How to write a business plan nolo pdf

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Posted on October 5, 8 Comments A few years back I co-wrote an article about getting accurate numbers from your financial system for the California Association of Nonprofits that was based on a workshop I developed.

These next two blog posts will excerpt some of the material from that piece. For folks who would like the whole article you can click the above link. This first post will be on cost allocation, the second post will be on setting up a functional accounting system. Cost allocation should not be ignored as a cornerstone of your financial management and reporting.

It is critically important to all aspects of your organization: How you budget from year to year, how you make management decisions, how you appear to potential supporters and the amount you are reimbursed for services all depend on proper and consistent cost allocation.

Allocation can look tricky at first glance, and initially it can be difficult to set up a reliable, consistent and simple system. But once your system is in place, it should go rather smoothly and become a routine part of your accounting and financial reporting process.

Put some thought and planning into developing a method that works for you and that best reflects the reality of what happens in your organization from day to day. Cost allocation is a method for apportioning shared expenses or shared costs also called common costs, or directly allocable costs across functional areas.

Your allocation method is your way of deciding what percentage of that bill to apportion to each functional area. Cost allocation is important because, done accurately and consistently, it can provide a realistic picture of what different programs and other activities cost. It is also used in cost recovery for reimbursable expenses, directly impacting your bottom line and related fundraising decisions.

There are a number of cost allocation methods out there, and several of the most common are: Allocations are based on a percentage of the total actual time worked or the total payroll dollars charged by all employees in each functional area.

Cost-to-cost or direct cost. Allocations are based on the proportionate space occupied by each functional area in your office or worksite. For example, Program A occupies 10 percent of your office space, Program B occupies 20 percent, Program C 50 percent, Administration 5 percent and Fundraising 15 percent.

This method is useful for allocating rent, utilities and other occupancy-related costs. Your organization might require a method not included above, or more than one method of cost allocation, for example using payroll for personnel-related expenses and square footage for office-related expenses.

You might have to pick and choose which method or methods work best for your organization in terms of both your available time and the accuracy of the data produced.

Frequently Asked Questions

That said, if you have many different allocation methods, some consolidation might be in order. Whatever method s you decide to use, you should use it consistently, put it in writing, have it approved by the executive director and be able to back it up if questioned about it. It should also be honest and ethical — not a method you would regret being described in a front-page story in your local newspaper.

If you would like to learn about creating a cost allocation policy for your nonprofit please click on the image below.A business plan contains a description of your business, including details about how it will operate, a section on market research and marketing strategies, an evaluation of your main competitors, and several financial forecasts.

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Why You Need to Write a Business Plan | regardbouddhiste.com

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