Here is an outline about what you should cover in your business plan. Each topic should be touched on in the Plan. As we noted earlier, the business plan can be short or long. It can be narrative or in an outline. It is never cast in stone. It is a document that changes over time.
Title Page - The Title Page will have the name of your organization, a list of the board of trustees or directors, the chief executive officer (I will refer to this person throughout this paper as the "executive director"), and the office address, telephone and fax numbers. If there is an e-mail address and a web site, include them as well. Note: some States call the board "trustees" and some States refer to the board as "directors". There is no real difference; use the word that is in your State nonprofit law.
Executive Summary - Actually you will write this last but it should be placed right after the Title Page. The reason you will write this last is that it summarizes briefly all the material following. The Executive Summary will tell the reader how the nonprofit is organized. It tells who you are and the function of the nonprofit organization. If you are looking for grants and money or will conduct fundraising activities, it will summarize your method and purpose for raising money that way. Key elements of the Executive Summary include clear identification of the organization, at least one sentence each on credibility, history, the problem being addressed, experience, goals and objectives, purpose and methods, assessment and evaluation. Include budget totals - total project cost, funds already obtained. Be sure it is brief, it is clear, it is interesting and it is truthful. This can also serve as a separate brief document to leave with potential supporters.
Corporation Description - Here you will give an overview of the function of your organization. Discuss briefly a history of how the idea of the organization began, its projected size (building needs, space, employees, equipment and tasks), a description of the service you will provide, how you will provide it and the community or the market your organization will be in. Character is the general impression you make to a prospective supporter, contributor or funder. Describe the character of your organization and its leadership. Discuss the values this organization and its leadership exhibit. Discuss the credibility of the principals, the problem being addressed, goals and objectives, purpose, methods and evaluation to be utilized. What are the benefits offered by the organization to the target population? Supporters and funders will form a subjective opinion as to whether or not you are sufficiently trustworthy actually to be able to perform the service and to handle the funds. The educational background and experience of the board and staff will be reviewed. The quality of the references and the background and experience of your leadership and employees will also be taken into consideration. Discuss those items here.
Market Analysis, Priorities, Data - Starting a nonprofit requires doing your homework, study and research. In this section you will discuss the research you preformed and the conditions and trends in the needs you want to meet. Write about the need for your service and the demand for it; how is it unique? Know what is happening in your community. Describe the priorities of the service or product and show how you developed the priorities. Describe how many other major competitors you have, both for-profit and nonprofit organizations, how much of the need your competitors meet and control, and your strategy for gaining a place meeting that need or developing a new niche. Describe how you are going to communicate with the community you intend to assist, to potential partners and funders. You need to be able to explain any barriers that you will have to face at the beginning, how you will maintain and sustain your activities as a nonprofit organization and how you plan to overcome those barriers. You may have discovered a gap in services; describe that gap, why you believe it exists and how you will close that gap. Are there other organizations that are willing to help you close that gap (list them and include letters of support in the Appendix)? How many people or other needs will you serve and what are those needs? What are the priorities and how do you know they are the priorities? Describe briefly the methods used to develop the priorities. Place the demographics about the need for this service in this section. Detailed surveys, tables and charts can be placed in the Appendix. You may need statistical information or data from the US census, for instance. Who will be your collaborators or partnering organizations? Do not name them unless you ask them and they agree to be included. Are there community leaders, both public and private, who support this effort? Have they written supporting letters? Put such letters in the Appendix. Is there anecdotal information that can support your plan?
Services - Explain your vision, your mission, the goals and objectives, the kind of services that will be provided and the activities, functions, evaluation and results in detail. How will other people know that you are able to meet these goals and objectives? How are your goals and objectives measurable? How will anyone know you are meeting your stated goals and objectives and meeting them timely? How do you know the activities you have planned will meet the stated goals and objectives? You have to answer the question, "So what?" So what if you will perform these activities? So what if you outline an extremely busy and detailed activity list? What will be different because you perform these activities in the way you perform them? What difference will it make? How will people or the problem improve or be alleviated or resolved? I have met with many community groups that work very hard and I have asked the question, so what? What have you changed or accomplished? Many are not able to articulate and prove they accomplished or changed anything. So…what will you change, how will you change it and how will you know your activities produced the change? What are the conditions under which your service will work? What is your mission and what is your mission statement? If your mission statement is brief and you have a logo, consider placing them on the Title Page as well. Here are some thoughts about a mission statement: There are those who believe it should encompass the basic reason for existence and can be several sentences long. There are others who say make it short so everyone can say it by memory and so it will fit on a T-shirt. Either way put the time in on creating this. It is not easy. Include others in the discussion and allow refinement as time goes on. We will discuss mission statements in a later article.
Operations - Explain how you will create and how you will deliver your service and meet the identified priorities and need(s). Specify how you will get your service out the door to customers/clients or supporters and meet the needs you see. Give the location of your service and state how and why that location was selected. Are there any barriers for your clients/customers because of this location? Will you be compliant with all laws regarding disabilities? Do you have a storage area? Where will your inventory be warehoused or kept? Create a flow chart that shows the steps you will take to offer and to provide the service. What records will you need to keep and what reports will you prepare about the organization? The State, IRS and funders require written reports, usually annually. In order to be recognized as a tax exempt organization (so that contributors may take a tax deduction for contributing) you have to complete and file IRS Form 1023. Form 1023 will take you hours and hours to complete. One of the most difficult sections of 1023 is Part IV where it states “describe your past, present, and planned activities in a narrative”. See also Part VIII where you are asked to list and discuss certain specific activities. The information you provide in your Business Plan here will help you be prepared for that IRS’ narrative and required details.
Marketing Plan - Describe how you intend to provide your service and who will use it. How will people know about the service? Describe your distribution plan and advertisement plan. Describe how you are going to market the mission, the vision, the activities, the results. Describe how you will reach potential customers and clients, how they will learn about the organization. Give the details of your marketing plan. Will you use fliers, the Internet, local newspapers and media, e-or snail-mailings, web site, blog, social networking, communication network or word of mouth? As with any other business the new nonprofit has to include in its marketing plan product positioning. Placing the NPO and its mission in front of its customers, clients, constituents, possible supporters and volunteers is vital to the success of providing the service. How will people know your address, your telephone number, how to reach you? For many new NPOs the marketing plan seems to be to have a web page up and running. I am surprised by the development of a web presence before the group is even incorporated. Do not be confused by this - I believe in a web presence but it is only one part of the marketing plan that has to be broader. How will your organization handle public relations? How will you protect privacy when required? Who can speak for the organization? Will there be a committee of the board to develop and hand marketing and public relations? If there will be such a committee, discuss its role here. If there is no experience in the group concerning marketing, how will you overcome this barrier? How will the organization handle bad publicity and other risks? Has the board detailed a risk assessment? There is a relationship between the mission of the organization and the marketing of the organization. For some material showing that discussion see http://www.independentsector.org/mission_market/index.html
Board of Trustees and Members – It takes a TEAM to raise a nonprofit organization – to raise it, to maintain and to sustain it. That team begins with the governing body. Describe the governing body of the organization, the board and indicate whether you will have members. Do you have bylaws? If you have bylaws, place them in the Appendix. What role will the members play? Who is on the board and who are the officers? Describe how these individuals became members, board members and officers. What experiences do the board members bring to the organization and its mission? NPOs should carefully consider paying for board and staff Errors and Omissions (E&O), Directors and Officers (D&O) insurance and liability insurance as protection in legal actions. If you intend to have a significant web site presence on the Internet, consider insurance to protect the organization with that as well. In my view insurance is a necessary ingredient to the budget, it is a cost of doing business. See my material Insurance Questions for Nonprofits - http://www.idealist.org/if/i/en/faq/144-221/40-8 . Attach resumes of at least the officers to the Appendix although it would be more helpful to have the resumes for all board members if the board is not too large.
Management and Personnel - Explain who will direct the day by day operation of the nonprofit. Who is she or he? What is the job description? Attach a job description and resume to the Appendix. Who will work with that person? What are the written standards that will be used to hire, train and evaluate the executive director and other staff? Describe how their experience and leadership will contribute to the success of the mission of the organization. Demonstrate the use of technology in your plan of service, particularly communication, finances and budgeting, Internet, e-mail strategy, web site and blog development, and availability of the technology to employees, volunteers and constituents. The organization needs to outline a risk assessment in this section and show how the mission and activities require the organizations to have risk management. What might cause risks, how will it be managed and by whom? Give an outline of the work plans that will be followed by employees and volunteers to meet the mission of the organization. A work plan shows what work will be done, who will do it, how it will be accomplished, where activities will take place, the date by which it will be done and feedback, evaluation and analysis of the effectiveness and efficiency of the tasks accomplished. Outline the employee policies you have or will have in place such as a written personnel manual, anti-sexual harassment policy, equal employment opportunity and so on; government and private grants require copies of many formal board-approved policies of this kind. Include written employees' job descriptions and personnel needs. Include copies of resumes for all known key staff people in the Appendix.
Funds and Resources Required and Expected Use of the Funds - If you are going to raise money, seek grants, hold fund raisers, collect dues, sell products, explain how you intend to raise the money, why you need the funds, how you will use the money, and how you will maintain fiscal records. Show how you will account for the money and what records you will keep. Please keep in mind that the board should prepare a resource development plan separate from the Business Plan. The resource development should address not only funding but other resources such as volunteers, pro bono assistance, low-cost or donated material and goods, such as through TechSoup, linked below. Describe your accounting system and the policies you have or will have in place concerning salaries and fringe benefits, travel expenses, bank reconciliation, separation of functions and so on. State a specific amount of money you will need for the first year and for the next two years. If you have letters of support and persons who are willing to provide funds once you are approved by the IRS as a nonprofit organization, consider whether to include them in the Appendix. You may not want to publicize them at this stage of your progress; they may want to remain anonymous. Describe your plan to secure funding and other resources and give a contingency plan in case your initial plan fails. One of the three most difficult sections of IRS Form 1023 is Part IX, the Financial Data. Form 1023 states in part: “If in existence 4 or more years, complete the schedule for the most recent 4 tax years. If in existence more than 1 year but less than 4 years, complete the statements for each year in existence and provide projections of your likely revenues and expenses based on a reasonable and good faith estimate of your future finances for a total of 3 years of financial information. If in existence less than 1 year, provide projections of your likely revenues and expenses for the current year and the 2 following years, based on a reasonable and good faith estimate of your future finances for a total of 3 years of financial information.” The time spent in preparing fiscal information here and in the next section below in the Business Plan will reduce the time and effort answering the questions in Form 1023, Part IX. Demonstrate the role of the board in funding and accounting in this section. Indicate how the organization will be maintained and sustained during the first three years. See internal controls suggested by the
New York State Attorney General - http://www.oag.state.ny.us/charities/internal_controls.pdf
Financial Statements and Projections - Include projections and budgets for the expected performance of your nonprofit for the upcoming three to four years. You will need to demonstrate your understanding of basic accounting and the financial concepts that are crucial to the success of your organization. Detail the budget for three to four years covering personnel, fringe benefits, employee taxes, telephones, computers, insurance, space costs, travel, training, board development, furniture, supplies, insurance and so on. By using complete and accurate projected financial statements, you will be able to communicate to a prospective contributor or funder how these concepts will be successfully applied in your organization. The narrative about the finances will be in this section and the supporting documents are to be attached to the Appendix.
Appendices/Exhibits - This section will document any issues you cannot address in other sections. An example is an agreement you have with other nonprofits or individuals, contracts for the lease or purchase of your property, equipment, job descriptions, professional, operating or health licenses and so on. Add any surveys or questionnaires or other assessment tools you used to assess the mission, the market, the purpose, activities, the priorities and the risks. Other sections above list other documents to include in the Appendix. The material that you use here should be ultimately in separate files for retrieval. You will many of them over and over again.
Are you finished? Then you can prepare the Executive Summary.
The Nolo Press has an excellent brief article answering the question, Why You Need to Write a Business Plan linked below. The article addresses the reasons to create a business plan, the importance of financial forecasts and the need to raise money. There are temptations to skip financial projections; they are hard. There is an old bromide that says the devil is in the detail. That is true for the business plan and will be in every grant application you prepare. Do not skip the financial projections.
SCORE has a useful 60-second Guide to Writing a Business plan, http://www.score.org/60_guide_business_plan.html. They also have a 31-page business plan template linked below. While it is aimed at small businesses, it can serve the purpose for a nonprofit as well. SCORE is a nonprofit association that provides entrepreneurs with free, confidential face-to-face and e-mail business counseling.
See also http://www.score.org/business_toolbox.html
Program precedes money. Planning precedes program. You have to start the program of your mission before others will provide funding. It is best if you have a business plan before you start the activities.
Reporting Program Service Expenses on the 990
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