Should Your Not-For-Profit Organisation have a Business Plan?

by Morri Young on June 25, 2012

Is generating revenues for your non-profit organisation at the top of your list? Perhaps you?re working on attracting funds from diversified sources (individual donors, foundation grants, etc.) or even expanding your organisation through adding programs, new products or mergers?

These are a few main reasons why many non-profits are developing business plans. A business plan is basically about money. Best viewed as a (short-term) plan for a specific service or product, a business plan should be a scale model of the organisation. A realistic model will prepare you for the actual scenario, will help persuade your colleagues that you have done your research, and will help you explain the theories you depend on to make it all work. In addition, since most non-profit organisations receive government funding, you may be asked to produce a business plan before funds are dispersed.

Business plans are often commissioned by an organisation?s CEO or the Treasurer of the Finance Committee but it?s also imperative that the plan involves input from a variety of colleagues within the organisation. This will ensure that the vision and goals decided on are shared by everyone and can be more easily adhered to. Without getting too theoretical, the business plan should be a document that guides your organisation?s daily work. You should add new ideas, suggestions and changes along the way, referring back to it constantly.

The framework or components that are included in a business plan include:

• Summary of the business and a definition of the venture. This should include a description of the organisation and the product or service, the vision and purpose of the organisation, as well as the impact operational activities may have in the future.
• Market analysis that includes your planned customers, beneficiaries and the competitive environment.
• Management and staff. This should describe the people who will be responsible for developing, marketing and operating the venture including their relevant skills and experience.
• Benchmarks for performing and evaluating work and processes.
• Financial requirements including initial start-up costs, cash flow and restricted revenue (that should include a financial plan).
• Projections of short and long-term profitability.
• Marketing plans for pricing, customer relations, media relations, branding, etc.
• Analysis of risks and contingencies. These should include both current and potential risks and the mitigation strategies planned in preparation to solve arising problems.

A business plan has numerous benefits depending on which reasons are relevant to your particular organisation. These benefits include, but are not limited to:

• Helping to formulate ideas and goals while clarifying your vision.
• Providing realistic estimates including start-up costs and how much you will need to finance or invest.
• Identifying and defining factors for success, corporate objectives and profitability.
• Defining your target audience and convincing investors to fund your organisation.
• Recognising the need to change or re-evaluate your plans around the changing world and grow your business.
• Understanding and minimising the risks involved.
• Monitoring the results and planning for the long-term.

Business plans are quickly becoming a benefit and requirement for non-profit organisations if they want to prosper and survive. Although not a guarantee for success, a business plan can now, more than ever before, assist organisations to think and act strategically in order to achieve their vision and goals.

Sources:

1. Business Planning for Non-profits: Why, When ? and How It Compares to Strategic Planning. By Brigette Rouson.
2. Business Planning (For non-profits, for-profits and hybrid organisations). By Carter McNamara, MBA, PhD, Authenticity Consulting, LLC and Rolfe Larson, Rolfe Larson Associates.
3. Business Planning for Non-Profit Organisations.; Our Community
4. A business planning guide for social enterprises ? Putting the pieces together. By Social Ventures Australia and Parramatta City Council

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Tagged as: business planning, management support, matrix, Matrix on Board

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