The confusing world of Business Plans
So you have a look on good old Google… and that’s where your problems begin… a totally confusing and contradictory picture develops as to what a business plan should be.
There is no simple resolution to this Issue, because the term Business Plan is used differently by different sectors and sometimes differently within those sectors – Roger Courtney in his excellent book – Strategic management in the third sector – sums up the issue well:
“in some contexts it is used in the same sense as strategic plan, in others to mean an operational plan, in others it is used to mean a subsidiary plan of a “business unit”, within a diversified organisation, with it’s overarching corporate plan. It is also commonly used to mean a plan for investments or funders, to provide evidence of, and confidence in, how and when they should see a return in investment”
When I worked in Local Government, the Council I worked for would produce a Corporate Business Plan that covered 5 years and talked about vision and strategy! Within our team, we wrote annual Business Plans – what we were going to achieve in the next year using a set budget.
In the business world often Business Plans are seen as documents that are produced explicitly to attract external investors, e.g. Banks. Usually produced by Start Ups to outline their business idea and demonstrate how they will make a profit and therefore repay the Investor usually with interest. Practical documents that show you have thought your business idea through. When I covered Strategic Management in my college studies, Business Plans only ever existed in terms of Start Up businesses – strategic, functional and operational plans were the plans concentrated on.
So where do Business Plans fit in the Voluntary Sector world? In terms of a broad definition I look towards Mike Hudson’s book Managing without Profit – “A Business Plan is usually a combination of strategic and operational plans, articulating both longer-term strategies and a more detailed plan and budget.”
To put it simply it is the strategic “What and Why” combined with the “How”.
So what goes into them? It depends on who the audience is and what you are wanting it to do with it. Those two things guide its content – in my view it is not possible to have a one size fits all template. Instead let’s look at 3 scenarios where Business Plans are used in the Voluntary Sector:
1. You need a document that will be used externally with possible Funders of a new project your Charity wants to start?
This scenario is probably the most frequent uses of Business Plans by Charities. Unlike the business world you will not be talking in terms of making a profit, but instead you will be explaining your outcomes – what benefits will come from your project to people/communities. You will also demonstrate that you have thought through the cost implications of what you are planning. Some funders will supply you with a template/outline of the headings to go in your Business Plan – a fairly typical example outline of this type of Business Plan (with really good guidance notes too) comes from the Big Lottery website.
2. Your Charity is wanting to explore a trading idea or you are a start-up Social Enterprise looking for investment?
You will need to produce a Business Plan clearly demonstrating how your profit will be achieved as well as your social aims. You will need it for yourselves, so you can be assured that your ideas is going to work, but also for any possible investors. These plans need to show you have thought about your return on investment in both profit and social terms, good knowledge of your competitors, clarity on your Unique Selling Point (your competitive advantage). For me the best guide to planning a Business Plan is Forth Sector’s Guide to Business Planning for Social Enterprises . The Prince’s Trust also produce useful guidance on their website and they have some excellent template finance spreadsheets that can be downloaded to help you on your way with the financial planning side of things.
3. An Internal document that staff/volunteers, in fact all stake holders, can look at and be clear about where the organisation is going.
This scenario is one I feel charities of all sizes should contemplate. This type of Business Plan can make a whole organisation clear on its direction. It can be an excellent way to motivate people within the organisation.They can also highlight that all the levels of planning within the organisation (from Trustees and senior management’s strategic thinking to frontline staff’s plans for the forthcoming year) are all going in the same direction! Small Charity Support, in “Why Write a Business Plan” (available from their website), puts forward some clear, compelling reasons for developing one. Basically you are setting out the strategic direction of the organisation for the next 3 to 5 years and then showing, usually spanning 1-2 years , the details of the implementation of that strategic direction, e.g. what will be done, when, and how much will it cost. Voluntary Action Islington produce an example template of the headings that could be used in this type of business plan.
Whatever your reason for writing a Business Plan, to finish with I give you my five top tips for getting it right:
Get someone to proof-read – ask someone who is a step removed from the process to read your plan. This ensures you have written something that is comprehensible and free from jargon.
Make it short – The days of lengthy Business Plans are gone. Better to write a short plan (20 pages or less) that it is more likely to be read.
Good Executive Summary – make sure this is focussed and clear (and written after you have written the rest) – no more than one page. It can be that the Executive Summary is the only bit that a Funder reads.
Think about your audience – there may be things you want to share with internal people, which you might not want to share externally to the organisation.
Include graphics – try to break up text with graphs, tables, diagrams that illustrate what you are saying. This will encourage readers to focus and may well illustrate your point better that several paragraphs of text.