What Do You Mean by a “Plan”?

People will ask an entrepreneur “what is your plan” and too often that question is met with a dazed and confused look. What does it mean to have a plan? It comprises three components – strategic plan (which sets your strategy), financial plan (which sets your financial goals and performance) and operating plan ((that details how the company will align its efforts to achieve the financial plan and the overall objectives of the company.

“You need a “plan” to succeed.” 

Your plan consists of strategy, financial performance and operational performance. Here is an outline of these three pieces:

Strategic Plan

The strategic plan is about setting a direction for the organization and identifying a range of strategies to pursue so that the organization might achieve its long term goals. The strategic plan is a general guide for the management of the organization but does not stipulate the day-to-day tasks and activities involved in running the organization.

Financial Plan

Your financial plan shows how your business idea and strategy translates into a business that is financially viable. It takes into account your projected revenue, expenses, cash and other financial needs. The financial plan comes to life in three financial statements:

  • Income Statement
  • Cash Flow Projection/Statement
  • Balance Sheet.

Operating Plan

Your Operating Plan presents highly detailed information specifically to direct people to perform the day-to-day tasks required in the running the organization. The purpose of the Operating Plan is to provide personnel with a clear picture of their tasks and responsibilities in line with the goals and objectives contained within the Strategic Plan and the Financial Plan. The Operational Plan provides the what, who, when and how much.

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