stick to it over the long term. You need to draw on the right partners to help you do this, so make sure you choose your accountant with this in mind.

If you would like to find out more about what’s involved in formulating a business strategy, or how AR Advisors can partner with you through this process, get in touch with us today.

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