Business Planning for Nonprofits

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Business planning is a way of answering, “Where are we going?” or “What are we trying to achieve?” but also, “Who will get us there, by when, and how much money and other resources, will it take?” The business planning process takes into account the nonprofit’s mission and vision, the role of the board, and external environmental factors, such as the climate for fundraising. Ideally the business planning process also takes into consideration the potential for changes in basic assumptions about the nonprofit’s operating environment. For example, nonprofits that have anticipated potential fluctuations in revenue may be better prepared to weather the storms of economic upheaval. Additionally, the business planning process can address how the nonprofit will prepare for future risks, answering questions such as, “What is the likelihood that the planned activities will fail? And what is Plan B if they do?”

Business planning anticipates the inevitability of organizational change, and focuses on producing a plan that is realistic, comprehensive, and integrated across organizational functions – all while remaining true to the mission of the organization.

Terri Theisen, Theisen Consulting, LLC

Basic Format of a Business plan

The format may change depending on the audience and the life-cycle of the nonprofit. For instance, the plan could be for a start-up nonprofit, a mature or declining nonprofit, or even a nonprofit in the midst of a turn-around. Here is a typical outline of a business plan:

  • Cover page
  • Table of contents
  • Executive summary
  • People: overview of the nonprofit’s structure
  • Market opportunities /competitive analysis
  • Programs and services: overview of implementation
  • Contingencies
  • Financials

What’s the difference between business planning and strategic planning?

A business plan explains the “who/what/how/where/when” and typically will answer questions such as: “Who are the nonprofit’s “customers?” “What is the geographic area for the nonprofit’s services?” “What other nonprofits are providing similar services?” and “What services does our nonprofit deliver that are unique?” A business plan is the action plan, identifying the tasks, milestones, and goals, but also identifying the potential for success and the potential risks ahead, given the nonprofit’s “competitive advantages” and the environment in which it operates.

The strategic plan takes all that the business plan has identified and answers “how” the desired results will be achieved, such as “How will we accomplish all this with limited resources? What will we prioritize?” Other questions that a strategic plan might answer include: “What needs to happen so that we can achieve success?” and “How will we measure success?”  More resources on strategic planning for nonprofits

Example: One finding from a nonprofit’s “business plan” could be the need to diversify financial resources. The strategic plan might then address how the nonprofit will diversify its resources, such as by enlarging the nonprofit’s individual donor base, and then drill down to identify how that will happen, such as through the tactic of developing an annual giving campaign; and further, how that tactic could be sustained, such as by identifying the cost of staff needed to support that activity on an ongoing basis.

Tools for Business Planning

Resources

Join your state association of nonprofits for special opportunities, such as assistance with business planning, as well as strategic planning.

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