Business plans are a lot like stories. They describe what a given organization hopes to accomplish. They specify the resources its leaders think they will need to achieve their goals. And they explain why they think the activities the organization is proposing to pursue will lead to the results they desire.

What differentiates good stories from poor ones is that the good ones hang together. Their narratives (however different in style and content) make sense. The same principle applies to business plans. Good plans make their logic and assumptions transparent, so that even people who don't know anything about an organization can understand and evaluate what it proposes to do. Poor plans are another matter. If you read an organization's business plan and you can't understand how it's going to get from B to C, the chances are its authors don't understand how they will do it either.

In the for-profit sector, business plans typically have one (and only one) real audience: potential investors. The stories they tell are designed to persuade investors that funds put into this particular enterprise will yield significant financial returns over time. In the nonprofit sector, the situation is considerably more complicated and complex. The audience of readers who will be interested in a nonprofit's business plan extends well beyond its current (or potential) funders to encompass its board members, its staff, and sometimes its program beneficiaries and larger community as well. For this reason, the story it has to tell will hinge as much (or more) on matters of human behavior, motivation, and social change as it does on financial figures and economic analyses.

If you would like to know more about the business planning process, "An Introduction to Business Planning for Nonprofits" draws on Bridgespan's experience with clients to highlight some common steps and concerns.

Please see our latest article on the topic of business planning:

Business Planning for Nonprofits
What it is and why it matters