One of my favorite cartoons is from Tom Fishburne’s “Brand Camp.” It does a great job of illustrating the inner monologue we all have when considering a new venture.

I often tell my students that successful entrepreneurship is half about skill (what you know and do) and half about mindset (what you tell yourself along the way and how you overcome the inevitable obstacles).

Think of a great athlete. They practice technical skills on the court, but they also train their mind. We saw this play out when famed Olympian Simone Biles showed the world how important mindset is to her sport by withdrawing from several events during the 2020 Olympics, then returning to win gold in 2024. Entrepreneurs — whether on their own or serving as intrapreneurs inside an organization — need this same mental conditioning.

Developing a nonprofit business plan strengthens both. It helps you test your assumptions, sharpen your thinking and build a venture that has a real chance of succeeding.

Start with the Problem, Not the Solution

Before deciding exactly what venture to pursue, we recommend brainstorming all the possibilities. We call this “ideation.” Sometimes this means stepping back, researching the landscape, talking with community members and allowing the best idea to emerge rather than falling in love with the first one.

This reminds me of one of my favorite teaching stories. A student wanted to start a community garden in the neighborhood where she grew up in South Dallas. I applauded her passion, then asked her one simple, but important question: Did you ask the community what it wanted?

At first, she answered, “Who wouldn’t want a garden?” Then, she thought a little and agreed. She wanted to provide greater access to fresh fruits and vegetables in an area considered a food desert, and a garden was only one way to do so. After interviewing residents, she learned that several community gardens had already been attempted but failed because the neighborhood lacked the capacity to keep them going. Instead of abandoning the problem, she reconsidered the solution.

She discovered that her neighborhood had lower-than-average enrollment in SNAP, formerly known as food stamps. Rather than building another garden, she developed a social marketing campaign to help eligible residents enroll in SNAP. Then, she organized a weekly farmers market that accepted SNAP benefits. This provided a longer-term solution to the problem she was trying to solve: giving people greater access to food.

Through this process, she was following one of my favorite principles: fall in love with the problem, not the solution.

That kind of curiosity, often associated with the Lean Startup approach, helps entrepreneurs discover solutions that are both meaningful and sustainable.

Before committing to an idea, ask yourself:

What problem are we really trying to solve?
What does the community say it needs?
What has already been tried?
Why did previous efforts succeed or fail?
Is there another organization we could support or partner with?
What would need to be true for this idea to work?
What might we learn that would cause us to change direction?

Sometimes the outcome of good research is realizing that you should pursue a different idea altogether.

Choosing the Right Business Planning Tool

Once you’ve identified the most promising idea, the next challenge is communicating it. That’s where business planning comes in.

Whether you’re seeking funding, launching a social enterprise or simply organizing your thinking, the right planning tool helps transform a promising idea into an actionable strategy.

A good business plan serves two purposes:

First, it forces leaders to think through every aspect of the venture, from beginning to end.
Second, it helps investors, funders and partners understand the vision and the reasoning behind it.

When I graduated from business school, business plans were often close to 80 pages long. Today, entrepreneurs have far more succinct options.

A social business model canvas summarizes the core business model on a single page. A prospectus serves as a visual overview for potential investors. A pitch communicates the concept quickly. A full business plan provides the detailed roadmap needed for larger ventures.

Each has its place. The right choice depends on the content, the audience and what you need them to understand or do. Below is a handy reference guide, “Social Venture Building Blocks,” to help guide your thinking about your needs for support and investment.

Download the printable PDF version of this graphic

Here are some additional prompts that could guide your decision-making:

Deciding whether an idea is viable or feasible? Start with a feasibility study.
Exploring a brand-new idea? Start with a pitch, prospectus or social business model canvas, which provides a visual overview of your idea and its business case. A pitch is also helpful for relaunching an idea or organization, too.
Creating an organization, expanding a major program or launching a social enterprise? Start with a full business plan that can double as an operating guide. If you are interested in a high-quality outline for a business plan, check out this link.

All are worthy of exploration and can be mixed and matched based on your needs and audience.

Regardless of the format, a nonprofit business plan should clearly explain:

The problem
The proposed solution
Community and market research
Intended impact
Business model
Revenue strategy
Operations
Staffing
Financial projections
Implementation

Because nonprofits and social enterprises operate differently from businesses, they also need to explain who benefits and who pays. The person receiving the service may not be the customer or funder paying for it. Your business plan needs to make these different relationships clear.

Finding the Right Length

There isn’t a perfect length. A social business model canvas is typically one page, but it can be expanded with additional market research and details for funder presentations. A pitch, prospectus or feasibility study may be relatively short. A complete business plan may need more detail, particularly if you are seeking significant funding or using the plan as an operating guide.

The format and length should be based on the audience and what you need them to understand or do. We recommend not making the plan longer simply to make it look more impressive. At the same time, don’t use a shorter format simply to avoid answering difficult questions.

Five Steps to Building Your Business Plan

Business planning can be overwhelming. To make things easier, we recommend breaking the process up and recruiting others to help.

Identify a champion: Every project needs a lead. Find someone who can really commit to the project and who passes the “drive test.” In other words, this person will think about the venture all the time, including on the drive to and from work.
Build a team: We consider business planning — much like strategic planning and grant writing — a team sport. Convene a group of staff, board members and volunteer experts to serve on a core team or advisory team. The core team should include staff and volunteers who are enthusiastic, committed to the idea and have time to devote themselves to the process. The advisory team should include people who have less time to commit but can provide key insights and an objective perspective. We have devised a quick template to help with this brainstorming process.
Create an outline: Decide what you need from your business plan, then develop an outline. We have created a template with key questions to assist with this process. Then, divide the work between your core team based on interest and availability. We have created a worksheet to help you complete and review each section.
Develop a work plan: Deadlines drive plans forward and create momentum and energy. Develop a reasonable yet ambitious work plan that allows the team to agree on key deadlines. We have developed a sample work plan but we encourage groups to use online project management tools, too.
Test your assumptions: Don’t wait until the plan is finished to find out whether the idea works. Talk with potential participants, customers, funders and partners. Test the price. Run a pilot. Learn what you can while the idea is still relatively easy and inexpensive to change.

Build a Strong Financial Foundation

No plan is complete without financial projections. At a minimum, the plan should include:

Startup costs
Ongoing expenses
Expected revenue
Cash-flow needs
The assumptions behind the numbers

For a social enterprise, you also need to understand how much it costs to deliver each product or service and whether the price covers that cost. If it doesn’t, what other revenue will fill the gap?

Based on what we have seen recently at social business plan competitions, pay particular attention to the financial assumptions. We recommend considering conservative, expected and optimistic scenarios. What happens if participation is lower than expected? What if costs increase? What if a major source of funding doesn’t come through?

Anyone can make a spreadsheet balance. The real question is whether the assumptions behind it are realistic. Optimism helps you start, but honest financial assumptions ensure your business is built to last.

You Don’t Have to Do It Alone

Outside of your network of staff and volunteers, there are many sources of help. SCORE and Executive Service Corp chapters can provide pro-bono or low-bono assistance. College and MBA interns can provide extra capacity and great research support. Even librarians at your local library can help research difficult questions using their access to proprietary databases.

Be on the lookout for business plan competitions, also known as pitch competitions, where you can test-drive your plan and receive objective feedback.

You can also learn a great deal from organizations doing similar work through competitive and comparable research. Use AI (see our prompt here) to help identify similar nonprofits, then review their websites, annual reports, Form 990s and impact reports. The goal isn’t to copy them — it’s to understand what has already been learned.

We do not recommend hiring a consultant to write a business plan for you. Much like when you were a kid in school, when you copy someone else’s homework, you don’t learn anything. Business planning is less about the plan itself and more about the process that forces you to think, plan and make decisions about the business. However, feel free to hire a consultant or market research expert to assist with market research, financial projections, business coaching, facilitation or project management.

The Keys to Success

The most successful business plans tell a compelling story about the venture and serve as a roadmap for implementation. They balance optimism with realism and inspire confidence without ignoring challenges.

The best business plans are also living documents. As you learn more about your community, customers and financial model, your plan should evolve. If the research tells you to adjust the idea, consider polishing it. If the financial model isn’t working, talk to customers, do more research and rethink the model.

A business plan is not a promise that everything will happen exactly as written. It is a tool to help you ask better questions, make better decisions and learn your way forward.

We welcome your input on the questions above. Feel free to send us any additional questions you have about business planning.

How to Write a Nonprofit Business Plan