In particular you need a business plan when revenue generation is significant factor in the project’s success.
Planning team may already be developed. Should include accountant/financial person, proposed CEO (if identified), architect, attorney, construction, champion (philanthropist, community leaders and an elected official, nonprofit expert, marketing/advertising/communications person, strategic partners. Strategy: bringing key players to the table from the beginning ensures community-wide support for the project, creating nucleus for new Board Members and successful capital/FR campaign.
Assessing the economic scope means projecting potential surpluses, reliability of revenue streams, cost and cost allocation, liabilities, liquidity and reserves.
4. For example: Would you consider a mortgage – then launch capital campaign to pay it off? Depends on risk tolerance and reliability of revenues and donations- if you have sufficient, multiple-year pledges it would make sense. Let’s say you have $1million in ledges, but spread out over fives years – mortgage might make sense depending on the amount of capital needed to build the center.5. Many nonprofits fail because cannot handle volatility of cash flows over time (seasonal or monthly fluctuations. For example, school programs flourish during summer months and then disappear irest of the year. One strategy: host summer camp and keep proceeds for winter reserves.
4. Liquidate an asset, special FR campaign (annual fund development).5. For example: If cash flows are highly predictable perhaps you need only 3 months reserves. If not, the six months.
Based on 20-30 stakeholder interviews and statisticalanalysisBecomes part of business model and key drivers of costs and revenuesBased on historical giving patterns, feasibility study (initial pledges) and Board capacity (give-get policies) – relationship mapping – the who knows whom.Socio-demographic mapping of need and geographic location in relation to need – relates to customer scope question.
Taking some of the scope questions already answered and constructing an organization and facility around those responses.
Market research is indicative of future, not predictive. What is the rationale behind .and validity of the numbers used? What is the evidence to support these assumptions? What do we do if an assumption falls apart? Important: prepares us to deal with critics.What drives costs and revenues and what variables influence them? Cost drivers include number of people served. What is the indirect cost rate? What are the FR costs?Test these number using three scenarios: bare bones, best and the average. Test salary ranges and various staff structures. Multi-year budget, cash-flow projections, balance sheets.Integrate need for operating cash and reserves into your capital campaign goal.Proposed program structure and costs based on market research (see 5).
Nonprofit Business Plans
Nonprofit Business PlansRainmaker Solutions Ltd. Co.
The PurposeThe purpose of the presentation is to outlineRainmaker’s approach to the business-planningprocess, including related capital and operatingfundraising campaigns.
Strategic vs. Business Planning• Most people equate strategic planning with business planning.• The strategic planning process involves market research, with qualitative (stakeholder interviews) and quantitative(statistical analysis) to determine the need for a project, leveraging the results into a detailed action plan.• The business plan tests the project’s economic logic, providing windows into the drivers of costs and revenues. Thisprocess includes the market research and strategic plan, but also incorporates financial modeling and analysis, cash-flowplanning, risk assessment and pro forma budgets.• The primary value comes from the rigorous, analytical process that drives strategic, mission-oriented decision making,drawn from financial best practices.• Revenue generation is the criteria for business plan.
Strategic vs. Business PlanningStrategic Planning Business PlanningDevelop organization responses toopportunities and challengesTest the economic logic and operational feasibility of aproposed decision or response.Articulate a strategy Test and elaborate on the core elements of a strategyDefine a program model Show how the program would be economically andoperationally viable.Confirm a need for a change to the businessmodel.Describe how and why the new business model isgoing to succeed.Determine a means to increase mission Test the assumptions that prove the change is feasible.
Launch the ProcessDevelop the planning team to answer these questions:1. What is the focus of our business planning effort?2. What is the strategic intent of the project?3. What questions do we need to answer?4. What decisions to we need to make?5. What information do we need to make these decisions?6. Who is the audience for the business plan?7. Who is going to approve the final document?
Define the Scope1. What is the geographic scope? What communities do we serve?2. What is the programmatic scope? What programs do we offer?3. What is the customer scope? Who do we serve?4. What is the economic logic? How do we structure the project financially?
Economic Logic1. Ensure adequate annual surpluses.2. Determine reliability of revenues over time.3. Project costs over time and cost allocation over programs.4. Examine and structure assets and liabilities.5. Plan for sufficient liquidity and cash flows.
Economic Logic1. How many months of operating expenses will reserves cover?2. Have our financial projections factored in the need to grow our reservescommensurate with the growth of the operating budget over time?3. Have we also factored in inflation (3-5%) for each year of operations.4. What opportunities exist to increase our risk reserve?5. How strong is our monthly cash flow?6. Is the organization up to this task?
Market Research1. What is the community need for this project?2. How can we best align our services to meet this need?3. Are the philanthropic resources available to meet this need?4. What’s our position on the competitive landscape?
Market Research• The personal and professional connections created during this process become thefoundation for individual giving campaigns, Board and committee recruitment and strategicpartnerships.• It provides the context for informed decision-making, grounded in the realities of thecompetitive landscape, increasing the client’s chances of securing major gifts.• It becomes the general template for most grant applications for start-up nonprofits thatrequire seed funding and established nonprofits that need to strengthen their proposals.• This research defines the client’s position, relative to other nonprofits, operating in itsparticular mission niche.• This position determines the client’s strategic priorities and inspires the most viable,compelling case statements – it provides the best compass for each client’sfundraising/marketing strategies.
Operations & Infrastructure1. What is our vision for the future?2. What kind of staffing will we need?3. What are the blueprints and models for our facility?4. What kind of programs do we provide?5. What are the highest priority implementation tasks?6. What is the implementation timeline?7. What are major capital and operational costs?
Governance & Management1. Who will lead the new programs and facilities?2. What is the Board structure, nominating policies and expectations?3. What are the staff structure and job descriptions?4. What are the proposed salaries/benefits for each position?5. When will the recruitment process begin and end?6. Who will manage and implement this timeline?7. What role does the Board play?8. Who will recruit and manage volunteers?9. What is the potential role and impact of strategic partnerships?
Marketing Strategies1. What is your value proposition?2. What makes this project so compelling?3. What are our competitive advantages?4. Who are our audiences?5. What is our pricing strategy?6. What are our marketing channels?7. What are our communications needs/costs?8. How do we develop and audience?9. What special event will we do?
Evaluation & Improvement1. What are the cost vs. benefits?2. What is success? How do we know?3. What are the short- and long-term outcomes?[4. How do we gather and evaluate feedback?5. Who is responsible for evaluating impact?6. How do we share key findings and with whom?7. How do we improve programs based on evaluation?
Building the Financial Model1. Isolate and test overarching and financial assumptions.2. Identify key financial drivers3. Explore financial and operational scenarios.4. Prepare financial statements.5. Quantify need for capital and cash reserves.6. Consider the needs of our audiences.
Rainmaker SolutionsMore Grants & Major Gifts…Made Easier.
Five Steps to Success1. Conduct an extensive market research study, including 20-30 interviews with communitystakeholders, statistical and demographic analysis of need.2. Leverage contacts developed from market research study to create a planning committee, whichbecomes the nucleus for Board development. Determine and incorporate fundraising and othergoals.3. Create a business plan that aligns services to the need, evaluates the sustainability of the project,and perform a rigorous financial and scenario-based risk analysis. Prepare three-year pro formabudget projections.4. Develop a fundraising plan, with benchmarked goal and timelines, including the messages, publicrelations and communications needed to persuade prospects and donors. Provide grantresearch/writing services. Provide the donor and prospect research needed to maximize existingfunding sources and locate new ones.5. Assist in Board Development and governance structure, with Board training in fiduciary andfundraising expectations. Develop strong nominating policies. In cooperation, manage anintegrated fundraising and capital campaign until we achieve our project goal.
Deliverables1. Twenty-thirty page, rigorously research business plan with financial analysis, cash-flow planning, and strategic-planning component with three-year pro forma budget projection (see samples)2. Strategic guidance and direct assistance in forming the Planning Committee, based on community contactsmade during market research phase, emphasizing on the required skills and major-gift capacity. Develop a one-three year fundraising plan, with benchmarked goal and timelines.3. Provide messages, public relations, case statement and presentations needed to conduct thefundraising/capital campaign. Provide grant research/writing services. Provide the donor and prospect researchneeded to identify prospects, maximize existing funding sources.4. Board Development and governance structure, with Board trainings in fiduciary and fundraising responsibilities.Develop strong nominating policies, highly critical to long-term success. Manage an fundraising/capitalcampaign until we achieve our project goal.
Benefits1. Rainmaker keeps our overhead low…”best bang for the buck,” with twenty yearsexperience in fundraising experience, including $4 million capital campaign for similarproject.2. Reputation based on client testimonials and references for “going above and beyond thecall of duty,” delivering more than our contracts require.3. We save our clients time, money and stress by bundling the best research technologiesand methods - the benefits of an in-house development department at a fraction of thecost.4. References available upon request.
Pricing Rationale• This project is labor-intensive and 12-36 months in length.• The amount of effort required accelerates over this time period.• Rainmaker should start to produce profit by months six-eight.• This compensation schedule covers all expenditures except printing costs.• The project begins when contract is signed.Year Monthly Rate Totals1 $X,000 $XX,0002 $X,000 $XX,0003 $X,000 $XXX,000