Business Plans

For most social enterprises, regardless of whether they are for profit or nonprofit, you will more than likely have to write a business plan. While a bit daunting at first, a business plan is useful in that it helps crystallize where you want the organization to be, how you will get there, and who will be involved/necessary for that process. Especially if you plan to apply for grants, fundraise, or raise money, a business plan will be critical to success in those endeavors. There are several components to a successful business plan, and below you will find all of the relevant information to create your own.

What are the components of a business plan?

This specifics depend a bit on whether or not your organization is for profit or nonprofit, but they are essentially the same, and are divided into the four components below.

Description of the Business: This section of your business plan will describe what the problem you see is, what the current market looks like, and how you plan on solving the problem.

Marketing: the marketing section includes greater details on how you plan to solve the problem. From developing a competitive analysis and marketing strategy to an operations plan and a set of metrics to evaluate success, the marketing section will contain a lot more than how you will advertise your social enterprise!

Finances: The finances section is important because it helps your organization evaluate how much money you need, how much money you have, what kind of (social) return on investment is created, and how your organization will develop over the years.

Management: This section says who is on your team, what these individuals do within your organization, and why they are qualified for the team. This is arguably the most important part of a business plan because the team is usually what makes or breaks an organization. Anyone can develop a great idea, but without the right team to execute it, the social enterprise will probably not be that successful.

How do I write my business plan?

Usually the best way to complete a business plan is to look at other business plans that have been created. By following the guidelines of how they are completed, what important information is conveyed, and the general style of the business plan, you will be 90% of the way towards creating your own successful business plan.

1. Don't rush it! - Business plans will take time because there is a lot of information that should be accurately and informatively conveyed. Think hard, have thorough discussions with teammates, and continually revise in the early stages. This will create a solid business plan that makes you think through every aspect of the organization and includes all necessary and/or relevant information.
2. Read Other Business Plans - One of the best ways to become familiar with how to write a business plan is to read a few and take notes. Another way to accomplish this is to find someone who has already written a business plan before and ask for their help.
3. Start Writing - You can split this task between teammates or in any other way that works. As you develop your business plan, make sure the following sections exist or are covered at least covered.
   • Cover Sheet - Title of who you are and that this is your business plan. Also may contain your slogan.
   • Statement of Purpose - This will change based on what your business plan is being written for. Business plan competition? State what you are applying for and why in this section.
   • Table of Contents - Very useful for keeping the business plan organized.
   • The Social Enterprise - Should include the description of the organization, the problem, your solution, marketing analysis, competitive analysis, operating plan, organization management, risks, and any insurance if necessary.
   • The Financials - Should include any loan applications if they exist, capital equipment and supply list, balance sheet, breakeven analysis (not as important with a nonprofit), income projects with profit and loss statements, a three-five year summary, cash flow analysis, (social) return on investment, and a section that details all assumptions that were made for the projections. When developing the income projections, detail the first year by months and by quarters for the rest of the years.
   • Supporting Documents - This section is for any and all information that doesn't fit as nicely into the business plan and should be included on a case by case basis. This can include tax returns (both personal and for the organization), personal financial statements, copy of proposed lease or purchase agreement for building space, copy of licenses and other legal documents, copy of resumes of all individuals involved, and copies of letters of intent from suppliers, etc.
4. Get Feedback - Have teammates, family, friends, or colleagues provide feedback for your business plan, espeically if they have experience with business plans, and find out how to incorporate that feedback effectively.
5. Review and Revise - A business plan is never complete, and every six months to a year, the organization should look over the business plan to see if they are on track and/or see what kind of revisions should be made to update the business plan.

Conclusion

As you can see, business plans are quite a bit of work, but they are definitely worth it in terms of knowing where your organization is going, how it is going to get there, and how it is going to measure whether or not it is getting there on time. Attached is a copy of Gumball Capital's 2008 Business Plan for one of the Business Plan Competitions we competed in.

Resources

Primary Source:

Small Business Administration. "Write a Business Plan." Page Online. April 2009.

Secondary Source:

Gumball Capital. "2008 BASES Social E-Challenge." Attached. April 2009.