Understanding the difference between a strategic planning process and a business planning process allows for a deeper understanding of why and when an organization should embark on these processes; how they complement one another and how they can significantly impact an organization’s future pathway. Here, we explain the difference and underline the reasons why a nonprofit should consider engaging in one, the other, or both initiatives.
What is a Strategy Process and Planning Effort?
Strategic planning involves setting the overarching goals and organizing an intention that creates a roadmap for achievement over a specific period of time (we recommend no more than three years). An example of a strategic direction could be to expand an organization’s geographical footprint to another part of the country, or to reach a new population that fit within the organization’s mission. Regardless of the specifics, these “big picture” goals are the key components of an organization’s strategic priorities, that are articulated in a strategy document/action plan, (often called a strategic plan). A strategic planning process should be spearheaded by a group of staff and board members that make up what we commonly call the Strategic Planning Committee or Taskforce, and seeks the perspectives and input of funders, volunteers and community members. The initial phases of the strategic planning process engages these and other potential relevant groups in order to craft a strategy that represents key voices of constituents and relevant environmental issues that might impact an organization’s future direction.
A Clear Organizational Strategy Paves the Way for a Successful Business Planning Process
Most successful business planning processes flow from an already agreed upon (strategic plans should be “passed” via a vote by the board and have staff buy-in) strategic plan. A strategic plan should include an implementation component that includes details that articulate “how” plan goals will be instituted and reflected by the organization moving forward. From there, a business plan breaks down the specifics: What is the actual cost of implementing goal X? What is the return on investment? What is the revenue and expense model that will support our priorities? What staffing model will ensure our success? The business plan is related to the nuts and bolts; it uses the information from the strategic plan and determines what it will take to implement the priorities effectively from a financial and business modeling standpoint. While strategy processes may (and should) include a budget component, a business plan’s central imperative is to articulate “what it will take” to implement an organization’s strategic priorities and vision over a set period of time. It can be helpful to think of both processes as cascading levels of details, with the strategic plan being the broadest level, moving towards implementation, and then to the more specific business planning process.
Why Plan at All?
Strategic planning and business planning efforts are both time and labor intensive – we surely get that as consultants who have supported hundreds of nonprofits with these processes, and as professionals with experience on the other side of the table working within nonprofits. Whether you engage a consultant to facilitate one or both of these processes or not, a significant amount of time, attention, and thought is required of an organization and its key staff and stakeholders to make a successful end product that is actually utilized on a daily level by an organization (that is the goal, right?).
Not all organizations need to have both a strategic plan and a business plan completed at any given time. Many organizations might initially prioritize conducting a strategy process and over time realize they are missing key components that should be addressed in a business planning process. Other organizations may have a strong strategy already in place that they are following and require a stronger business and financial modeling component in order to truly map growth, revenue expansion goals, and other major model shifts. Regardless, these efforts enable an organization to have a clear pathway and decision-making lens that will guide what to do and not to do – new programs, staff growth, funding resources, etc. – and how to do it in a systematic and visionary fashion. These processes and the end “product” for any planning effort should be perceived as key tools rather than simply time-intensive headaches. Whether it is a strategic plan or business plan, our goal at Olive Grove is to collaboratively engage in processes with an organization and deliver outcomes that everyone can rally around and embrace – something that provides both direction and inspiration.