Why are business plans important?

While a business plan might feel like a chore to complete, if done properly a good business plan should be a tool that you refer to again and again.

Planning what is going to be in your business plan is a good chance for you and your colleagues to use your experience and passion to work out how you are going to achieve the organisation’s vision. The plan itself is the end of a process of discussion, collaboration, learning, and problem-solving with your colleagues

What exactly is a business plan? 

A business plan describes your organisation and its activities, or a specific project.

It sets out:

Your goals (what you want to achieve)

Your plans (how you aim to achieve your goals)

Your finances (where you are now in terms of money to run your organisation)

The risks you face (what could happen if you are unable to achieve your goal).

Your plan should also show that you understand your market (your competitors who may be raising money in the same field and the people/organisations you will be approaching for funds to help you achieve your goal), and that the work you do has both a social and financial return (the impact on your charity and the people/cause you help).

When would I need a business plan?

You may need a business plan if you’re:

Trying to secure funding.

For example: you are applying for a major grant from a new funder. The new funder has asked you to provide information on the impact and outcomes from the project you are asking them to fund and whether their grant would be seen as ‘value for money’.

Setting up a new organisation. Your staff, board, potential partners, and supporters will all want to know who you are and how you will operate, what you do and how you plan to do it.

You are looking to attract new donors and want to roll out this message wider than to your current donor base to the media and public. For this you need accessible clear aims and objectives and how you will use the new donations. 

Starting to trade in an existing organisation. Your board, partners and possibly bank will want to know that this has been planned and that you have a robust financial strategy.  

Is there a difference between a strategy and a business plan?

Organisations, particularly charities, often publish a strategy that incorporates an overview of their operational plan. Conversely, they might also have a business plan that discussed their strategy, but which is used as an internal document.

Strategy – a strategy should be a set of high-level decisions that set an organisations priorities and purpose. These decisions are based on what you believe are the best ways of achieving your mission. A strategy document is likely to include a lot of information about the issues that you’re trying to address and the impact that you want to have.

Business plan – this is a much more detailed description of how you’ll achieve your aims, the market in which you’re operating and the resources you’ll need. It may also include an operational plan that describes your main activities or outputs, and important milestones, timescales, and performance indicators.

A way to look at it is the strategy is a webpage, the business plan shows the full code needed to bring that webpage to life.

What should a business plan include?

Before you start recruiting volunteers, you should understand the following:

Summary introduction – many plans start by summarising the key points of the business plan. Remember that some people may only read this section, so make it a clear, concise overview of who you are, what you want to do, and how you plan to do it.

Your organisation – in more detail this gives you the opportunity to give details of who your organisation is and what you do. This may include your vision; your mission, values and aims; your history; the current state of your organisation (e.g., turnover, number of staff); your legal status (CIC, registered charity etc); your products and services.

Your market (area you work in) -Your business plan should show that you have a clear and detailed understanding of your market. Use this section to describe your stakeholders, including your beneficiaries, customers, and donors; any market research or testing you’ve done; your marketing strategy and plan, and how you intend to reach your audience; any market or competitor analysis that you have done.

Your operational plan – this is where you give an overview of the day-to-day operations of your organisation. This may include descriptions of the resources you need to run your business; the people and organisations you work with (e.g., partners and suppliers); your premises and the equipment you use; your process for taking donations; any legal requirements that your organisation needs to meet (e.g., do you run a building or events where you may need licences as well as public liability insurance).

People – here you would describe the people who are crucial to your organisation and any staff changes you plan as part of your business plan. This may include biographies of your management team or trustees, and an overview of any planned changes to your management or staffing structure. 

Impact – as a charity, your business plan needs to show not only a financial return, but also a social one. This social return is your impact – the difference you make for the people and communities you work with. Give a clear and concise description of the impact your organisation has. Try and back this up with details such as the change you want to make; how you plan to measure that change; how you will use these learnings for the future of your charity and how you will tell people about the impact your charity is having  

Finance – you will need to give a summary of your finances, including all your costs and expenditure, and your main sources of income. In this section you should also include your financial forecasts. Financial forecasts are important in any business plan. Be realistic as unrealistic forecasts will let your plan down. The key element to include in your forecast should be a cash flow forecast.

Risk – finally you need to set out the risks you face across everything you do. These could include governance risks; external risks; regulatory or compliance risks; financial risks; operational risks. The key here is to explain the likelihood of each risk, how you plan to manage it, and the impact it could have on your organisation.

Business Plan Templates

There are numerous business plan templates to help you with the structure but one of the most user friendly comes from The Princes Trust and you can see their free templates to download here