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Posted by Sarah Brown on 30 Jun '24

Who should be reading your business plan?

Why and when do you write a business plan? For many businesses, it's to secure a loan or investment. For charities or social enterprises, it's to obtain a grant. For larger organisations, it's often a routine part of the calendar. But why are external readers more important than the people within the organisation?

Being clear about what you aim to achieve, assessing its feasibility, and planning how to accomplish it are crucial. That's why everyone in the organisation needs to understand, not just external readers.

Business planning, like planning a holiday or planning to get a new house, should be inspirational, a means of achieving more. It should be an exciting and motivational reading for everyone involved with and in an organisation at whatever level. It is crucial to be clear about your goals, assess their feasibility, and determine the steps to achieve them. A well-crafted business plan can provide this clarity.

Much of this blog is based on an article I originally wrote about the importance of business planning for charities in The Charity Times, but it is relevant regardless of your legal structure.

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

For social entrepreneurs, even the name can seem alien: "business". When people seek help from business planning textbooks, 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 critical to the success of any charity, particularly at the moment, and that you are also cheating those you help if you don't plan. There are four reasons.

Creating inspiring visions and goals

If you continue doing what you have always done, you will likely get the same results and fail because the environment has changed. However, the organisation can blossom if you take the business planning process as an opportunity to dream and consider new opportunities and ways of creating social impact.

Working with one team of workers and their management committee at a women's refuge, we imagined what award the organisation would get in five years. 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 see 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 the organisation's values and how they impact what you do? Do you share stories of how you are bringing your goals to life?

blocked road

Avoiding future roadblocks

The business planning process forces you to look at what is happening within your organisation, the world around you, and beyond. What are other charities or businesses doing? How will the new government policy affect you? What opportunities and threats await your organisation, and what are your strengths and weaknesses? Our 4Ps(c) tool works like a SWOT but also allows you to identify priorities.

Doing the 4Ps analysis honestly 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 allowed them to discuss whether new ways of working were strengths or weaknesses. Without that discussion, the charity would have had significant problems as it launched its latest 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 that you have a problem with resources.

A good business plan forces you to identify who will do what, 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 allows you to consider the worst and plan for it. If the government's involvement in Ukraine forces budgets to be cut, what will be the impact on your organisation? If unemployment rises, will your income fall?

What are your high 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 potential solutions rather than just hoping everything will go well. An honest risk assessment shows you have good management and self-awareness.

Business plans create better and more successful organisations. The process strengthens the organisation, and if you use the plan as a guide for action, what you can achieve can be remarkable. I know of one organisation that 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 established a strong reputation for providing clients with the conceptual and practical knowledge needed for success. Whether success is measured by funds generated, reputational improvement, or levels of support, we are here to help you maximise your future impact. Contact us for a free chat.

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