In order to succeed, it’s important to have a plan, no matter if it’s a graduate school thesis, a grant proposal, or a document that outlines your nonprofit’s structure and operations. A business plan is as essential for a charitable organization as it is for a commercial enterprise – perhaps even more so.
An effective business plan is more than a statement of purpose and goals. It is a roadmap for success, and it deserves serious consideration. Statistics are sobering: of the more than 1.5 million nonprofit organizations that operate in the United States, approximately 12% do not make it past the five-year mark, and the percentage of failure rises to 17% by the 10th anniversary — according to a 2019 brief from the National Center for Charitable Statistics.
Mission, Goals & Business Operations
We’ve previously addressed the need for a clear and concise mission statement to communicate your nonprofit’s defining purpose when seeking support from the community. We have also touched on the importance of a strategy for alleviating the specific needs that are core to your nonprofit’s mission, and to help with efforts to motivate volunteers, attract donors, and achieve your goals.
Both are vital aspects of your organization’s structure. A business plan is distinct, however, because it addresses the actions and activities of the organization in a concrete and detailed way. It not only defines the heart of your mission, but it outlines both short and long-term goals, defines funding needs, fundraising methods, and expenses for achieving goals. It should also provide clear answers to the following concerns:
- What actions will the organization take to achieve its specific goals?
- What is the plan to secure revenue for these activities?
- What are the associated operating costs, and how will they be funded?
Your business plan is an essential component of the nonprofit’s efforts to secure major funding from corporate sponsors, apply for grants, or secure development loans for facilities and operations. As your organization grows, your annual report should also refer to your business plan so that your board, supporters, and the public have a yardstick for measuring success.
While much of the information in a business plan is of a general nature, each nonprofit is different. Before you get down to the business of drafting a business plan, determine who the audience will be. Do you hope to attract partners, secure funding from local businesses, sell sustaining memberships, or attract individual donors? Will you be applying for grants, or are individual volunteers and service hours more important than dollars? How do each of your goals tie directly to your mission?
How to Tie it All Together
Your formal business plan should reiterate that mission statement, and include a brief outline of the agreed-upon plan to support that mission. Whether you are starting a nonprofit or refining the business plan of an existing organization, your written document should include, at minimum, the following sections:
- An Executive Summary that captures your inspirational vision and mission, and outlines the overall business plan to follow
- A description of the planned programs, services and products the organization will provide
- The intended beneficiaries of programs, services and products
- Specific financial projections
- A marketing plan that includes as many details as possible
- Operational details, including a personnel chart, if applicable, as well as a facilities overview
- The projected impact of your organization on the people or community it intends to serve
A business plan can also include an appendix in which you might include comparative data from similar nonprofit organizations, statistics showing the need for your planned services, or potential fundraising goals for the year or over a five-year period.
Need More Help?
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