Three Power Questions to Plan the NFP Year Ahead
24 June 2014 at 10:08 am
The end of the financial year is a great time to reflect on the achievements of the past year but it’s also an opportunity to plan for the year ahead, writes Westpac Social Sector Banking’s National Marketing Manager Lali Wiratunga.
One of the most rewarding feelings that you can have is that of a job well done. Imagine sitting in the board room at the end of the financial year, with everyone satisfied that the books balance, there is surplus money in the bank, and more importantly, the organisation’s mission has been well and truly fulfilled.
As June 30 rolls around in any given year, it is a great time to reflect on the achievements of the past year, and celebrate those wonderful successes. It is also a good to cast our gaze ahead to exactly one year from now, where we hope to once again be celebrating another year of achieving our goals.
There is an old saying that “if you don’t know where you are going, any road will get you there”. The truth is that those feelings of success at the end of the next year begin with having a solid plan for how you want the year ahead to unfold in front of you.
For a lot of people, planning is a chore. It involves tedious hours of drafting out our thoughts on paper, circulating them amongst key stakeholders, and then finalising a document that, at best, will get a cursory glance now and then. Why on Earth would we want to spend our time focusing on something like that?
Those who think this way, however, are missing the point. A plan is a vision of the future, and doubles up as a roadmap to help us navigate the twists and turns that the coming year will bring us. Not only that, when we construct a plan well, we refer to it often, as it will keep us aligned with our goals and, more importantly, provide us with a scorecard to determine whether we are truly successful or not.
There are three really useful questions to ask when developing your plan for the coming year. They are:
1. What do we want to achieve?
2. How are we going to achieve it?
3. How will we know when we have achieved it?
What do we want to achieve
The first question that should be asked at the start of every planning period is the simplest, and most obvious. It is: “what do we want to achieve?” For most organisations, the answer to this question is unlikely to change.
Take Many Rivers Microfinance Limited (Many Rivers) as an example. They are a not-for-profit organisation that support aspiring business owners with microenterprise development support, and access to finance, in order to see the potential of people and communities realised.
When Many Rivers develop their yearly plan they always ensure that whatever activity results from that thematically aligns with the above goal. As an example of this, Many Rivers have commenced piloting a series of ‘pop-up’ shops. These shops actively promote the products of the microenterprises that they help to nurture, and drive awareness of the challenge faced by clients in gaining access to the broader Australian marketplace.
“It is very difficult for people in remote communities to participate in the real economy. The Many Rivers Pop-Up Shop is all about connecting these communities to mainstream economies,” says John Burn, CEO of Many Rivers.
“We utilise the established transport infrastructure and physical sites of our network partners. As a not-for-profit, Many Rivers can provide access to this infrastructure on a marginal cost basis, supporting legitimate commerce and stimulating economic flows into remote communities.”
The alignment is clear, and the activity makes perfect sense in light of what they are trying to achieve.
While this sounds incredibly simple, it is this simplicity of it that is often overlooked or dismissed. We have all seen examples of organisations who have undertaken an activity that makes us scratch our heads in wonder. The risk that these organisations run is that they get distracted from their mission and fail to achieve what they set out to do.
How are we going to achieve it?
There are always a multitude of activities that you could do that will make have a really positive impact on your mission. The challenge, however, is that there is rarely enough funding and resources to actually achieve all of those activities.
This is where it pays to be absolutely ruthless in the planning process. Consider all of the activities that you want to undertake, and then rank them to determine which ones you will actually deliver on. This can be done on a simple, two-by-two priorities matrix, where you rate the activity by its ‘impact to mission’ against its ‘return on investment’.
Take the Many Rivers pop-up shop as an example. This activity would rate high on ‘impact to mission’. Why? Because it aligns Many Rivers strategy of providing support to aspiring business owners. It does this by showcasing the quality and range of products of these business owners.
This activity would also rate high on the ‘return on investment’ scale. Why? For the business owners themselves it provides an opportunity to increase sales revenue through an additional sales channel. For Many Rivers, it is a relatively small cost to provide an awareness platform that can promote the partnership between Many Rivers and its pop-up host funder and/or partner.
How will we know when we have achieved it?
The final step in planning is arguably the most important in the entire process. It is here that you get to determine what success actually looks like for the year. These metrics will ultimately determine whether there are future cash flows to support ongoing operations.
It is important to measure success in a meaningful way. That is, by how it positively impacts the mission, or by how it supports ongoing operations. A useful performance measure will have any one, or a combination, of the following attributes:
- Tracks progress towards achieving goals;
- Identifies gaps between current performance and goals;
- Identifies problem areas and probable causes, and more importantly, points to solutions.
So what should you measure? A good way to think about this is the ‘staff-customer-shareholder’ lens that a lot of for-profit businesses use. This lens argues that contented and purposeful staff leads to happy customers, which in turn leads to profitable outcomes.
From a Not for Profit perspective, this might look like volunteers and staff who have a very clear understanding of the mission (staff), end users of the services that your organisation provides receiving meaningful support (customers), and empathetic individuals and businesses that contribute to your mission (shareholders).
Here are a couple of measurements that may relate to your organization, based on the above lens:
- Volunteer and staff satisfaction (measuring alignment and commitment to the mission)
- Volume of people supported
- Improvement in circumstances of people supported
- % Revenue from funding and donations
- Current ratio (a high level measure of cash flow health)
The above measures are just examples, and it is important to note that the possibilities are endless.
The end of financial year is a great time to pause and reflect on how successful last year really was. It is also a great opportunity to plan for future success.
By asking the three simple, yet powerful questions of “what do we want?”, “how do we achieve it?” and “how do we measure it?”, you have the template for a robust plan that can be a catalyst for growth and improved performance over the coming year.
The best of luck in your activities this year.
For more information on Many Rivers Limited, please visit the following URL:
For more information on any of the tools or concepts mentioned in this article, please visit the Davidson Institute at the following URL:
About Westpac Social Sector Banking: Westpac Social Sector Banking is deeply committed to the For Purpose sector, and can proudly say we have a national team of dedicated specialists and customised banking solutions to service the sector. The sole aim of our bankers located across Australia is to deliver better banking experiences for Social Sector customers. For more information, visit Westpac Social Sector Banking.
About The Davidson Institute: It is Australia's First School of Money, backed by Westpac Banking Corporation. It provides an extensive range of financial education, from free seminars to facilitated sessions on Cash Flow to Superannuation, and accredited courses in finance. For more information visit www.davidsoninstitute.edu.au for a number of useful articles. Short courses are also available.