Why Right Now is the Perfect Time for Your Nonprofit to Revisit (or Create) Your Business Plan

In the early days of COVID-19’s spread within the United States, La Piana Consulting surveyed 750 social service agencies on how the pandemic was impacting their business. They found that 90 percent of respondents experienced a revenue loss in April 2020 and, on average, respondents had laid off or furloughed 18 percent of their workforce. The survey also found, however, that respondents were proving their ability to adapt to a changing landscape with eighty percent of respondents have moved at least some of their programming to a digital delivery method and over three-quarters (83 percent) having put work-from-home arrangements in place.

Nonprofits, by nature, are nimble in design as they must be able to quickly shift priorities and add or retire lines of service as a result of available funding (regardless of if that funding comes from grants, donors, or transactions). On the whole, they can leverage volunteer labor, which helps spread the impact of their dollar when it comes to attracting and retaining a talented workforce. However, if you work in or with nonprofits, you also know that success in both nimbleness and creatively enhancing the impact of revenue is challenging even in the best of times.

Many (if not most) would argue that we are not currently in the best of times, which then begs the question: How can nonprofits best navigate current events and retain their operations?

This requires, above all else, funds to keep the doors open, talent to be retained, and services to be provided. And while the federal government has provided some relief through various CARES Acts (start here to read our overview of these packages), there is growing concern that a shrinking tax base at the federal and state level may jeopardize the government’s ability to continue to support nonprofits; especially those not on the front line of addressing the COVID-19 pandemic.

So where should a nonprofit turn?

For one, nonprofits should turn to their supporters! According to Barrons, donors in the United States are allowing for the release of more flexible and unrestricted grant funds to support those working on social issues. Forbes encouraged individuals to increase their donations given a change in the country’s tax code built into the April 2020 CARES Act and American Psychologist released a study identifying a 12-fold increase in the delivery of tele-based mental health services since the pandemic began. This shows that both funders and consumers alike are changing their behavior to adapt to the new normal, which should be encouraging to nonprofits.

Regardless of where new or continued sources of funds come from, the first task is getting in front of the right audience and knowing what to say once you are there. For many, hearing this makes them automatically think about a business strategy, a marketing plan, or a consumer engagement campaign. And to those things, we at Atrómitos say, “Yes! Do those things. But make sure that they are all integrated.”

Now is a great time for your nonprofit to comprehensively and cohesively revisit what you do, why you do it, and how you will get things done. Now is the perfect opportunity to update (or, in some cases, create) your business plan.

The Fallacy: Business Plans are Internal Documents

Most nonprofits are brilliant at putting together glossy annual reports which showcase accomplishments from the previous twelve (or so) months. These reports are vital pieces of collateral for nonprofits to ensure that their successes are widely known so that customers continue to seek out their services and funders continue to support their work. Similarly, nonprofits regularly publicize their strategic plans so their communities can understand how they think about their work and what milestones they are hoping to achieve.

And while annual reports and strategic plans are very important, they are both only a piece of the story. Each share one of the polar ends of the work nonprofits accomplish: annual reports share what has been done while strategic plans identify what will be done. Oftentimes these two documents do not fill in the gap between the strategy and the accomplishment; they are missing the how and the why.

Without the how and the why nonprofits have to rely on their past successes in order to bring in revenue. But what happens when your nonprofit is seeking to expand into a new line of service? Has your nonprofit been able to leverage previous accomplishments in building new programs for an emergent need in the communities you serve? Your staff and Board of Directors may have all the confidence necessary in your organization’s capability to stand up a new offering, but are they able to adequately convey that confidence onto customers and funders?

In large part, the confidence of your staff and Board comes from an internal understanding of how your organization operates: what resources you have to leverage, the breadth of talent within your staff, the plans you have in place to communicate with your consumers, funders, and community partners, and what metrics you are tracking to prove your success. This understanding is your business plan and, even if it is not in written form, it is most likely widely understood by those employed by and overseeing the organization. It is the reason your staff comes to work each day and why your Board members continue to volunteer their time. So why not share that with everyone?

Atrómitos sees your organization’s business plan as the dynamic, living foundation of how and why you do the work that you do. It helps your supporters, customers, and funders understand how your organization is built and, by extension, understand your organization’s ability to expand, grow, and adapt to change. A business plan outlines your ability to communicate with your stakeholders as well as what is needed from them in order for you to thrive. We encourage bringing visibility to your business plan, in partnership with annual reports and strategic plan, so that current and future stakeholders have a 360-degree view of your organization and all its capabilities.

So pull your plan out of the drawer, find it on the shelf and dust it off, or prepare to write it for the first time, and let’s get down to it.

How to Build a Business Plan

In order to build a business plan that best suits your organization, you need to be purposeful in thinking through two things: (1) how you will write; and (2) what you will write.

HOW YOU WILL WRITE

As mentioned before, your business plan should be considered a living document within your organization: adaptable to changing times. As the context within which your organization operates changes, so too must your organization to stay relevant and successful. In order to do so, you must leverage data to inform your business plan. And we mean all of the data, from data about your customers, your competitors, and collaborators to data about the geography within which you provide services. Understanding data relevant to your organization will help you identify:

1. The problem(s) you solve;
2. Who you solve the problem(s) for; and,
3. Why your solution is better or more unique than others in the field.

Without data, you cannot be sure that what you offer is still relevant for the customers you wish to serve. Without data, it will be impossible to make the case for why funders should invest in your ingenuity and skill set. Making decisions without data is, after all, just guessing. So, in case the point isn’t yet clear, we will repeat: Use your data.

The second key factor to a strong business plan is feedback from your stakeholders. Too often, nonprofit leaders believe that the nuts and bolts of achieving an organization’s mission fall under a “within the family” category.  

In some ways, this is true. It would not, for example, be appropriate to let your stakeholders dictate how you allow your staff use time off, whether they can work remotely, or what holidays you recognize. However, there are a lot of factors that contribute to running your organization that stakeholders can and should offer feedback on. These might include:

• Who are you marketing to and why?
• How many of what type of resources do you need?
• What problem(s) in the community are you hoping to address?

Our advice: Identify stakeholders who are key to your organization’s success and engage them in reviewing and offering critical feedback on your business plan. After all, these stakeholders may represent the customers you are hoping to serve or the funders you are looking for support from; it is significantly easier to develop alignment with these players along the way as opposed to after your business plan has been finalized.

The last “how” to consider is to simply be honest. Nonprofits face limitations; we all do. Too often, however, those limitations are seen as weaknesses or as an opportunity for someone to tell us why we cannot do something. In response, we highlight what we’re good at and hide what we are not.

But what if our limitations were just as important as our strengths? What would happen if we could confidently talk about what areas we know we need to improve, and how those changes could result in better service to our customers? Atrómitos believes that a business plan is your opportunity to demonstrate just that. Yes, the plan should accurately describe how and why you do what you do. And in the how, you get to help your customers and funders understand why investment in new work or a specific expansion will improve outcomes.

WHAT YOU WILL WRITE

While all nonprofits are unique, there are common elements that we believe should always be included in your business plan. These include:

• Executive Summary: While this section appears at the very top of your plan, this should always be written last. This section is geared for the audience member who only needs the highlights or wants quick access to the most salient points.
• Organizational Structure: Everyone knows you have someone leading the organization, and some may know a person in charge of a program. But who is in the middle? How does one specific program get enough oversight to align with the organization’s larger vision and mission? Including your organizational structure will help your audience figure out how you fit together and who key contacts are for their specific needs.
• Market Overview/Needs Assessment: Nowhere will your need for data be more prevalent than in the Market Overview/Needs Assessment. Atrómitos sees this as the heart of your business plan: it tells the story of why your community needs you. Do not skimp on the details here.
• Products/Programs/Services: Just by being a nonprofit you, by nature, offer a large suite of products, programs, and services. Do all of the customers you serve, however, know about all they can access from you? Do all of your funders understand the full suite of programming they could support you in providing? A small program to you may make a world of difference to the customers it is serving. You do amazing work. Showcase it all.
• Marketing: How will you reach each of your audiences? What media will you use? If you list your job on a LinkedIn profile, you are engaging in marketing. When you introduce yourself at social functions, do you mention what you do for a living? That’s marketing too. Yes, this section needs to include your social media plan and your public relations strategy. But we encourage you to think even bigger (or smaller, depending on how you look at it). What colors does your organization use? What is your brand image? Do you have a style guide? As business guru Seth Godin puts it: “Marketing goes way beyond advertising, email pitches or the way you do pricing. In fact, most of the time, marketing has nothing at all to do with money. We’re surrounded by people who would like a piece of our attention, a bit of our trust, and some of our action. Those people are marketing to us.”
• Operations: While passion for work is important, it does not guarantee work is done in an organized or sustainable way. That is what your Operations section is for. Customers will want to know where you do business so they know where they can access you. Funders will need to know what technology you are using so they do not question budget items for a new suite of technology platforms. You’ve already talked about the full range of products, programs, and services you offer; this is your chance to show the world you know how to offer those services efficiently and cost-effectively.
• Performance Evaluation: This is the second area driven by data. In this section, however, the data will be a direct result of the work that you do. In the Market Analysis/Needs Assessment, you identified what problem(s) you are solving. But how do you know you’re making an impact? What metrics, either internally or within the community, are you tracking to ensure customer dollars or funder investments are working towards the better good? A well-thought-out Performance Evaluation section helps hold you accountable and makes your annual report significantly easier to write.
• Finance: You can’t do what you do without funds, and there is universal acceptance of that truth. But you are less likely to succeed in raising investment dollars if your audience thinks their funds will go into the black hole that is your financial infrastructure. Atrómitos believes financial transparency is critical and showcases your organization as a good steward of fund utilization. More than a budget, the Finance section outlines the range of funding resources necessary to do your work and what those funds support. Unsure how to start talking about Finances with your staff or Board? The National Council of Nonprofits and The Bridgespan Group have resources to help you get started.

Put It All Together

Now you have the why and how of a business plan. Easy, right? Ready to go? …No?

If not, you are not alone. Starting the journey is sometimes the hardest part. But do not worry: Atrómitos is here to help. If you’re ready to jump in and start writing, try using our introductory template by entering your email below. Or contact us for a free, no-obligation consultation if you want to kick some ideas around.

Regardless of your next step, we urge you to take it. And we’re here to help if you need it.