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What's the connection between business and community development?
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What's a business plan?
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Why should you make a business plan?
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When should you make a business plan?
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How do you make a business plan?
What's the connection between business and community development?
Although your primary goal may be improving community well-being rather than generating profit, business and earned-income activities can sometimes support community work. Nonprofit organizations and community initiatives need resources to sustain their missions, and selling appropriate products or services may be one part of a broader financial sustainability strategy.
Earned-income activities usually involve providing products, services, or both in exchange for payment. Examples include:
| Products | Services |
| Books, guides, or educational materials | Childcare |
| Arts, crafts, or locally made goods | Food delivery or food-access services |
| Seeds, plants, or flowers | Gardening, landscaping, or yard services |
| Greeting cards or other printed products | Housing, workspace, or facility rentals |
| Clothing or organization-branded merchandise | Recreational, educational, or community programs |
But is it ethical for a community or nonprofit organization to sell products and services?
It can be, when the activity is honest, transparent, fair, mission-aligned, and designed to provide genuine value. Products and services should be accurately described, appropriately priced, accessible to the people they are intended to serve, and delivered as promised.
Earned-income activities may also advance an organization's mission directly. For example, an organization might provide useful training, childcare, educational materials, recreation, food services, or other offerings that meet community needs while generating revenue to help sustain the work.
At the same time, organizations should consider whether a business activity could create barriers to access, shift attention away from the mission, compete unnecessarily with community partners, or place new demands on staff and organizational capacity.
And is it legal?
In many situations, nonprofit organizations may generate earned revenue and may end a year with a financial surplus. However, business activities must comply with applicable federal, state, and local laws, tax requirements, organizational documents, licenses, and regulations. Requirements may vary depending on the type of organization and the relationship between the business activity and its mission, so organizations should obtain appropriate legal, tax, or accounting guidance when needed.
Does this mean every nonprofit or community organization should develop business activities?
No. Earned income is only one possible sustainability strategy. Other sources may include grants, fundraising, membership dues, public funding, contracts, donations, and in-kind support. The decision to develop an earned-income activity should reflect your financial needs, organizational capacity, community priorities, mission, available alternatives, and realistic prospects for success.
Planning for overall financial sustainability requires a broader financial strategy. If earned-income or business activities are part of that strategy, a business plan can help you assess and organize them.
What is a business plan?
A business plan is a written document that explains what product or service you intend to provide, whom it is intended for, how the activity will operate, what resources it requires, how it will generate revenue, what risks it faces, and why you believe it can be financially and operationally sustainable. The plan should be supported by relevant evidence, financial information, community or market research, and realistic assumptions.
Why should you have a business plan?
- Developing a written plan can clarify your thinking, assumptions, priorities, and responsibilities.
- A clear business plan can increase confidence among staff, board members, community partners, funders, lenders, and other potential supporters.
- A business plan can help identify opportunities, costs, risks, capacity needs, and potential problems before substantial resources are committed.
- A plan can help determine whether a proposed business activity is financially viable, mission-aligned, equitable, and appropriate for the community or market it is intended to serve.
When should you make a business plan?
- When you are seriously considering starting an earned-income or business activity
- When you need greater clarity about costs, operations, staffing, customers or users, risks, and expected revenue
- When you want expert, community, customer, or partner feedback on the details of your idea
- When you are seeking grants, gifts, loans, investment, supplies, facilities, partnerships, or other forms of support
- When you need to determine whether an existing business activity should continue, expand, change, or end
How should I make a business plan?
We'll cover three main elements:
- What should the plan contain?
- How should the plan be written?
- How should the plan be presented?
What Should the Plan Contain?
Business plans vary in length and format depending on the organization, audience, activity, and purpose. Most plans, however, include several common components. Adapt them to your situation rather than treating one format as mandatory.
Cover page
Include the title of the plan, organization name, date, and relevant contact information, such as a phone number, email address, website, and mailing address when appropriate. The title should clearly identify the activity or purpose of the plan.
Table of contents
For a longer plan, include a table of contents with clear section headings and page numbers or digital links. Make the document easy to navigate whether it is read in print or electronically.
Executive summary
The executive summary is often one of the most important parts of the plan. It is usually written after the rest of the plan and provides a concise overview of the proposed activity, the need or opportunity it addresses, whom it will serve, how it will operate, expected financial results, major risks, and what support or decision is being requested.
If your executive summary is effectively written, it will:
- Communicate your organization's vision and purpose for the activity
- Establish your organization's credibility and relevant experience
- Describe the product or service and how it will be provided or sold
- Explain the need, demand, or opportunity the product or service addresses
- Summarize major implementation steps
- Give the reader enough information to understand the plan and decide whether to review the details
- If funding is being requested, state the amount or type of support needed and explain how it will be used
Description of your organization
This section should explain who you are and why your organization is positioned to carry out the plan. It may include:
- What your organization does
- Where it operates and the communities or markets it serves
- How long it has been operating
- Its mission, goals, and objectives
- Relevant accomplishments and experience
- Current funding or other resources relevant to the plan
- Experience providing or selling similar products or services
- What distinguishes your organization, including relationships, expertise, community knowledge, accessibility, or other strengths relevant to the activity
Description of your management and implementation capacity
If you are seeking outside support, describe the people and structures responsible for carrying out the plan. Briefly identify key staff members, officers, project leads, board members, advisors, or partners and explain the experience or qualifications relevant to the activity.
This section should demonstrate that the organization has, or has a realistic plan to develop, the leadership, staffing, partnerships, financial systems, and operational capacity needed to carry out the proposal responsibly.
Description of your product or service
Describe clearly what you intend to provide. What is the product or service? What needs or opportunities does it address? What features, benefits, accessibility considerations, or limitations should customers or users understand?
Use clear examples. If the offering is a physical product, photographs, drawings, samples, or product information may be useful. If permits, licenses, certifications, accessibility standards, safety requirements, or other regulations apply, identify them.
Explain the value the product or service provides. When appropriate, include evidence of previous demand, customer or participant feedback, testimonials used with permission, pilot results, or relevant research.
Information about your market and community
Your reader will want to understand who is likely to use or purchase the product or service, what evidence supports that expectation, and how you plan to reach those people.
This may be one of the most detailed sections of the plan. Consider the following:
- Your market means the customers or users you intend to reach. How many potential customers or users are there? Where are they located? What needs, preferences, circumstances, or characteristics are relevant to the offering? Are there barriers involving affordability, transportation, language, disability access, technology, or other factors? Your projections should be based on realistic evidence that enough people are likely to use or purchase the offering to support the level of revenue you expect.
- Your market research documents why you believe people will use or purchase the product or service. Relevant evidence might include data on comparable offerings, surveys, interviews, focus groups, community assessments, pilot programs, sales data, user testing, or feedback on prototypes. Where the activity directly affects community members, include their perspectives rather than relying only on assumptions about what they want.
- Your marketing and outreach plan explains how people will learn about and access the offering. Options might include a physical location, partner organizations, community events, email, websites, social media, online marketplaces, digital advertising, print materials, referrals, phone or text communication, or other channels appropriate to your audience. Consider accessibility, language, digital access, cost, and trust when choosing communication channels. Include alternative strategies in case one approach does not work as expected.
Information about comparable providers, competition, and collaboration
Most products or services already have alternatives. Other businesses, nonprofits, public agencies, informal community networks, or organizations may offer similar or related services.
Describe relevant alternatives and comparable providers. Rather than assuming your offering must be "better" than everyone else's, explain what distinguishes it, what need or gap it addresses, what value it provides, and why there is sufficient demand or community benefit to justify the activity. Also consider whether collaboration, referral, shared services, or partnership with existing providers would serve the community better than unnecessary duplication.
Details of your operating plan
Explain how the product or service will actually be produced, acquired, delivered, managed, and supported.
An operating plan should answer questions such as:
- What are the major production or service-delivery processes?
- Who will carry them out, and where?
- What staffing, contractor, volunteer, or partner capacity is needed?
- Is the offering currently operating, being piloted, or still in development?
- What equipment, technology, or other infrastructure is required?
- Is a specific physical or digital location required?
- How will supplies, inventory, scheduling, vendors, and other operational needs be managed?
- What laws, licenses, permits, safety requirements, accessibility requirements, or other regulations apply?
- What staffing, workforce, compensation, maintenance, and training considerations need to be addressed?
- How will products or services reach customers or users?
- How will quality be monitored and improved?
- What contingency plans exist if costs rise, suppliers fail, demand changes, staffing becomes unavailable, or other problems occur?
- How will customer or user satisfaction, accessibility, and experience be assessed?
- Would a process map, workflow diagram, or other visual help explain operations?
You may not be able to answer every question immediately. Identifying unanswered questions is itself useful because it shows what needs additional research, testing, planning, or consultation before the activity begins.
Financial information
This section should show whether the activity can generate enough revenue and other support to cover its costs and contribute appropriately to the organization's financial goals.
Relevant financial information may include:
- Historical revenue and expense data for the product or service, if available
- Revenue projections for several future periods
- Projected costs over the same periods, including staffing, benefits, materials, facilities, technology, marketing, accessibility, administration, and other relevant expenses
- The assumptions behind your revenue and cost projections
- Cash on hand and other assets available to support startup or ongoing operations
- Additional funding or financing needed to begin or sustain the activity
- The point at which revenue is expected to cover operating costs, when applicable
- Major financial risks and how the organization plans to respond if revenue or costs differ from projections
If you are seeking a loan or other financing, explain how the funds will be used, what revenue or other resources will support repayment, and what assumptions underlie the repayment plan.
Common financial documents may include a balance sheet, income statement or forecast, cash-flow projection, startup budget, and other schedules appropriate to the activity. Use the formats that best help readers understand the financial condition and projections of the proposed business activity.
Timelines
Include a timeline showing major action steps, responsibilities, decision points, and expected completion dates. A clear timeline helps both internal planners and potential supporters understand how the activity will move from planning to implementation.
Appendices
Supporting information that would interrupt the flow of the main plan can be placed in appendices. Examples might include staff qualifications, letters of support, detailed market research, survey results, permits, technical specifications, financial schedules, partnership agreements, photographs, or other relevant documentation.
These are common business-plan components. Adapt them to the scale and purpose of your activity, then focus on presenting the information clearly and accessibly.
How should the plan be written?
Your plan should be clear, concise, accurate, evidence-informed, honest, and appropriate to its intended audience.
Common problems in business plans include:
- The writing is unclear or difficult to understand.
- The plan is unnecessarily long or does not distinguish key information from supporting detail.
- The organization or layout is difficult to follow, or useful visuals and explanations are missing.
- The executive summary is missing or does not accurately summarize the plan.
- The plan uses excessive technical jargon or does not clearly explain why the product or service is useful.
- The plan does not adequately explain whether the organization has the capacity and qualifications to carry it out.
- The intended market or users are poorly defined, or relevant market and community research is missing.
- Comparable providers, competitors, collaborators, or alternatives are not discussed.
- Financial information or assumptions are unclear, incomplete, or unrealistic.
- The plan does not clearly explain the value of the activity or why a funder, lender, partner, customer, or other supporter should participate.
- The plan does not address important risks, accessibility considerations, community impacts, or possible unintended consequences.
Review these issues before finalizing your plan.
How should the plan be presented?
Your plan should be professional, accessible, easy to navigate, and appropriate to how your intended audience will receive and review it.
Consider the following:
- Provide the plan in the format requested by the intended audience, whether that is a digital document, online application, presentation, printed copy, or another format.
- Use enough detail to support informed review without making the document longer than necessary. Length should reflect the complexity of the proposed activity and the expectations of the intended audience rather than an arbitrary page count.
- Use headings, tables, charts, graphics, and other visual elements when they improve understanding. Make sure digital and visual materials are accessible.
- For digital plans, use clear navigation, readable formatting, accessible document structure, descriptive links, and appropriate file formats. For printed plans, use clear organization and durable presentation appropriate to the audience.
- Have several people review the plan for accuracy, clarity, accessibility, consistency, and errors before it is submitted or distributed.
A professional presentation should support the content rather than distract from it. Clear writing, accurate information, accessible formatting, realistic financial assumptions, and evidence of community or market understanding are more important than elaborate design.