Business planning is the new black
In our monthly Management Café discussion, I was reminded about our current Page to Practice™ feature because the executives on the call were discussing how they constantly evaluate the financial impact (earning power or appeal to donors) of their programs.
This month’s Page to Practice™ feature of The Nonprofit Business Plan: A Leader’s Guide to Creating a Successful Business Model underscores the discussion of financial impact by addressing the economic logic of your nonprofit business model. In other words, business planning is the new black. Authors David La Piana, Heather Gowdy, Lester Olmstead-Rose and Brent Copen argue that business planning is not strategic planning. Rather, it’s the next step after strategic planning—a way to test the economic viability of your strategies. I asked Nonprofit Business Plan coauthor, Lester Olmstead-Rose, to discuss the difference between strategic planning and business planning as well as how they interact. Here’s what he had to say:
CausePlanet: Your book discusses the difference between strategic planning and business planning. Can you briefly touch on this?
Olmstead-Rose: Strategic planning is focused on articulating a strategy or creating a response to an organizational opportunity or threat, which is something organizations need to do all the time. A strategic planning process might identify a business model that isn’t working, such as where the mission impact is low or the organization is not able to pay for its work. But the emphasis in strategic planning is on how you will coordinate your activities and coordinate them to what end.
Business planning specifically tests the operational and economic viability of a major change. It is true that a business plan may pick up where the strategic plan leaves off. Your strategic plan might say, “We need to develop sources of earned revenue.” You can then use the business planning process to identify and test options for doing this. The value of a business plan is in the rigor of the process you go through to test the proposition that a particular undertaking–a program, partnership, new venture, growth strategy, or the entity as a whole–is economically and operationally viable.
CausePlanet subscribers: Don’t forget to register for next month’s live author interview via webcast with Lester Olmstead-Rose about this book.