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Chapter Six

You have researched your audience, written a value proposition, determined your revenue strategies and developed a business model canvas. Now it’s time to write a business plan.

What is it? A business plan is the story of how you plan to create and sustain the news organization you are starting. It shows funders that you’ve have carefully considered all of the key aspects of the business and how they work in concert to deliver on your value proposition, or “theory of change” as foundations call it. An effective business plan also

Don’t be intimidated. Because you have completed a business model canvas, you already have a broad vision of what it will take to deliver your value proposition to your audience. You know the work you’ll have to do behind the scenes, what your key activities will cost, and your potential revenue streams. Business plans should not be excessively long or repetitious, but must convey that you have thought through all aspects of the business and understand the interdependencies.

Telling a story with numbers. Journalists know how to tell a compelling story, but may find it challenging to develop financial projections. It’s important to understand that the numbers are also telling your story and those numbers should match the narrative. We recommend that you utilize resources in your community to help with this aspect of the business plan. We included links to business resources that have offices in every state and U.S. territory.

A business plan takes time, it requires research, careful analysis, a solid value proposition and great storytelling. We’ve provided you with the tools and resources to create a solid plan for success. Dig in.

RESOURCES: America’s Small Business Development Centers, an association offering no-cost business consulting and low-cost business training
The Service Corps of Retired Executives

Many resources are available in books and online for formatting a business plan, and you should use whichever one you find appealing and relevant to your operation. Below is one example, and in the pages ahead we will elaborate on some sections that are not self-explanatory or have not already been covered in this guide.

  • Cover Page
    • Name, address and contact information of the business
    • Names, titles, address of the owners
    • Month and year completed
  • Table of Contents
  • Executive Summary
    • A brief summation of the concept and how you plan to achieve it. The executive summary is written last since you are summarizing all the other sections.
  • Background Information
    • Concept
    • Mission Statement
    • Business Model Statement
    • What will be special about your concept/business?
    • What market do you intend to serve?
    • How can you serve the market better than the competition?
  • Description of product(s) and/or services
    • Features of proposed product(s) and/or services
    • Benefits to your target audience
    • Production plans
    • Future product(s) and/or services
  • The Market Plan
    • Description of the industry
    • Current and future industry trends
    • Business fit within the industry
    • Audience profile
    • Size of the audience
    • Audience trends
    • Identification and evaluation of direct and indirect competitors and their strengths, weaknesses
    • Your competitive advantage — your unique value proposition
    • Marketing strategies — branding, promotion, distribution
  • Management and board structure and organization
    • Describe management team and/or board and their strengths and weaknesses
    • Roles, duties and responsibilities of the management team
    • Will you have to train people? Use volunteers?
    • Describe the organizational structure, who will do what? Include an org. chart
  • Business Operations
    • Location
    • Virtual or physical space?
    • Have you filed required legal paperwork?
    • Fiscal sponsorship or 501(c)(3)
  • Financial Plan
    • Startup costs
    • Business needs/capital equipment list
    • Cash-flow projections — revenue and expense projections for three years with assumptions. NOTE: INN recommends that founders plan to spend 50% of their total resources in their first year on the business side, as a rule of thumb, and 50% on editorial efforts.
    • Projected balance sheet
  •  Conclusion
    • Reiterate feasibility of concept
    • Launch plan (Optional: If you already have developed a detailed tactical plan for your startup and growth, you may attach it to the business plan.)
    • Support documents (providing details that some funders or participants may have requested but that are not core parts of the business plan.)

One Page Business Plan books
SCORE business plan template

Be objective. While your tone should be positive and confident, don’t exaggerate your experience or resources. Be factual about the strengths and weaknesses of both your operation and potential competitors.

Keep it simple, focused and easy to read. Brevity is crucial if you want others to read your business plan. But include explanations of terms and trends that may be unfamiliar to potential benefactors who are new to supporting nonprofit news. Anticipate their questions and refer briefly to the most important research, data and trends that support your plans.

Get a trusted outsider to read and provide feedback.

Review and revise as assumptions change. Your business plan can be written with an eye towards the future, but it must accurately describe where you are now. When you make strides such as signing major distribution deals, update the plan.

As in any story you write, you should start with an introduction summarizing your plan, and end with a conclusion reiterating the feasibility of the concept. Depending how far along you are in your planning, you may also attach a detailed tactical plan outlining activities planned during the startup years.

When you address business operations in your business plan, you should provide an accurate picture of where you are starting from, even if you are working alone from your home or in a coworking space. Potential benefactors will find it reassuring that you are not wasting money on an expensive lease. They want to fund news, not a fancy office.

If you have not performed necessary legal paperwork or secured nonprofit tax status, you still can begin presenting your business plan. It should specify that the legal work is in process and whether there is a fiscal sponsor.

A fiscal sponsor is an established 501(c)(3)-certified organization that accepts funds on behalf of the sponsored program and ensures the funds are spent to advance the program’s mission. This allows new nonprofits to receive tax-deductible donations while they are ramping up or their status is pending with the IRS. Some nonprofits may be sponsored for a short time. Others stay under sponsorship for years as an efficient way to operate. INN offers both short and long term fiscal sponsorship.

RESOURCE on Fiscal Sponsorship

The preceding pages of this guide took you through the process of creating your business model and mission statement, so you already should have those elements written. You already must have a clear vision for what market and audience you intend to serve, and how you can market yourself and compete for that audience. If you cannot restate this information clearly and concisely at the beginning of your business plan, you are not ready to proceed. You should go back and do the groundwork before writing a business plan. Funders are looking to see how well you have thought through your concept and your plan to start and sustain your news organization for the long term.

Your business plan must provide at least a rough accounting for your startup costs and ongoing business costs. These costs include anything you need to buy or pay for to carry out the activities that must be done to deliver on your business goals.

Some terms you should be familiar with and include in your narrative:

  • Capital equipment: U.S. accounting rules consider capital equipment that costs more than $5,000 and has an extended lifetime of over one year to be a fixed asset of a business. These assets do not include real estate or software.
  • Fixed and variable costs: Fixed costs such as rent, web hosting and internet access remain constant over a period of time. Variable costs include one-time startup expenses such as a logo design or legal fee, discretionary expenses such as travel and training, and ongoing costs that vary month-to-month. In a fast-growing operation, variable costs such as independent contractor fees can increase substantially.
  • Assumptions and projections: You should project your revenue and expenses for at least two or three years in your business plan in a way that shows you have a realistic chance of maintaining a positive cash flow. Nobody wants to provide seed money to a startup that is going to run out of money and shut down. So the projections must be based on realistic, conservative assumptions.

Journalists are well-equipped to explain their financial assumptions and projections in a narrative, but the business plan should also include a projected balance sheet that matches the narrative. Journalists may not be equipped to build financial projections and should seek help. In every state there are small business resources available at no cost. We also discuss building a budget in the next chapter.


Business and financial planning support from America’s Small Business Centers

Even if you plan to start your operation working by yourself in your home, your business plan must envision and describe your support team. These could be professional consultants or unpaid helpers, ranging from volunteers you train to experts who volunteer to train you.

Strength in numbers: You not only need extra help as your operation grows, you need it while writing your business plan. Journalists used to working on tight deadlines must realize this is not a “let me just write something and get it in” situation. It requires research, analysis, contingency planning, and an understanding of how numbers work. As you are telling your story in words, you must also tell you story with numbers, and they must match your narrative.You can’t say, “By Year Three, we will have a staff of five reporters,” and project a budget of $75,000 that year. The numbers must jibe. Wealthy donors tend to evaluate the financial statements before deciding whether to read the narrative. If financial projections are not your strength, include that strength in your management and board structure.

Accountability: INN recommends that founders plan to spend in the first year half of their total resources, both time and money, on fundraising. To ensure the money is well spent, the roles, duties and responsibilities of the management team should be outlined in the business plan. No matter how small the operation, an organizational structure must exist to show funders there is accountability. A startup founder should be answerable to a board of directors. The founder may find such a board by partnering with an existing nonprofit in the community, or can assemble a group of people who have complementary skills and knowledge.

Diverse skills: It can be tempting to fill a board with prominent journalists to gain credibility with foundations. But a board of eight members should have no more than four journalists, and the other members should fill gaps in the management team’s skills. It can be valuable to recruit a lawyer, an accountant, a fundraiser, a marketer and a social media expert, because those board members (all independent of any firms paid by the operation), bring needed expertise. People with deep pockets and extensive networks can be excellent board members even if they are too busy to attend many meetings.

A business plan can tactfully state that the organization has recruited board members who are well-connected to open doors to funding, or can identify board members as philanthropists who have a passion for civic engagement. A news site devoted to education should have educators on the board. If a board member brings expertise or community connections that are important to the mission but not obvious from the person’s name or job title, make it clear.

RESOURCES: America’s Small Business Development Centers, an association offering no-cost business consulting and low-cost business training
The Service Corps of Retired Executives

We covered revenue models for nonprofits earlier in this guide. Before you can write a revenue model statement for your business plan, you must have determined what revenue sources are realistic for you to pursue and rely on in your first year or two of operations.

Your business plan will list the potential revenue sources and project conservatively how much income you expect and when you will receive it.

INN has surveyed its members and studied their revenue sources and found the following:

  • While grant funding to journalism is growing overall, dependence on foundation funding is decreasing as a share of most news nonprofits’ budgets because it does not provide long-term sustainability. Think of it as seed funding while you build added revenue streams or to do something new.
  • More than two-thirds of the 109 news organizations in our 2020 INN Index survey have three or more revenue streams. For updates and details by publication type, you can find good references in the full INN Index report.
  • The successful sites start by putting put at least half of their resources into running the business, reining in editorial costs and working on revenue generators such as events, advertising and sponsorships.
  • The most cost-effective revenue generator is simply asking people for money.

To add credibility to your assumptions and projections, and to confirm that you have a marketable plan, ask a sample of your target audience what they are willing to pay for a subscription, membership or sponsorship. Individual donors and particularly major donors are relatively undeveloped revenue sources for news nonprofits, making up one third of total revenue for the organizations in the INN Index. By comparison, individual donors provide more than 70 percent of charitable revenue for all nonprofits across the U.S., according to Giving USA.

You can find reference points on averages for small donor giving in the NewsMatch 2018 Learning Report. But nothing beats sampling your intended audience.

Your business plan has roughed out a cost structure: what assets you need and what activities must be done to deliver on your business idea. Now you need to quantify those specifics. What will it cost to run and maintain the operation that delivers your value proposition in a way that keeps your audience coming back?

The startup and ongoing costs of website development, hosting, and metrics can vary widely depending on how complicated your needs are.

What are your one-time start-up expenses? These may include:

  • Equipment
  • Professional services, such as hiring an accountant or bookkeeper who specializes in nonprofits to set up the organization’s financial statement.

What are your recurring costs to cover ongoing business needs? These may include:

  • Salaried personnel
  • Travel and entertainment
  • Rent
  • Utilities
  • Postage
  • Printing
  • Insurance
  • Interest
  • Depreciation
  • Dues/Subscriptions
  • Advertising

The following sections will cover the “how-to” of projecting costs and building a budget. But first, you’ll need to think about how to translate into dollars the narrative you’ve created about the business. They should match.

You have established your budget in terms of what you expect in total revenue and expenses for a designated period, such as one year. The cash flow projection goes a step further by identifying when your expect the money to come in and go out, by month or by quarter, so you know whether you will be able to pay your bills on time and not overdraw your bank account.

Including a cash flow projection in your business plan gives you a realistic view of what revenue you need to pay your expected expenses for people, fixed costs and recurring costs. The projection shows the cash you have begun with and it breaks down expected revenue and expenses in enough detail that you can easily update it as you go along.

The cash flow projection will remain a valuable and important management tool for the organization. If you are seeking foundation grants, donors may ask to see your past cash flow projections.

Free templates and expert advice are widely available for creating these financial reports.

RESOURCE: Sample Cash Flow Statement from legal guide publisher

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