What’s the Difference?


The terms “business planning” and “strategic planning” are used in various ways that often overlap.  But there are important differences, not just in meaning, but in function.

One good definition of business planning is:

“The process of determining an enterprise’s objectives, strategies and projected actions in order to promote its survival and development within a given time frame.”*

Another definition statement gets to an essential purpose:

“A business plan tests the proposition that a particular undertaking—program, partnership, new venture, growth strategy, or entity as a whole—is economically or operationally viable.”**

By contrast, strategic planning is: “a process of agreeing on an overarching mission, envisioning a desired future, and translating this vision into broadly defined goals or objectives.”*

There are several major distinctions between the two:

  • Strategic planning is typically broad and general, whereas business planning is operates at both high and detailed levels.
  • A strategic plan’s primary audience is internal—it’s used to build alignment within the organization—while a business plan’s audience is both internal and external, including investors and other supporters.
  • A business plan is used directly to build revenue and support for the organization.

Business Planning is the Best of Both Worlds

Many nonprofit leaders have expressed frustrations about strategic planning, for example that it is often time-consuming, overly-vague, and quickly out-of-date. While newer techniques address some of these concerns, the real issue is too much time spent on strategic planning, and too little (or no) time spent on business planning.

Ironically, despite the semantics, many vital  strategies can only be articulated through business planning, which offers more focus and specifics. Business planning is both “big picture” and “where the rubber meets the road.”

So how can business planning and strategic planning relate to each other?  Three possible ways: 

  1. A strategic plan can be incorporated into a business plan, and the two processes can be conducted efficiently in tandem.
  2. Business planning can (and should) be conducted regularly during the life of a strategic plan.
  3. Finally, a radical idea: separate strategic planning may not be needed at all. Business planning alone may fill the need better and more cost-efficiently.

The bottom line is that business planning is essential regardless of where an organization is regarding strategic planning. Done well, the benefits of business planning can be dramatic for a nonprofit's operations, business model and public support.

* BusinessDictionary.com, 2013
** La Piana et al, The Nonprofit Business Plan, 2012



AuthorScott Schaffer