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Answer:

Key areas to address: Not all business plans will have the same structure but there are some key elements which they should all address:

1. Organisational purpose, aims and objectives

This opening part of your business plan should cover your charity’s identity, mission, and measurable goals, ensuring the reader understands:

  • Who you are: A brief history of your charity, its purpose and unique value.
  • What you aim to achieve: Clearly define your mission and vision.
  • What your objectives are: Set measurable short and long-term goals.

Example: Our mission is to support refugee families in Tower Hamlets by providing access to language classes, mental health support and cultural education. Our vision is a thriving community where every family feels empowered and included.

2. Pinpoint need – why your organisation is needed

Understanding client needs: Your business plan should show a deep understanding of the people you serve. It should answer these questions:

  • Who are your beneficiaries? Their demographics, backgrounds, and specific characteristics.
  • What challenges do they face? Economic, social, or health related.
  • How are you meeting these needs? Write both immediate and long term solutions.
  • What is your organisation currently doing, and on what scale? Summary of the activities that the organisation is running, including number of participants.

Example: We support elderly residents in Tower Hamlets, many of whom live alone and face isolation, financial hardship and declining health. Over 60% come from ethnic minority backgrounds and struggle with mobility and accessing services. To address this, we provide weekly social gatherings, exercise classes, and home visits. Long-term we aim to create a buddy system and advocate for accessible community spaces to combat loneliness and improve well-being.

3. Using statistics

Using relevant statistics paints a clearer picture of the community’s needs, identifies service gaps, and demonstrates your organisation’s impact.

  • Opening with key facts: Use striking statistics to highlight the scale of the problem (e.g., “X% of people in [area] are affected by Y issue...”).
  • Relevance to your work: Connect these statistics directly to your services, showing how you address these challenges.
  • Comparative insights: If you can compare the area’s data with regional or national averages to underscore the urgency or uniqueness of the need.

Example: In Tower Hamlets, 48% of children live in poverty after housing costs, significantly higher than the London average of 32%. The borough also experiences severe income deprivation, with a score of 2.03 compared to the London benchmark of 1, highlighting widespread financial hardship among residents. These statistics highlight the need for initiatives that address poverty, improve living standards and support families (Census 2021, London Borough of Tower Hamlets).

4. Understanding internal and external strengths and weaknesses

Your business plan should set out:

  • Your organisation’s strengths, weaknesses and how these were agreed.
  • The external context in which you operate and how this context affects you.

Methods and tools you can use to assess your organisation’s strengths and weaknesses and external context

SWOT analysis

Is a strategic tool used to evaluate an organisation’s internal strengths and weaknesses, and external opportunities and threats. It is often used to help you to understand your current position and make informed decisions. By identifying strengths, you can take advantage of them; by recognizing weaknesses you can improve. Opportunities show potential for growth, and threats show risks to prevent.

Example:

  • Strengths: Strong community partnerships, skilled volunteers.
  • Weaknesses: Limited core funding, reliance on short-term grants.
  • Opportunities: Expansion into nearby regions
  • Threats: Economic downturn reducing donor contributions.

Thinking about and discussing these areas can benefit your organisation in many ways, from strengthening your existing resources to overcoming challenges. It also helps you take opportunities and manage potential risks. This analysis serves as a foundation for guiding your priorities, shaping decisions, and developing strategies that support your mission and goals.

PESTLE analysis

A PESTLE analysis is a strategic tool used to understand the outside factors that influence an organisation. ‘PESTLE’ represents six key areas: political, economic, social, technological, legal and environmental. Each area looks at specific external forces to understand how they affect an organisation. This analysis is particularly useful for strategic planning and decision-making and helps to identify risks and adapt to external changes. It might not be necessary for smaller voluntary and community groups to use this tool.

Every organisation’s analysis will be different, and will depend on the work you do, the time and place you are operating in and the views and ideas of the people you work with.

Using a PESTLE analysis, we can identify key drivers, for example:

pestile analysis

Answer:

Your business plan is not just a document; it is your story of change. Treat it as a living document. Start with what you have and update it as your organisation grows.

What is a business plan?

A business plan is a tool to help organisations and charities stay focused, achieve their goals and plan for the future. It explains your mission, objectives and strategies and helps you to focus your effort and resources.

Why have a business plan?

View the business plan as a strong sign of your ability to make strategic, intentional decisions and a place to show you have thoughtfully considered how your actions support your mission. Keep in mind that a business plan is not static; it should grow with your organisation, serving as a tool for both guidance and accountability. Many funders now ask for a business plan to see how your organisation thinks strategically, plans financially and stays committed to making an impact.

How you can use a business plan

Plan how to deliver your strategy: A strong strategy outlines your organisation’s goals and priorities, providing the foundation for your business plan. If you do not have a strategy or have not gone through a strategic planning process, it would be ideal to tackle this first. The business plan should then act as a practical guide, making sure all your activities and decisions work towards your strategic aims. For guidance on developing a strategy visit What is strategy? | NCVO.

Measure progress: Refer to the business plan to assess performance against set goals. It helps to track progress and adjust strategies if needed to stay on course.

Support trustees: Your trustees have a legal duty to oversee how your organisation’s resources are used. You can read more about the legal duties of trustees here and a concise summary of the 6 main duties here.

A business plan will help trustees to:

  • Understand how your plans will be implemented.
  • Assess the risks that might come up.
  • Give input to make sure legal duties are met.

Support you to respond to change: How you manage your direction by responding to the changes that are happening around you. This could be changes in legislation, issues that affect your beneficiaries or how new digital ways of working can help you respond more effectively to running your organisation.

Reviewing: You can plan the review points in your business plan. This might be part of your organisation’s annual cycle of reporting, evaluating or planning, and can be included in staff and trustee away days, planning events with beneficiaries or other types of review.

Answer:
Your group will need a bank account if you handle money. UK Finance has put together some questions to help you decide what your banking needs are, and provides a list of bank accounts that might be suitable for voluntary and community groups. There should be two signatories to authorise payments on the bank account, and they must not be related or living in the same household. The Charity Finance Group gives much more information about charity banking here: Charity Finance Group | Banking for Small Charities.
Answer:

If you are given money for something specific, you must spend it on that thing. This is known as ‘restricted’ income. Examples of restricted income might be a grant from a trust or foundation, or a donation from someone specifically to spend on a particularly project. Some income (e.g. money earned from ticket sales, or public donations from a sponsored event) can be classed as ‘unrestricted’ income, meaning it can be spent on anything that comes under your charitable objectives. Where the restriction has been defined by the donor, you must be able to prove that any restricted income has been spent on what it was donated for.

You cannot fundraise for something in particular and then spend the money you raise on something else. If your fundraising campaign raises more money than it needs for a specific cause then you must follow Charity Commission rules to identify a new purpose: Charity fundraising appeals: using donations when you’ve raised more than you need. Likewise, if your appeal doesn’t raise enough money you must either return the donations or follow the Charity Commission rules to identify a new purpose: Charity fundraising appeals: using donations when you have not raised enough money or you cannot achieve your appeal purpose.

NCVO gives a simple overview of fund accounting here: What’s different about charity finance | NCVO

Answer:

You must set up financial controls to ensure you meet your legal duties, protect your assets and make informed decisions about your financial position.

These financial controls should cover:

  • All aspects of how your charity handles its resources and assets, including its money.
  • How you store personal data in line with the UK General Data Protection Regulation (GDPR).

The financial controls should include how expenditure is authorised and how you check what money has gone in and out of the bank.

You should also set a budget at the beginning of the financial year, setting out your expected income and expenditure. Trustees should approve this as they have overall responsibility for finance. Management accounts are updates on the financial position, which can be run quarterly or monthly. They show how well you are doing against the budget and set out the reason for any differences.

You should set out how you buy things (e.g. making sure you get several quotations to ensure good value for money), separation of duties when purchasing and approving payments, management of cash/credit cards/ cheques/online banking, as well as setting out procedures for claiming expenses. UK charities must follow the same anti money laundering regulations as businesses.

The Charity Commission gives more information about fnancial controls here including a financial controls checklist.

Answer:

Reserves are the part of your unrestricted funds that are freely available to spend on your work. They should not include buildings, land and equipment, social investments or money set aside for future project commitments. In this way reserves is money that is truly available to use if needed. Reserves are kept so you can comply with your legal duties to act in the interests of your organisation and its beneficiaries, to act with reasonable care and skill, to protect and safeguard the assets of your organisation and to ensure that your organisation is accountable.

In practice this means:

  • Planning to maintain essential services for beneficiaries.
  • Covering the risk of unplanned closure.
  • Planning for the risks of unplanned closure on your beneficiaries, staff and volunteers to ensure you can meet your spending commitments and liabilities.

Trustees should decide the level of reserves your organisation needs and develop a reserves policy that sets out the level of reserves and why they are necessary. Having a reserves policy can also reassure creditors that the organisation can meet its financial commitments. Your reserves policy should consider the risks of holding reserves that are either too low (so you do not have enough to cover unplanned closure or cannot maintain essential services for beneficiaries) or too high (which may mean that funders are less likely to fund your work).

Further information can be found from:

Answer:

The Charity Commission defines a risk as ‘anything that could, if it happened, affect your charity achieving its purposes or carrying out its plans’. It notes that trustees ‘have a duty to avoid exposing your charity to undue risk’.

Risk management is the process of identifying and assessing risks and deciding how to deal with them.

The Charity Commission says this should consist of the following steps:

1. Establish a risk policy.

2. Identify risks (what could go wrong, including governance, operational, financial and external risks as well as compliance with the law and legislation).

3. Assess risks (how likely is it, and how serious would it be).

4. Evaluate what action to take (e.g. avoid it, transfer it, insure against it, accept it).

5. Review, monitor and assess periodically.

Full information from the Charity Commission can be found here: Charities and risk management (CC26) (publishing. service.gov.uk).

The Charity Governance code also talks about the importance of good risk management.

Answer:

Good risk management should not only avoid negative events but also improve decision making and enable your organisation to seize opportunities and innovate. A systematic approach to risk management can help to achieve your mission more effectively by identifying and addressing potential obstacles and uncertainties. Conversely, charities that have had poor risk management have experienced an impact on their reputation, finances and operations.

Categories of risk can include: governance, external, regulation and compliance, operational and financial. Financial risk might cover losing funding, not finding enough funding to carry out key projects, financial processes not being adequate, fraud, loss of key staff and cyber crime.

Guidance on risk management

Answer:

Annual accounts and return

All registered organisations must submit an annual report to the Charity Commission or CIC Regulator. Full details of how to do this are given here: Charity reporting and accounting: the essentials November 2016 (CC15d) - GOV.UK and here: CIC34: community interest company report - GOV.UK.

Audit and independent examination

All charitable incorporated organisations (whatever their income) and registered charities with an income greater than £25,000 must file their accounts and an annual report with the Charity Commission. The Charity Commission has a detailed guide to charity reporting and accounting.

If your annual income is less than £25,000 you do not usually need any form of examination or audit of your accounts. If your income is over £25,000 but under £1m you will need to get an independent examiner (‘IE’). If your income is over £1m (or more than £250,000 and with gross assets of more than £3.26 million) you will need your accounts to be audited.

Audit and independent examination resources

Answer:

When you start employing people then you need to have a basic understanding of employment law. ACAS is a good source of information about employment law, and they have a free telephone helpline for all employers: Contact us | Acas. You must also buy employers liability insurance, which is a legal requirement.

You will need to decide and/or determine whether the people you pay to work for your organisation are self-employed or employees. If you take on staff then you will be responsible for calculating and paying their tax and National Insurance contributions under PAYE (Pay As You Earn). You can find out more information about this here. There are penalties for dealing with tax obligations incorrectly or for paying someone ‘cash in hand’ without properly determining that they are paying their own tax and National Insurance. Many organisations therefore work with accountants and/or payroll providers to help them to manage the process of paying staff. You should always research providers and seek quotations to make sure you get a service that is suitable for your needs.

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