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What Is a Business Plan and Why Do I Need One for My Nonprofit?

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Question: What is a Business Plan and Why Do I Need One for My Nonprofit?

Answer:

Nonprofits have a lot in common with a business, and managers of both must understand and follow a lot of the same practices. One of those is to have a business plan.

A business plan for a for-profit entity usually includes the following:

  • Executive Summary. This explains very concisely and clearly what the business does or will do.
  • Products/Services. What will be sold or what services provided? Who is the market? Why should your market use you rather than someone else?
  • Strategy. How are you going to sell your product or service. How will you market it? How will you keep track of clients/customers? How will you grow the business?
  • Operations. Where will your business be located? Will you make your products or purchase them from wholesalers? Will you lease or buy equipment? Hire employees? Partner with other businesses? How will you handle distribution? Inventory? How will you market your business?
  • Financials. Where will you get the money to start your business? Will you pay yourself a salary? How will you pay for employees? What are your costs and income?

A business plan for a nonprofit organization might be set up like this:

  • Executive Summary. Include a mission statement, description of the board of directors, types and number of employees needed, location and where services will be provided, description of those services, funding sources, summary of market research you may have conducted.
  • Services or Products to be offered. Description of service or product, what problem do they address? What the objectives are for the services.
  • Results of your needs analysis. Explain the documented need for your service or explain a new need you will address. Who else provides this service or a similar one? Who are your clients...who will you be helping? Where are they located? How many are there?
  • Organization & Management. How will you organize? Create an organizational chart. Develop staff profiles for the major players such as the CEO and the program manager.
  • Marketing and Sales Strategies. How do you plan to communicate to your target audience. Include an advertising plan and a PR plan.
  • Financials. Where will you get the money for the startup? Grants, loans, fees? Prepare an annual budget showing revenue and expenses.

You can see how similar these plans are. You will need a business plan for your nonprofit to show to donors or foundations that may fund you, to potential board members so they know what they are getting into, and the plan can serve as a compass for your organization so that you don't get off track. A business plan is a living document and can grow and change as your organization grows, becomes more sophisticated and takes on additional challenges.

See also Elements of a Business Plan for a Nonprofit Organization

 

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