Not everyone that starts a business envisions pointing skyward on the NYSE. Many businesses are started in order to benefit an organization, charity or common cause. These ventures are considered non-profit because it is not for the financial benefits of the owners or shareholders. Instead, profits are reinvested directly back into the organization, its program, and utilized to fulfill its mission in tangible ways.
California has the most nonprofit businesses at 159,517, creating revenues of $155.2 trillion, approximately $973,000 per organization. Texas has over 100,000 and generates revenues of $74.6 trillion. Florida comes in third with 74,187 registered non profits with revenues of $65.3 trillion.
Developing a business plan for a nonprofit is just as essential as a for profit business. A business plan for a nonprofit gives the founder the opportunity to think through the details of the business clearly before he or she is called upon to explain it to others. This includes the clear need for the non profit’s services, the management team required, marketing and operating plans to deliver services to constituents, and financial results – or how the organization will cover its expenses with donations, earned revenue, or both. Having a well crafted business plan will help the founder develop a strategy to address any risks that the organization may encounter and therefore be on much better footing when the non profit launches.
One key difference between a for profit and a nonprofit business plan is the marketing section. In a for profit business, the served customers are generally those who provide the revenues needed to cover expenses and continue operations. For a nonprofit, often the served constituents do not provide this sustaining funding, and it must be sought from a third party – donors. This means the marketing plan must describe both how the organization will communicate its services to its target market and also how it will communicate its need for funding to its donor base.
Another key difference between a for profit and nonprofit business is that there are some management skills that are generally unique to nonprofits such as fundraising and grant writing, recruiting volunteers, developing programs, and creating public policy. The people needed for successfully running a nonprofit require a more diversified set of skills than is often required in a for profit business.
Al Huntoon, Nonprofit Management professor at Duke University, has developed seven important steps that every non profit organization should take to achieve long-term success:
1. Create an organizational assessment and develop a strategic plan to address any capacity deficits.
2. Communicate effectively with Board members to ensure quality governance structures, practices and oversight.
3. Adopt proven marketing, communications, and fund development strategies.
4. Build business skill sets and integrate basic business practices and tools.
5. Utilize technology to evaluate success, streamline processes, and hasten the delivery of services.
6. Institute progressive human resource practices focusing on leadership skills and team building.
7. Explore new collaborative business models with complementary organizations.
Non profits serve an important function in society and entrepreneurs shouldn’t be discouraged from forming one because of organizational or planning difficulties. Epic Business Planning has experience in developing nonprofit specific plans and customizing documents to suit multiple types of grants. Consult a specialist today to find out how to maximize your nonprofit potential.