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Guide to business planning
If you are starting a voluntary organisation for the first time, you will need to create a business plan as a starting point to developing your organisation.
Your business plan should adopt a standard format. You can use a free business plan template as a guide. This plan will set out the goals of your organisation, how you want to achieve them and what resources you need.
In this guide we explain how to research and write a business plan, when you will need to use it and who will need to read it. We provide practical tips and resources to help you create a professional business plan that will help your organisation get ahead.
The term ‘business planning’ might seem a bit out-of-place in the voluntary sector. After all, voluntary organisations are not businesses, or run for profit, so why would they need a business plan?
All organisations need to generate a source of income to fund their activities. They do this through fundraising: the process of ‘raising voluntary financial contributions from individuals, businesses, charitable foundations and government agencies.’
To get your organisation funded you’ll need to become adept at writing grant applications. Funders will want to see what a great impact you’re making and be persuaded to support your future objectives. This is where business planning comes into play.
A business plan is a formal document with a standard structure. Your business plan will need to conform to this professional standard, but how detailed it needs to be will depend on what you need to use your business plan for.
This table from the National Council for Voluntary Organisations (NCVO) provides a useful insight into the different situations when you’ll need to use your business plan:
Who will read it
What you should focus on
You’re creating a new organisation
Staff and board, potential partners and supporters
Operational plan, robust financial planning, market research
You’re applying for a major grant from a new funder
Funding officer, funding committee
Impact and outcomes, value for money
You’re about to launch a big push for new donors
General public, existing donors, press and media
Being easy to read, accessible – perhaps publish on your website
Being visual, with key social impact statements drawn out
Clear aims and objectives with a roadmap of how you’ll use donations to get you there
You’re applying for social investment for a new building
Social investment provider, bank manager
Strong financial planning and forecasts, social impact, a clear ask
You’ve just lost a major contract and had to make people redundant
Board, staff, partners, other funders/commissioners
Reassurance that you can come out of the crisis: strong financial planning, realistic short term aims and objectives, longer term strategy for rebuilding
You’re an existing charity that wants to start trading
Board, existing partners or funders, bank manager
Robust financial planning and realistic forecasts, thorough market research and marketing strategy
If you’re writing a business plan for the first time, using a template will give you a good idea of the type of information you need to include. We recommend the Big Lottery Fund template and guidance because it has been designed with voluntary organisations in mind.
However, any professional business plan template will contain at least these section headings:
Most templates online will be designed for businesses selling commercial products and services. If you’re using a commercial template, you’ll need to adjust some of the section headings and categories to correspond with the typical operational activities of your organisation.
Here’s an example of when you might need to revise a business plan template:
In the Prince’s Trust template, sections 4 to 6 are about ‘market research’ and ‘market strategy’ which assumes the business plan owner is aiming to sell goods to consumers. However, for your voluntary organisation you might want change these headings to describe your service users and their needs (rather than customers), and explain how you plan to deliver services (rather then selling goods).
Bad business planning is one reason organisations fail. Hopefully, by now, we’ve been able to persuade you that a business plan is an important tool for setting up and growing your organisation. Ultimately, a strong business plan will demonstrate diligence and professionalism on your part, which, in turn, will build trust between your organisation and grant funders and stakeholders.
A well-researched business plan will make it much easier for funders and supporters to help your organisation. In this sector where organisations must compete for support, it is not enough to say what you want to do and who you want to help, but you must back up any assumptions you make with facts. In other words, you must provide evidence that your objectives are realistic and there is a genuine need for your organisation and its planned activities.
If you want to get people behind your mission, they’ll need to see that you understand your service users’ needs thoroughly, and that your organisation is simply the best way to get those needs met. You can achieve this by conducting research and using the evidence in your business plan.
As a general rule, write in short sentences, never use two words where one will do, and always choose plain words that your readers can easily understand. You won’t be expected to write like an English professor, but sloppy writing littered with spelling mistakes will have a negative effect on how funders perceive your business plan and, therefore, your organisation.
If writing isn’t your strong point then ask someone with strong writing skills if they can check your business plan for spelling and grammatical errors, before you show it to grant funders and stakeholders.
Updating your business plan for each new situation ensures that your organisation continues to come across as relevant to your different support groups.
We’ve shown in this guide how a business plan comes into play for different situations, and at different stages of an organisation’s lifecycle. In the same way that a CV needs to be updated and tailored for each new employment opportunity, your business plan will need to be revised and updated for each new opportunity and new challenge.
Here’s an example from the National Council for Voluntary Organisations (NCVO):
If you’re applying for a major grant from a new grant funder, you’ll want to update your business plan to appeal to the funding officers and committee of that trust. They’ll need to see strong evidence of your ‘impact, outcomes and value for money’ in order to justify giving you financial support over another organisation.
In the event you have lost a major contract and had to make people redundant, you’ll need to update your business plan for your board of trustees, remaining staff, strategic partners and other funders, and highlight your financial recovery plan, for example.
Formatting your business plan will give it a professional appearance and make it easier to read and understand. The basic elements of a professionally formatted document are:
Clear and consistent formatting will help your business plan to stand up to the competition and make a great impression on readers. Here are examples of a document that has been formatted and one that hasn’t.
If you’re familiar with Microsoft Word then follow this easy tutorial on how to use Styles in Word to give your business plan a professional finish.
At Voluntary Action Camden we can provide one-to-one support for researching and writing a business plan that funders and supporters will appreciate. Get in touch via email or fill in this form if you’d like our help.
Planning-related funding opportunities