Strategic planning is a systematic process that helps you set an ambition for your business' future and determine how best to achieve it. Its primary purpose is to connect three key areas:
- your mission - defining your business' purpose
- your vision - describing what you want to achieve
- your plan - outlining how you want to achieve your ultimate goals
Strategic planning is different to business planning. It requires stepping back from your day-to-day operations and articulating where your business is heading, by setting long-term goals, objectives and priorities for the future.
Importance of strategic planning
Strategic planning is necessary to determine the direction for your organisation. It focuses your efforts and ensures that everyone in the business is working towards a common goal. It also helps you:
- agree actions that will contribute to business growth
- align resources for optimal results
- prioritise financial needs
- build competitive advantage
- engage with your staff and communicate what needs to be done
Another significant purpose of strategic planning is to help you manage and reduce business risks. Growing a business is inherently risky. Detailed planning may help you to:
- remove uncertainty
- analyse potential risks
- implement risk control measures
- consider how to minimise the impact of risks, should they occur
Read more about risk management.
What is a strategic plan?
Effective planning usually results in a written strategic plan. This is a formalised document that describes your business' goals, and the actions needed to achieve them.
Other common elements are:
- vision and mission statements
- core values
- clearly defined goals and objectives
- action plans
You may also want to include an implementation schedule, key performance indicators (KPIs) and other accountability measures.
Learn more about the key elements of strategic planning.
Difference between strategic plan and business plan
Both strategic and business plan documents are essential planning tools for your business. However, depending on business stage and goals, one may be more useful than the other.
A strategic plan is for a 3-5 year period and sets out the tasks, the milestones and the steps needed to drive your business forward. Find out how to develop a strategic plan.
A business plan focuses on a shorter term, usually no more than a year, and serves a specific goal - eg starting a business, getting funding, or directing operations. See how to prepare a business plan for growth.