It’s hard to miss the headlines about the collapse of Peloton. The fitness company rose to prominence during the early days of the pandemic thanks to their coveted, and expensive, stationary bikes. But two years later, the business is in crisis. Replacing the CEO. Laying off workers. Shuttering expensive investments.
It’s enough to give any Executive Director nightmares.
Could Peloton have avoided this fate? And, if so, how?
The answer is simple: Strategic Planning
We all want to seize opportunities and lead our nonprofits to success. But doing so without a roadmap is a recipe for disaster. That’s where strategic planning comes in.
A Strategic Plan Is a Roadmap to Reach Your Vision
Like Peloton, many nonprofits are helmed by a charismatic leader with a vision. But a vision is only a destination—a compelling picture of what could be—not a map for how to get there.
A roadmap might not seem as exciting as a vision, but getting lost before achieving your vision is far worse (just ask Peloton).
That’s why a strategic plan is designed to help everyone—from board members to staff to funders—understand both where your organization is going and how you’re planning to arrive. This helps you better align fundraising pipelines and organizational goals with strategic investments, whether that’s hiring more staff, starting a new program, or signing a new lease. Strategic planning also helps you prepare for what could go right and what could go wrong.
Business Planning Pushes You to Assess Risk
Few people become nonprofit Executive Directors because they love assessing risk. The nonprofit leaders we know are driven by a deep commitment to making a difference in our world. They’re focused on seizing opportunities, changing lives, and growing impact. Plus, highlighting opportunities is often more compelling than getting bogged down in risk analysis, particularly in donor conversations.
All of which makes it too easy to think only about what’s working now.
That’s what Peloton did. Inspired by skyrocketing demand for their products and services at the start of the pandemic, Peloton got trapped “chasing the dream that the pandemic represented the company’s trillion-dollar future.” The company made massive investments based on what was happening in the moment, without accounting for potential future shifts in consumer behavior. Which meant they were taken by surprise when, seemingly overnight, demand dried up.
That’s why a well-crafted strategic plan helps leaders focus on not only the heady potential of the moment, but also account for inevitable headwinds in the future. As part of a business planning process, Funding for Good recommends that all organizations engage in a comprehensive environmental scan and SWOT analysis.
- An environmental scan maps the external factors that may affect your nonprofit.
- A SWOT analysis—which stands for Strengths, Weaknesses, Opportunities, Threats—charts the internal factors that a strategic plan needs to consider.
With these tools in hand, Executive Directors and Boards of Directors can make smarter, more strategic decisions in both good times and bad.
Sustainability Requires Business Planning
A strategic plan is also key to positioning your organization for success not just today but for years to come. That’s why nonprofits of every size and stage need a strategic plan. For example:
- New nonprofits can use a strategic plan to ensure the organization and culture they build is aligned with their mission and vision.
- Growing organizations can use it to evaluate which opportunities to take advantage of and which to reconsider.
- Established organizations can use it to identify ways to increase their reach and impact even further, whether it’s identifying new income streams, piloting new programs, or uncovering unmet community needs.
For all nonprofits, a strategic plan is also an essential fundraising tool. Being able to provide a current strategic plan shows donors—not to mention board, staff, and volunteers—that you’re prepared to make their investment in your organization count.