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Business Plans and Planning for Social Enterprises and Nonprofits is a guide that forms part of the Social Good Guides, a series of essential small-business guides created to support startup changemakers produced by the Social Innovators Collective. Authored by Mischa Byruck, Manager of Strategic Partnerships at DataKind, this guide discusses the essentials of creating a solid business plan for a social enterprise. Some of the insights offered in this guide include the importance of going through the process of writing a business plan, the additional information needed for a business in the social sector, and the anatomy of a plan. When asked, “When in the first twelve months should a startup changemaker begin to think about writing a business plan?” Mischa responded: “As soon as possible. Even at the earliest stages, the plan helps articulate, clarify, and cut through the noise to articulate the essence of the organization and how it will succeed.” When asked, “Who should write a business plan?” Mischa answered: “Nine times out of ten, founders should write their own business plans.”
A big part of the value of the plan is the process of writing it. If you don’t engage in that process, the document itself is next to useless.
Below is an excerpt from the Q + A section of the guide.
The Social Good Guides (SGG): When in the first twelve months should a startup changemaker begin to think about writing a business plan?
Mischa Byruck (MB): As soon as possible. Even at the earliest stages, the plan helps articulate, clarify, and cut through the noise to articulate the essence of the organization and how it will succeed. That doesn’t mean that the entrepreneur should write the plan immediately. I advocate starting to do research and write the plan, and, if you realize that you haven’t fleshed out the idea enough to answer the questions it poses, then set it aside and come back to it. As for the model, it may take even longer to figure that part out. Again, the main thing is to spend time thinking about it. Stubbornly ignoring the inevitability of spreadsheets is a scarily common problem among social entrepreneurs.
SGG: Where does the business plan fit in to the general suite of tools that a social entrepreneur should have at her disposal?
MB: Every social entrepreneur should, at the minimum, have the following four tools for communicating their idea:
– Business plan
– Executive Summary/one-pager
– Pitch deck
Write the business plan so that you can present the most important information in the executive summary. Then, distill the essence of your idea and the most compelling points into the pitch deck and your elevator pitch. When you meet potential investors/supporters/advisors/contacts/clients/partners, present these materials to them in the reverse order. First, give them the pitch. They’ll go home and visit your website. If they’re interested, shoot them the pitch deck you’ll have put together. Another bite? Send the one-pager. If they really want the details, send the business plan with the financials.
SGG: Are there different types of business plans that are written for different scenarios?
MB: Not really. I don’t advise changing your model based on who you’re pitching to. Most people will accept a plan as long as it covers the standard sections well. Many funders will have you write a specialized grant application anyway, though you should definitely feel comfortable pulling language from one for the other.
SGG: Is there any connection between a business plan and a legal structure?
MB: I tend to advise entrepreneurs to first figure out how their business will work, and then pick the legal structure that best accommodates it, rather than the other way around. Figure out what the business looks like specifically. Ask yourself how it will make money (grants, earned income, sales, fees, advertising, etc.), what the ownership structure and financing will look like, if the entity will take on investors and be able to offer them a return, or if it’s more likely to grow through foundation grants. These are all important elements of a business plan and will help guide the discussion and decision about the legal structure.
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