When a Good Business Plan Is Not Enough

By Prof. Enrique N. Soriano

Over the past three decades of advising family businesses and serving on boards, I have reviewed countless business plans. Some were prepared by start-ups seeking financing, while others came from established family enterprises pursuing growth. Most were professionally written, complete with financial projections, operating budgets, staffing requirements, and expansion schedules. They explained how the business intended to grow. What many failed to explain was why the business would succeed.

One particular case remains vivid in my mind.

An SME owner approached me after successfully operating his business in one city for several years. Encouraged by strong local demand, he decided to expand into another region. His business plan was comprehensive. It projected higher revenues, additional manpower, larger warehouse capacity, increased marketing expenditures, and the capital required for expansion. On paper, everything looked convincing.

During our discussion, I asked a few questions.

“Who exactly is your target market? How are customers in the new area different? Who are your strongest competitors? Why will customers choose you instead of established players?”

His answers were largely based on assumptions. Because the business had succeeded in one location, he believed it would naturally succeed elsewhere. I advised him to pause the expansion and first undertake a strategic planning exercise before investing further. He politely disagreed.

He believed speed was more important than strategy.

About a year later, he returned.

The expansion had failed to meet expectations. Sales were well below target, operating costs had increased significantly, marketing expenses exceeded budget, and the new branch was losing money every month.

Ironically, the business plan had been executed almost exactly as designed. The strategy failed because there was no strategy.

Strategic intent is far more than the desire to grow. It is a clear understanding of where the business intends to compete, who it seeks to serve, how it will differentiate itself, and what capabilities it must build to succeed over the long term. Without that clarity, even the most disciplined execution can move an organization in the wrong direction.

The company expanded without first defining its strategic intent. It never answered the most important questions. Which customers should we pursue? What value would truly differentiate us? Which competitors were we trying to outperform? What capabilities did we need before expanding? Those questions should have been answered before a single peso was invested.

That experience reinforced a lesson I continue to share with founders, CEOs, and boards.

A business plan is indispensable. It creates discipline, allocates resources, establishes accountability, and translates ideas into measurable actions. Every organization should have one. But a business plan is not a substitute for strategy.

A business plan tells management what activities to execute.

A strategic plan determines whether those activities are worth pursuing in the first place.

Without strategic intent, companies often mistake growth for progress. They open new branches, hire more employees, increase inventories, and expand facilities, believing that bigger automatically means better. In reality, growth without direction often produces higher costs instead of greater value.

The SME owner eventually revisited his expansion plans. This time, we started with strategy. We studied the market, identified the right customer segments, assessed competitors, evaluated future trends, and clarified where the company could build a sustainable competitive advantage. Only after those strategic choices were made did we rewrite the business plan.

The second expansion succeeded—not because the business plan was better, but because the strategic direction was finally clear. That is the difference. A business plan helps you run the business.

A strategic plan helps you determine whether you are running toward the right future.

Every organization needs a business plan. But sustainable growth begins with strategic intent.

Prof. Enrique M. Soriano is a Fellow and Mentor at the Singapore Institute of Directors’ Board Readiness Program. A former World Bank/IFC Governance Consultant, he advises boards and multi-generational family enterprises across Asia on governance, strategy, succession, and long-term stewardship. He is Executive Director of Wong + Bernstein Advisory Group and Professor at the Ateneo Graduate School of Business.