Types of Strategic Business Plan

This page discusses the difference between different types of Strategic Business Plan, and between corporate strategy and business planning. The information set out here is only a summary, and will be expanded later. If you require further information, please see General Comments below.

Different types of Business Plan

There are three main types of Business Plan, required for the following three different purposes:

- Securing bank loans / overdrafts;

- Raising venture capital;

- Internal strategy / planning.

The differences are discussed below.

A Corporate Strategy aims to look at the current position of the organisation, identifies the objectives which it is trying to achieve, and the steps to be taken to achieve it, all at a high level. It is, therefore, a high level version of an internal business plan, which is described as the last of the three options described below.

Difference between Corporate Strategy and Business Planning

Essentially, these plans consist of financial projections. These consist of projections of income and expenditure, cash flow, profit and loss, and balance sheets, based on a number of clearly identified assumptions. Many include some sensitivity analysis. This is where the impact on the figures, of a change in the assumptions, is clearly shown, so enabling the reader to see where the biggest risks and potential lie.

Securing bank loans / overdrafts

The plan should also show the basis on which the assumptions were made, and provide proof that they are based on solid research, such as marketing studies, orders from prospective customers, competitor prices et cetera.

Raising venture capital

Whilst this type of plan includes the projections above, it also includes much more about the business and, especially, its key players. To a venture capitalist, the people, whom he is investing in, are key. Accordingly, CVs and job descriptions for these people are included. There will also be information about the company, its markets and products, background information on the industry, and any other information which helps to give the investor a better feel for the company.

Internal strategy / planning

This type of plan is prepared for the company itself, although it can be used to satisfy the needs of the bank manager and provide some of the information required by outside investors. It analyses the company as it is, its future potential, and the aspirations of the key players, considers future options, recommends a strategy and objectives for the planning period, commonly five years, and the steps required to achieve these objectives. Financial projections are then produced based on these assumptions.

General Comments

The Business Plans described elsewhere on this web-site are of the internal strategy / plan type. The information, contained in them, can be pitched at a high level for Corporate Strategy purposes, and a subset can be used for raising bank finance. If the aim is to raise Venture Finance, then additional information, especially on the key personnel, will be required.