Gina Zeilinger Compares Strategic Planning and Financial Planning

Many professionals today blur the line between a strategic and a financial plan. In practice, the two should overlap to some extent, but they must remain distinct from each other. Organizations run into problems when individuals do not understand the difference between each plan. Often, strategic plans include imperatives like “Increase profits by 10 percent,” which actually belong on a financial plan. Without a strategy to back the goal, the organization will likely never achieve it. The strategic plan outlines the steps that the organization must actually take in order to increase the profit margin by 10 percent.

Most of the time, financial planning plays a support role to strategic planning. A financial plan ensures that the organization maintains the resources and liquidity necessary for accomplishing the goals outlined in the strategic plan. Through financial planning, an organization can also frame its desired outcomes. In the above example, the imperative is really a financial goal, the fulfillment of which may signal that the organization has met a specific objective outlined in the strategic plan. The financial plan, then, may set the ultimate goals, while the strategic plan answers the question, “How will we achieve these ultimate goals?”

An easy framework for thinking about strategic and financial plans is one of growth and survival. The strategic plan focuses on growth, outlining the actions that the organization should accomplish as it develops. In that sense, the strategic plan actually drives growth. On the other hand, the financial plan accounts for all available resources and ensures that the organization does not become bankrupt. The financial plan accounts for the organization’s survival. Since survival proves necessary for growth, professionals can easily interchange the two plans, but they are not equivalent.

On rare occasions, the two different plans do become the same. This occurs when the financial plan begins reacting to the growth of the company. When a professional looks at how finances can shape or propel growth, the two plans have the same objective.

About the Author

A resident of Florida, Gina Zeilinger works for a global aerospace technology firm as its Finance Director. In this position, she identifies new opportunities for increasing revenue and reducing costs. Gina Zeilinger oversees teams that work in a variety of departments in order to optimize the company’s working capital.