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Posted by Sarah Brown on 01 Jun '12

Dealing with an uncertain future - the role of business planning

Sarah Brown, explains the importance of business planning for charities. Originally published in Charity Times.

It can seem that the only good reason to write a business plan is to keep the funders quiet. As a consultant that specialises in strategy development, business planning and evaluations I normally get the first phone call from a charity because an existing funder wants to see a strategy and business plan or a potential funder insists one is attached to the application. Some organisations claim they want one to improve their efficiency but when asked who will read it list funders first.

Even the name can seem alien “business”. And when people seek help from business planning text books the mentions of sales, competitors and worst of all profit can make it seem like the exercise of writing the plan is just that, an exercise; an academic waste of time to meet the arbitrary demands of a funder.

However I believe it is not only critical to the success of any charity, particularly at the moment, but that you are also cheating those you help if you don’t plan. There are four reasons.

Creating inspiring visions and goals

If you only keep on doing what you have always done at best you will only get the same results and at worst you will fail because the environment has changed. However if you take the business planning process as an opportunity to dream and consider new opportunities then the organisation can blossom.

Working with one team of workers and their management committee at a women’s refuge we imagined what award the organisation would be getting in five years time. One group presented a vivid picture of the women who had left the refuge getting a business award for the herb business they had set up and expanded. They had learnt the skills and gained the confidence to launch it while at the refuge and suddenly the charity saw a new way to help their users. The plans for a new building were expanded to include herb beds and the services to include training in setting up businesses.

Failing to plan is planning to fail. Without clear goals, which often happens when you have no business plan, you do not know when you have reached your target. Nor can you look for ways to achieve them. Psychologically we notice what is important to us, once we want a new car we notice all the cars of that make, before we didn’t. If you have no goals, or goals that are not clear to everyone in the organisation then you aren’t using the brain’s ability to find ways to achieve them.

Equally important working together as a team you can create shared goals and visions which everyone understands, staff, trustees, volunteers and users. Does everyone in your organisation know where you are going? Does everyone know what the values of the organisation are and how they impact what you do?

Avoiding future roadblocks

The business planning process forces you to look at what is happening within your organisation and in the world close by and beyond. What are other charities doing? How will the new government policy affect you? What are the opportunities and threats that await your organisation and what are your strengths and weaknesses.

Doing the simple SWOT(strengths, weaknesses, opportunities, and threats) analysis in an honest fashion as a team can highlight differences in viewpoint and failures in communication. With one organisation the process highlighted that the management committee really did not understand what the organisation did and the staff were appalled. However the process gave them the opportunity to discuss whether new ways of working were a strength or a weakness. Without that discussion the charity would have had major problems as it launched its new expansion.

Planning the resources you need

At a minimum even if one person prepares your business plan and you get none of the team building or shared visions that can arise you should at least get a chance to match your resources to your goals. If you are often in crisis management mode that suggests that your forward planning is flawed or you have a problem with resources.

A good business plan forces you to identify who will do what and how they will do it and how much money will be needed. This reality may be scary but it is better than not knowing.

Being prepared for the worst

Finally a business plan gives you the opportunity to consider the worst and plan for it. If the government involvement in Afghanistan forces budgets to be cut what will be the impact on your organisation? If unemployment rises will your income fall?

What are your high risks and low risks and how will you plan to meet them? At a presentation on business planning to about 60 charities only four had put a risk assessment into their business plan! In my experience anyone reading the plan would prefer to know that you have thought about the problems and thought of potential solutions rather than just hoping everything will go well. An honest risk assessment shows that you have good management and honest self awareness.

I feel passionately that business plans create better and more successful organisations. The process strengthens the organisation and if you then actually use the plan as a guide for action what you can achieve can be remarkable. I know of one organisation which felt that creating a business plan resulted in them tripling in size in three years and providing a much better service for their users. What could you achieve, maybe something that is now just a dream?

Since 1991 we have built a reputation for giving clients the conceptual and practical know-how that is required for success, whether it is measured by funds generated, improvement in reputation or levels of support.

Tags: business planning charity funding and investment

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