Why You Need a Business Plan
Starting a nonprofit is an adventure, and a detailed business plan will be your map to guide you when you get a little bit off track. Basically, it is a way of putting all of your ideas onto paper. This will help you to organize your actions and to have a bit of clarity on how your future will look. This will be especially helpful when officially registering your organization.
In addition to this, if you hope to gain any sort of funding you will need a business plan. Whether you are getting your financing through grants or donors, you will need to have a document to show them where their money is going.
A business plan is also a great way for potential volunteers to see what it is that you do. Of course, your website will have the basic information, but a business plan will enable you to provide more details. This can be of benefit to you if you want to have full-time volunteers. In line with this idea, your plan can also help you to attract your board of directors.
Tips to Create Your Nonprofit Business Plan
Your nonprofit business plan should provide your donors, volunteers, and other key stakeholders with a clear picture of your overarching mission and objectives. Below, we share our top tips for ensuring that your plan is attractive and thorough.
- Develop a Strategy First: You must aim before you fire if you want to be effective. In other words, develop a strategic plan for your nonprofit in order to provide your team with direction and a roadmap before you build your business plan.
- Save Time with a Template: No need to start from scratch when you can use a customizable nonprofit business plan template to get started. (Download one of the options above.)
- Start with What You Have: With the exception of completing the executive summary, which you must do last, you aren’t obligated to fill in each section of the plan in order. Use the information you have on hand to begin filling in the various parts of your business plan, then conduct additional research to fill in the gaps.
- Ensure Your Information Is Credible: Back up all the details in your plan with reputable sources that stakeholders can easily reference.
- Be Realistic: Use realistic assumptions and numbers in your financial statements and forecasts. Avoid the use of overly lofty or low-lying projections, so stakeholders feel more confident about your plan.
- Strive for Scannability: Keep each section clear and concise. Use bullet points where appropriate, and avoid large walls of text.
- Use Visuals: Add tables, charts, and other graphics to draw the eye and support key points in the plan.
- Be Consistent: Keep the voice and formatting (e.g., font style and size) consistent throughout the plan to maintain a sense of continuity.
- Stay True to Your Brand: Make sure that the tone, colors, and overall style of the business plan are a true reflection of your organization’s brand.
- Proofread Before Distribution: Prior to distributing the plan to stakeholders, have a colleague proofread the rough version to check for errors and ensure that the plan is polished.
- Don’t Set It and Forget It: You should treat your nonprofit business plan as a living document that you need to review and update on a regular basis — as objectives change and your organization grows.
- Use an Effective Collaboration Tool: Use an online tool to accomplish the following: collaborate with key personnel on all components of the business plan; enable version control for all documents; and keep resources in one accessible place.
What Should You Include in a Nonprofit Business Plan?
1. Executive Summary. The Executive Summary is the first thing that any potential partner or supporter will read, and it introduces the mission and purpose of your nonprofit.
You can customize this section of your business plan depending on your purpose in sending it out. For example, the Executive Summary might have a very different focus if you are trying to recruit an expert in your service sector to the Board versus applying for a small business loan to open a gift shop.
2. Organizational Structure. This section should identify the type of nonprofit organization that you have and how you’re set up.
For instance, if your nonprofit is a 501(c)(3), you will list that in this section. (There are other types of nonprofit organizations such as fraternal beneficiary organizations, or horticulture, labor, and agricultural organizations that are structured as nonprofits as well…so be clear here.).
Also, talk about whether you have employees or are all-volunteer. Do you have (or will have) a facility? Paint a picture of your organizational structure so the reader can understand quickly what your nonprofit looks like from an operational point of view.
If yours is an established organization, you can discuss how you started your nonprofit and the milestones you have reached. Listing previous successes and accomplishments in this section can be convincing for potential partners and reassure them that you will use their funding efficiently.
If your nonprofit is just getting started, explain your vision and why you are creating your organization. Focus on the problems you see and the practical ways you intend to alleviate those problems.
For example, if you run a homeless shelter, you should mention the number of people who are homeless on any given night in your area. Talk about the number of beds you have, the number of beds you are planning on for the coming year, and exactly what services you provide in addition to shelter.
If your shelter offers wrap-around services or plays a key role in connecting those you service to other vital services, talk about those too. Do your beneficiaries have access to medical care once a month? Does your organization provide a meal? Do you have volunteer tutors who can help students who are homeless with their work? Note who carries out your programs and services and whether you use mostly volunteers or whether you have paid staff in place.
Also, talk about any other nonprofits who are addressing the same need and how your services are/will be different. Donors don’t like duplication of services, and getting grants will be tough if you can’t articulate how your approach is unique.
4. Marketing Plan. Your marketing plan should describe the specific target audiences you want to reach for both programs and fundraising, key messages you’ll use, and which methods or vehicles you’ll use to reach the right people.
5. Operational Plan. This section should describe both day-to-day operations and long-term plans for operating your programs.
What do you and your staff do every day to run programs and provide services? Be specific. How much does a single unit of service cost per person? Who delivers the service? Where and how?
Note expanded services. If you are planning on growing or expanding your services what would that mean in terms of operations? For instance, if you run a food bank and you are actively planning to double the number of people you feed in the next year, how will that affect operations? Will you need more refrigerators? More trucks? More staff or volunteers? Will you expand hours? Be ready to share in the Financial section how this growth will impact your budget, both in revenue and expenses.
If you haven’t spent time making long-term plans, this is a good time to sit down with Board members and staff and think about it in detail! Decide if you’ll start the program or secure funding first (there’s a big difference!).
Evaluation is critical to determine your effectiveness as a nonprofit — and particularly important for grants. How can you tell if a program is providing the benefit that you are promising? Potential donors and grantors will want to know how you will make sure that funds are used to their highest potential and that you are flexible enough to change if need be.
You should also talk about methods in place to evaluate various aspects of your nonprofit to make sure you’re getting a good return on investment for the time, energy, and resources you put into each area of operations.