Strategy First, Business Plan Later — Why a Clear Strategy Lays the Foundation for Every Successful Startup

Every startup begins with a vision — an idea with the power to revolutionize markets, solve pressing problems, or open up new possibilities. However, too often, startups don’t fail because of their vision but because they lack a solid strategy. Instead of treating strategy as an essential foundation, many founders view it as an inconvenient task — something to “check off for investors” rather than as a tool for their own success. This mindset isn’t just negligent; it’s outright dangerous.

A strategy isn’t an optional accessory for investor readiness — it’s the core of what investors genuinely want to see: a thoughtful, robust framework that outlines how the vision will be executed and how the business will secure its place in a complex, competitive market. Improvisation at this stage signals uncertainty and lack of preparation. But the risks extend far beyond failing to secure funding. Without a clear strategy, startups risk falling into aimless activity, misallocating precious resources, and losing sight of their long-term direction.

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In the dynamic and often unpredictable world of startups, a strategy is more than a compass — it’s a safety net that prevents founders from becoming trapped in short-term challenges or overlooking critical blind spots. It provides answers to key questions: Which markets do we want to enter? How do we allocate our resources most effectively? Most importantly, why will our approach endure in the long term?

A startup’s success doesn’t start with chasing capital; it starts with developing a strategy that demonstrates real substance. Anything else is a high-stakes gamble — with the very real risk of losing everything.

Differentiating Strategy from a Business Plan

Although the terms are often used interchangeably, strategy and a business plan differ fundamentally in purpose and function:

• Strategy defines the “what” and the “why.” It establishes long-term goals, competitive positioning, and the core principles guiding the business. A strategy sets the direction and forms the basis for all subsequent planning.
• Business Plan focuses on the “how” and “when.” It’s an operational tool that translates strategy into actionable steps, financial projections, and milestones.

A business plan without an underlying strategy is like a detailed travel itinerary without a clear destination. Only when both are aligned can a business not only launch but also grow sustainably. The sequence matters: strategy comes first, followed by the business plan.

The following sections will explore why a clear strategy makes all the difference and how founders can set the right course from the start.

Why Strategy Comes First

The success of a business is built on a strong foundation. A clear strategy provides this base by defining direction and structuring the decision-making process for the founding team. Below are three core reasons why strategy should precede any business plan.

Defining the Company’s Vision and Mission

The vision and mission of a company are more than just inspiring statements — they’re the core that holds all business activities together.

• Vision: Describes the overarching goal and long-term impact of the company. A clear vision motivates the team and gives investors and partners a sense of purpose.
• Mission: Outlines how the company plans to achieve its vision in practice, providing focus and guiding decisions on products, services, or business models.

Without a well-thought-out strategy, vision and mission risk becoming empty phrases rather than guiding stars for the business. Strategy turns abstract ideas into actionable directives.

Identifying Target Audiences and Market Positioning

One of the greatest challenges for startups is identifying the right target audience and establishing a clear position in the market. A solid strategy answers questions like:

• Who are our customers, and what are their needs?
• How do we differentiate ourselves from the competition?
• What unique value do we offer that others don’t?

By clearly defining their audience and developing a unique positioning, founders can avoid wasted efforts and deploy their resources effectively. This is especially critical in competitive markets where first impressions often determine success.

Ensuring Flexibility and Adaptability

Startups operate in dynamic environments where markets, customer needs, and technologies can change rapidly. A clear strategy isn’t a rigid construct but a flexible framework that:

• Sets priorities: Founders can quickly identify opportunities that align with their vision and mission.
• Enables adaptation: Strategic guardrails help respond to new developments without losing focus.
• Protects resources: Flexibility in strategy prevents valuable time and money from being wasted on ineffective initiatives.

Startups that prioritize strategy establish the foundation for sustainable growth. They avoid losing direction in day-to-day operations while remaining open to new opportunities that strengthen their vision.

The next sections will examine the risks of crafting a business plan without a strategy and how a solid strategic foundation helps founders mitigate these risks.

Risks of a Business Plan Without Strategy

A business plan without an underlying strategy might appear professional at first glance but is like a building without a foundation. It may seem sturdy, but it will crumble under pressure. The main risks of such an approach can be summarized in three key points.

Focus on Unrealistic Assumptions and Figures

Business plans often rely on forecasts to outline future market conditions, customer demand, and revenue growth. Without a solid strategy, these assumptions are often:

• Overly optimistic: Founders tend to overestimate growth rates and market share due to insufficiently tested assumptions.
• Unrealistic: Without a deep understanding of the target audience and market, figures are often based on wishful thinking rather than data and validated hypotheses.

The result: While the business plan may look impressive on paper, it’s challenging to implement in reality. This can erode the confidence of investors and partners and waste valuable resources.

Lack of Differentiation From the Competition

A business plan without a strategic backbone often focuses on operational details — from distribution channels to financial projections. What’s missing, however, is the answer to the critical question: Why should customers choose us?

• Without clear positioning, it’s unclear how the business stands out from existing providers.
• The focus remains on generic measures rather than creating a genuine competitive advantage.

This lack of differentiation leads to the startup being perceived as “replaceable,” which deters both customers and investors.

Loss of Long-Term Perspective

A detailed business plan demands significant time and effort. However, without strategic guidelines, founders often lose sight of the bigger picture:

• Short-term thinking: The focus shifts to immediate goals like revenue generation or cost reduction, neglecting the long-term vision.
• Limited flexibility: A rigid business plan leaves little room for adjustments to dynamic market conditions or new insights.

The consequence is that the company is pushed in a direction that may seem operationally sound but diverges from its original vision and long-term objectives.

Without a clear strategy, startups risk becoming bogged down in operational details, failing due to market realities, or being distracted by short-term goals. A well-thought-out strategy acts as a shield, protecting founders from these risks and enabling them to make informed decisions.

The next section will explore the core elements of a successful strategy and how it can be developed systematically.

Elements of a Successful Strategy

A successful strategy is not a coincidence but the outcome of a structured process. It is based on thorough analyses, clear decisions, and a long-term focus. The following three elements form the foundation of any successful strategy.

Market Analysis and Customer Understanding

The first step in building a successful strategy is gaining a deep understanding of the market and the target audience. This includes:

• Market trends and dynamics: What developments shape the market? Where are there gaps or untapped potential?
• Target audience analysis: Who are the potential customers? What are their needs, desires, and pain points?
• Competitive landscape: Which players are already active in the market, and how do their offerings differ?

A thorough market analysis provides not just data but critical insights. It helps founders tailor their offerings precisely to customer needs and identify opportunities others might overlook.

Clear Competitive Advantages and Positioning

A solid strategy establishes what sets a company apart in the market. This involves:

• Identifying unique value propositions: What does the company offer that competitors can’t?
• Developing a clear brand position: How should the business be perceived in the market?
• Leveraging strengths to address gaps: How can the business capitalize on its strengths to meet market needs?

Strategic differentiation ensures that the company isn’t just another player in the market but a distinct and valuable alternative.

Long-Term Goals and Measuring Success

A successful strategy doesn’t stop at goal setting — it also includes clear plans on how to achieve and measure these goals:

• Long-term vision: What does the company want to achieve in five, ten, or twenty years?
• Operational goals: What milestones must be reached on the way to the vision?
• Success measurement: Which key performance indicators (KPIs) will indicate whether the strategy is working?

Clear goals provide orientation and allow founders to track progress and adjust their strategy when necessary.

A successful strategy combines market understanding, clear competitive advantages, and a long-term vision. It is not just a guide for founding the company, but also a tool for flexibly responding to market changes and positioning the company for long-term success.

The next section will discuss how founders can translate a strategy into an operational business plan and adjust it iteratively.

A clear strategy sets the framework, but it is only a well-thought-out business plan that translates this into concrete, actionable measures. The plan should reflect the strategic guidelines while maintaining the flexibility that startups need. The transition from strategy to business plan consists of three key steps.

Translating the strategy into concrete measures
The strategy defines the “what” and “why,” while the business plan clarifies the “how” and “when.” This transition is achieved through:

• Operationalization: The strategic goals are translated into clear milestones, tasks, and responsibilities.
• Prioritization: Not all strategic goals can be implemented immediately. The business plan helps set priorities and deploy resources effectively.
• Time horizons: The plan should link short-term actions (e.g., marketing campaigns) with long-term goals (e.g., market share growth).

A good business plan is detailed enough to provide guidance, yet flexible enough to respond to changes.

Financial planning as a tool, not a goal

Financial planning is a crucial part of any business plan, but it should always be viewed as a means to an end:

• Resource allocation: The financial plan shows how capital, time, and personnel will be used to achieve strategic goals.
• Risk assessment: Scenario analyses can identify potential risks and develop strategies to mitigate them.
• Investor communication: A transparent and realistic financial plan is essential to gain the trust of investors.

A common mistake is to make financial plans too rigid or overly ambitious. Instead, they should be based on realistic assumptions and regularly reviewed.

Another mistake we frequently see in our venture studio: While financial planning describes the operational handling of existing resources, the financing strategy focuses on how and where these resources are to be acquired. Both aspects are closely connected but have different focuses:

• Financial planning: It answers questions such as: What will the available capital be used for? What costs will be incurred, and when are they due? It serves as an internal control instrument and ensures efficient resource use.
• Financing strategy: It defines how the required capital will be raised, such as through equity, debt, or grants. The choice of financing partners and sources also plays a crucial role.

A successful financing strategy ensures that the financial plan can be realistically implemented without jeopardizing the company’s long-term stability. It takes both short-term liquidity needs and long-term capital requirements into account. A business plan that establishes a clear connection between financial planning and financing strategy not only appears professional to investors but also ensures the company remains financially viable.

Iterative adjustment of strategy and plan

Neither strategy nor business plan is set in stone. Especially in dynamic markets, it is important to regularly question and adjust them:

• Feedback loops: Insights from implementation — such as customer feedback or market developments — should continuously feed back into the strategy.
• Data-driven decisions: Performance indicators (KPIs) help assess the effectiveness of actions and correct the course when necessary.
• Flexibility: Both strategy and business plan should allow enough room to respond to new opportunities or challenges.

This iterative approach ensures that the company not only reacts but can also proactively address changes without losing sight of its long-term goals.

The business plan is the bridge between the vision and its practical implementation. It allows founders to bring their strategy to life while maintaining the flexibility that is crucial in the early stages of a business. With a business plan built on a strong strategy, startups can navigate their course securely and achieve sustainable success. In the next chapter, practical examples will be presented, showing how a well-thought-out strategy makes the difference between success and failure.

Case Studies and Lessons Learned

The importance of a clear “Strategy First” approach is especially evident in the fields of deep tech, cleantech, and sustainability. In these industries, long-term visions and well-founded strategies often determine success or failure, as they are not only technologically complex but also capital- and resource-intensive. The following examples illustrate how a well-thought-out strategy can make the difference — and what risks arise without one.

Successful startups through the “Strategy First” approach

1. Stegra: Decarbonizing the steel industry with a clear vision The Swedish company Stegra aims to drastically reduce CO₂ emissions in steel production through the use of green hydrogen.

• Strategy: From the outset, the company adopted a clear vision — transforming steel production into a sustainable model. With a focus on decarbonization, strategic partnerships, and the development of its own hydrogen ecosystem, Stegra was able to convince potential investors and build strong partnerships.
• Success: Thanks to this strategic alignment, Stegra secured over €4 billion in funding and already signed numerous purchase agreements with leading companies from the automotive and construction industries before production even began.

1. Climeworks: Targeted audience approach in carbon removal Climeworks is a Swiss company that develops technologies for direct CO₂ removal from the atmosphere.

• Strategy: Instead of targeting the mass market, Climeworks initially focused on large customers such as companies and organizations with ambitious climate goals. At the same time, a strong communication strategy was developed to build trust in the new technology.
• Success: This targeted market approach helped Climeworks become a leader in carbon removal and secure significant investments.

Examples of Failures Due to Lack of Strategic Foundation

1. Better Place: Lack of adaptability and unrealistic assumptions
   Better Place aimed to revolutionize electric mobility with a network of battery-swapping stations.

• Mistake: The strategy was based on the assumption that battery swapping would be more quickly accepted than charging stations, without adequately considering market needs and technological developments.
• Consequence: When the automotive industry shifted to more efficient charging technologies, Better Place lost its relevance and had to file for bankruptcy.

1. Solyndra: Lack of market analysis and cost control
   The US solar company Solyndra developed innovative solar panels but failed despite receiving government subsidies.

• Mistake: Solyndra ignored the price drop of standard solar panels from Asia and could not make its costly technology competitive.
• Consequence: Without a sound strategy that accounted for market conditions and cost efficiency, the business model was not viable.

Lessons Learned

1. Focus and targeted audience approach are crucial. Companies like Stegra and Climeworks show that a clear focus on defined target groups and unique selling points in the deep tech and cleantech sectors is essential.
2. Strategic adaptability ensures success. The Better Place case highlights that companies must regularly reassess their strategy and adapt flexibly to new market realities.
3. Sustainability as a long-term vision requires a solid foundation. Solyndra failed to consider the economic reality when developing a sustainable technology, while Northvolt proved that ecology and economy can be integrated.

These examples show that strategy in the deep tech and cleantech sectors is not optional but essential. It provides founders with direction in complex markets, minimizes risks, and enables the implementation of sustainable innovations that can truly make a difference.
The concluding chapter will summarize why strategy must come before any business plan and how founders can implement this approach in practice.

Conclusion: Strategy is the Key to Long-Term Success

In the world of startups, the path to success is rarely a straight line. Uncertainties and obstacles are inevitable, but a strong strategy provides the anchor that guides founders through turbulent phases. A strategy is more than just a plan; it is the expression of what a company wants to become and the value it wants to create for the world.

The greatest successes arise when vision and strategy go hand in hand. Stegra, revolutionizing the steel industry with green hydrogen, or Climeworks, pioneering in carbon removal, demonstrate the power of a clear, actionable strategy. They prove that strategy is not just theoretical but makes the difference between success and failure in practice.

When building a company, ask yourself: What is the vision that drives me? Who do I want to reach, and why should anyone believe in my idea? These answers are the beginning of a strategy that will not only give you clarity but also earn the trust of your customers, investors, and partners.

A business plan can list numbers, but a strategy provides the internal compass you need to stay flexible and resilient. It helps you prioritize, find creative solutions, and react to change without losing your direction.

Remember that strategy is not a static document that’s created once and then put aside. It is a living process — a cycle of reflection, learning, and adaptation. Successful founders know that they must return to the drawing board repeatedly to assess and realign their strategy.

Use modern tools, gather feedback from customers, and foster a company culture that encourages innovation. The world is constantly changing, and a good strategy provides the flexibility to change with it.

Whether you’re just starting out or looking to reassess your strategy, now is the moment to gain clarity. Start with your vision, analyze your strengths, and align your company to make a positive, long-term impact.

Because one thing is certain: The companies shaping the future are not the ones with the most sophisticated business plans, but the ones with the clearest strategy. Be one of them.