October 18, 2019
 
Preparing for the Future Starts by Creating a Good Business Plan

Nonprofits are under pressure from numerous sources to act more deliberately, but many, particularly smaller organizations, may lack a comprehensive, detailed plan and perhaps not know how to construct one. The Nonprofit Business Plan will put them on the right track.

David LaPiana, an expert in nonprofit strategy, and his team of co-authors recognize the problem many nonprofits encounter: the lack of a rigorous methodology that connects mission to strategy to sustainable execution.

Even more basic, many organizations (and not just nonprofits) operate without a clear definition of “strategy,” which makes it difficult to create a business plan distinct from a strategic plan.

LaPiana helps by defining strategy as “a coordinated set of actions aimed at creating and sustaining a competitive advantage in carrying out the mission” and a business plan as a tool that “tests the proposition that a particular undertaking—program, partnership, new venture, growth, or the entity as a whole—is economically and operationally viable.”

Business planning, he writes, is a process through which decision makers can understand and anticipate the consequences of financial decisions. And that's where its value lies – by offering a way to think about the consequences of such decisions. The world will always evolve, and today's plan may soon become outdated, but a sound process for evaluating new conditions and opportunities should serve the nonprofit through waves of change.

A business plan has many uses, including helping a nonprofit:
  • Understand whether its current business model adequately supports its mission.
  • Test the idea that growth will fix financial problems.
  • Identify assumptions that may be too optimistic, as well as negative trends.
  • Evaluate and prepare for a change in programs or clients.
Business plans also have important secondary uses by providing support for fundraising and recruitment of senior level executives.

In addition to laying out this important groundwork, The Nonprofit Business Plan offers guidance for developing a plan and uses a prototype table of contents as a road map for creating a solid document. Case studies and discussion of issues surrounding key elements of a business plan make the book a worthy guide. Many organizations will find the detailed attention given to developing financial projections helpful, as a business plan ultimately succeeds or fails on these projections.

While it would seem to go without saying, LaPiana appropriately emphasizes that the financial projections included in a business plan must be communicated well. Those who read the plan, including non-finance experts, must be able to clearly and fully comprehend what the plan describes and how the organization will achieve its goals. To that end, and consistent with the hands-on, practical approach of the book, the book offers dos and don'ts that any business plan writer will find helpful.

For those who have never written a nonprofit business plan, and who may not have even seen one, the book includes a sample plan in the appendix, which in itself provides valuable guidance.

How do you know if your plan is good? La Piana's answer: If those who read it, including board members, donors, political leaders, and interested funders, are reassured that the proposed program, venture, partnership, or growth strategy makes sense and has a high likelihood of success.

The Nonprofit Business Plan is available from Turner Publishing.

Reviewed by Peter Lowy
July 2012


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