Developing a Dynamic Business Plan

David Renz, Director Midwest Center for Nonprofit Leadership Henry W. Bloch School of Management University of Missouri – Kansas City

 Executive Summary  Description of the Venture  Organization and Management Description  Market Opportunity Explanation  Product or Service to be Delivered  Basis for Assessing Quality and Satisfaction  Key Planning Assumptions  Uncertainties and Potential risks  Financial Projections  Growth and Exit Strategies Midwest Center for Nonprofit Leadership at UMKC

This is the first part of the business plan document, but the last part to be created.

 What is the product or service?  Who is the target market? (Clients and funders)  Is the venture a start-up, expansion, or acquisition?  Where and how is the product or service delivered?  What is the nature of the venture, and how will it operate?  Who is on the board, and who is on the management team, and what are their qualifications for leading and enabling the venture to be successful? (More on this later)  What are the unique characteristics indicating success?

 What is the relevant background of key management?  Who are key employees and what is their relevant experience?  What is their educational background?  Why will they make the venture a success?  What are the responsibilities of each member of the management team?  Who performs the planning function?  Who reports to whom?  Where are the final decisions made?  Who is on the board of directors or advisory committee and how is their experience and knowledge helpful?  What is the overall organizational structure?  What outside professional services are required, and who will provide them?  How will management be compensated?

 Personnel  How many and what types of staff will the venture require in each of year 1, year 2, year 3?  What functions will each perform?  What skills must each have? (Licenses?)  Are the positions full- or part-time?  Is training required?  How will personnel be compensated (hourly, wages, salaried, overtime, benefits)?  Is there sufficient supply of skilled staff available in the marketplace?

 Who is the target market?  Who is the typical client or consumer (age, gender, profession, income, needs, characteristics)?  Who is the typical funder and what are their characteristics?  What is the present size of the market?  What percent of the market will the venture have?  How will the venture expand its market?  What is the market’s growth potential?  What geographical area will the business serve?  Who is the competition? What are their strengths and weaknesses? How are they different from your venture?

 What is the venture’s competitive edge?  How will the venture advertise and promote its product and service?  How will the venture distribute its product or provide its service?  Are there any warranties or service policies?  What is the venture’s pricing strategy?  Will the venture sell wholesale or retail? How will it reach the market?  Does seasonality affect the venture?  How will the venture handle the public relations function?  Will the venture conduct ongoing research and development?

 What is the process required to produce items for sale, or to provide the service?  Which aspects of this process will the venture undertake, and which will be provided by others? Who will provide them? Are there key collaborators?  What are the requirements for fixtures, furniture, machinery or other equipment?  Will seasonality affect production/service delivery?  What is the floor plan and structural features of the facility?  How will the venture purchase inventory/supplies?  How will the venture administer quality and cost controls?  How will the venture benefit from the experience of the nonprofit organization?

 What is the process for gathering data about client performance, success and satisfaction?  What is the process for gathering data about overall program performance and impact?  What are the performance metrics that you will need to monitor.  Are there external entities to which the venture will need to report performance(e.g., accreditors, license holders, regulators)? If so, who are they, what will they require, and how often?

 What are the key planning assumptions that have been made as a part of developing this venture plan?  What are the risks that are inherent in the development and operation of the venture, and what are the ways that these risks will be managed?  What are the uncertainties that exist with regard to the venture, and what do you know about them?

 Budget  Cash Flow (Pro Forma) ◦ Projected Revenues  Amount and Timing ◦ Projected Disbursements (Expenses)  Income Statement  Balance Sheet

 What are your plans for long-term growth and development?  When and in what ways do you expect to take this venture to scale, and what are relevant timing issues? ◦ (Example: deeper, broader)  Is there an exit strategy?  Is there a succession strategy?

 Market data – statistics  List of product/service offerings  Floor plan indicating requirements for space  Capital-equipment list  Quotes and estimates from vendors  Rent, lease, or purchase agreements  Letters indicating a line of credit or loan  Letters of intent from potential customers  Letters of support from others in the industry, or from foundations and corporate giving offices  Legal documents, such as incorporation papers or nonprofit status determination letter  Annual report and financial statement of the nonprofit parent

 What is the product or service?  What is the market (clients and funders)?  How will this product or service be delivered?  Who is the management team?  How many employees will the venture have?  Where is the venture located?  How will the venture operate?  Is the venture part of a larger nonprofit organization?  What are the revenue projections for the first three years?  What is your profit estimate for the first three years?  When will the venture break even?  How much money do you need, and why?  How will the money be repaid?