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

Every Nonprofit Needs a Road Map. Here's What It Should Look Like

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A nonprofit is a type of business. That's why a nonprofit incorporates before applying for tax-exempt status from the IRS. Many of the same rules that apply to a for-profit enterprise also apply to a nonprofit.

How Might a Nonprofit Use a Business Plan?

You will need a business plan to show

  • to serve as a compass for your organization so that you don't get off track.
  • to apply for a business loan, especially if you decide to set up a store, gift shop, or another enterprise to help fund your programs

A business plan is a living document and can grow and change as your organization grows, becomes more sophisticated and takes on additional challenges.

9 Things to Include in Your Business Plan

The business plan can be used throughout the life of your nonprofit, changing as the organization does. A startup's business plan may be quite brief while the business plan for a mature nonprofit may be quite long. 

Business plan formats for nonprofits vary according to the type of organization, but several elements seem to show up frequently

Executive Summary

This is a concise overview of your entire business plan. Make it interesting enough to keep the reader engaged. Describe your nonprofit's mission, its history, your unique strengths, and assets.

 Provide a list of your products, services, or programs. Don't forget your marketing plans and how you will finance your organization both in the short and long term.

Organizational Structure

Describe how your nonprofit is organized, from board to staff. Describe any subsidiaries, the stage of maturity your organization has reached, your objectives, plans to scale (or grow), and list a few of the trends in your specific nonprofit area.

Products, Programs or Services

List and describe what products you may produce or distribute, what programs you will offer, and/or services you plan to provide. Include special features such as delivery processes, sources of products, the benefits of what you offer and what your future development plans are. Provide information on any copyrights, trademarks or patents your organization has protected. Explain any new products and services you will eventually launch.

Marketing Plan

Who are you trying to reach? How will you reach them? Describe the constituencies you serve. What are the subcategories of your constituency? Explain the trends in your market, the need for your nonprofit's services, and what other organizations are competitors or possible collaborators. Detail your promotional efforts, market researchmedia outreachcommunication channels. Include examples of your promotional material in the appendix.

Operational Plan

How do you plan to deliver your services? Where will your facility be located?

Do you have equipment and/or inventory?  Explain how you plan to maintain your operation and how you will evaluate your programs and services.

Management and Organizational Team

Who is on your management team? Provide information about key management staff and their expertise. List the members of your board. Detail their expertise. List financial sponsors. Include an organizational chart. Explain lines of responsibility. Provide an assessment of current and future staffing needs, including how you will use volunteers.

Capitalization

Explain your organization's capital structure. Detail outstanding loans, debts, holdings, bonds, and endowments. If there are subsidiaries, explain how they relate to the primary organization.

Financial Plan

What is your nonprofit's current and projected financial status? What are your sources of income? Consider including an income statement, balance sheetcash flow statement, and financial projections. Explain any need for financing. List grant awards, major contributions, and in-kind support. Include your fundraising plan.

Appendix

Often included here are resumes of key staff, board member lists, pertinent charts and graphs, promotional material, strategic plan, and annual report.

Finally, don't let your business plan turn to mush just sitting on a shelf. Revisit and revise it frequently. You'll be glad you started your nonprofit with a well-thought out plan and that you kept it up to date.

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