Update Your Business Plan Today

Every venture needs a good, current business plan—even nonprofits. This month, Sharity examines the importance of nonprofit business planning and discusses why having no business plan is not an option.

Update Your Business Plan Today
Last month, we talked about the importance of planning for your nonprofit at the beginning of a new year. This forward focus extends to all of your nonprofit’s plans: strategic plan, marketing plan, operational plan, impact plan, financial plan, and, most importantly, business plan.

When was the last time your nonprofit updated its business plan? If you have to stop and think about it, then it has been way too long. Many nonprofits make the mistake of planning from one fiscal year to the next, failing to link one year’s activities with the next and relying more on its strategic plan to guide the business of the nonprofit. Even more concerning, between 50 and 75 percent of nonprofits have no business plan at all.

For those new to the industry, a nonprofit’s business plan — revenue sources/mix, operational costs, program costs, and capital structure — is the bedrock on which all other “plans” within the nonprofit are built. For example, a business plan answers the basics of who/what/when/where/how for a nonprofit, and this information is fed into the organization’s strategic plan to answer the question of “how” the nonprofit will make the business plan a reality.

Ultimately, it provides a clear picture of a nonprofit’s current status, while also guiding the trajectory of the organization for a three- to five-year period. At the same time, it is not a static document but lives, breathes and evolves with the needs and goals of the nonprofit. It is a plan of action for a nonprofit, accounting for and considering every variable that may impact the organization, including the operational environment, competitive advantage, potential risks and obstacles, and milestones and goals.

Seasoned veterans of the nonprofit world know that a current and active business plan can give your nonprofit a real competitive edge when it comes to financing, grant awards, large corporate donors, and the quality of your board members. Financial institutions champion nonprofits with a business plan. Grants more easily turn from applications and proposals to awards when a solid business plan is included. Large corporate donors and competent, qualified board member candidates will be more willing to be a part of the nonprofit.

So, whether it has been a long time since your nonprofit’s business plan was updated or you do not have one at all, a business plan is critical for an organization to prove to its donors and donor prospects that it is a viable organization and that their investments will be put to good use. Truly successful nonprofits are forward thinking and benefit greatly from long-term business planning. Stop living in the moment and start looking forward.

Ask yourself these questions to see if your nonprofit’s business plan needs to be tweaked:

  1. Does your plan start with the larger community need you are addressing?
  2. Do you pick up your business plan more than once per quarter?
  3. Do you have an established budget that covers the same period of time as your business plan?
  4. Does your plan result in measurable outcomes rather than an increase in outputs?
  5. Do you know how much it will cost to fully implement your plan?
  6. Did you share a draft of your plan with stakeholders and major donors to get their feedback before it was finalized?

If you answered “no” to any of these questions, call Sharity today. We want to help your nonprofit with its business plan.