or that our current sources of revenue will continue to provide this level of income? ” You can think of a business plan as a narrative - or story - explaining (ideally in a way that will make sense to someone not intimately familiar with the nonprofit's operations) how the nonprofit will thrive given its activities, its sources of revenue, its expenses, and the inevitable changes in its internal and external environments over time.
According to Propel Nonprofits, business plan usually should have 4 components that identify: revenue sources/mix; operations costs; program costs; and capital structure.
” 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. ” Other questions that a strategic plan might answer include: “What needs to happen so that we can achieve success? ” More resources on strategic planning for nonprofits.
The strategic plan takes all that the business plan has identified and answers “” the desired results will be achieved, such as, “How will we accomplish all this with limited resources? Example: One finding from a nonprofit’s “business plan” could be the need to diversify financial resources.
Business planning is a way of answering, “What problem(s) are we trying to solve? ” 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.It's a "plan" after all - and the underlying assumptions may change.If they do, then having a plan can be useful during the process of identfying adjustments that need to be made to respond to changes in the nonprofit's operating environment. A business plan prepared for a bank (to support a loan application) may be different from a busines plan that board members will use to help define their priorities in recruiting new board members.Yet, we often read opinions in the popular business press that the business plan is no longer relevant.All you need is a business model, we are told by business gurus.A business plan can also take into account assumptions that exist today but may change in the future: Are there certain factors that need to be in place in order for those income streams to continue flowing?The plan should address both the everyday costs needed to operate the organization as an entity, as well as costs that are specific to the unique programs and activities of the nonprofit.A business plan can explain: what the income sources will be to support the charitable nonprofit's activities.What will be the types of revenue (sometimes referred to as "income streams") that the nonprofit will rely on to keep its engine running?Ideally, the business planning process also takes into consideration the potential for changes in basic assumptions about the nonprofit’s operating environment.For example, many nonprofits rely on government contracts or grants.