Business Planning in Associations

a theoretical approach and a practical case:

The BP of ESTRO

Alessandro Cortese, ESTRO CEO

ESAE Vice President

Profit Potential

+

Social Impact Potential

+ −

Old SchoolCorporation

Old SchoolNot for Profit

x

−Profit with a Purpose

Social entrepreunership

Paths to growth are not idiosyncratic but strategic

Any organization that wants to be relevant, to deliver value at scale, and to sustain itself must clearly articulate and evolve its business model

Translate mission, vision, strategy and business model into business plan→Multi-year Plan (Long Term)

→Year Plan (Short Term)

Paths to growthChallenges in Social Profit

Dual FocusChallenges in Social Profit

Cultivate a distinct set of fundersIdentify beneficiaries and create value through programsHowever, what is the difference between shareholders and stakeholders?

Provide clarity about

→how you will fund your mission

→how to deliver your programmatic impact Often main focus on beneficiaries ↔

fundraising on an ad hoc basis

Identify beneficiaries and make difference for them with programs

→Beneficiaries usually fund only part of your mission

Key drivers to growthChallenges in Social Profit

Cultivate a distinct set of funders→ Building and scaling sustainable financial

support

Key drivers to growth in non profit

→Choose right business model that is a natural match for your mission→Choose transparant governance model to achieve your goals

Some elements to define a Business Plan

• The business plan is not abstract, uninformative, theoretical or mysterious

• It’s a document that convincingly demonstrates that your business can sell enough of its products or services to make a satisfactory social profit and be attractive to potential backers

• it is a selling document

• The plan writers should have an in depth understanding of financial pro forma statements, cost and cash flow analysis and revenue modeling.

Definition

• A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals.

• In non-profit organizations, creative tensions may develop in the effort to balance mission with "margin”.

• a 3 to 5 year business plan is essential to any organization…

FUNDAMENTALS

FUNDAMENTALSMulti-year Plan:

• Financial forecast over 3 to 5 years

• Key Performance Indicators forecast over the same period

• Detailed Program Plan

Annual Plan:

• Budget

• Description of key processes and procedures

• Include a cash flow analysis next to the P&L (costs & revenues)

Processes and Procedures:

• Standardization of operational activities

• Definition of accountabilities and controls

From Strategy to Business Planning

Mission

Vision

Strat.

LT Plan

ST Plan

Strategic Plan

Business Plan

THE PRINCIPLE OF DELEGATION OF POWERS AND REPORTING

Transfer of authority by one person or group to

another person or group:

• Authority

• Accountability

• Responsibility

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Why is strategic planning important?

• to bring everyone on board – to engage and to mobilize towards the vision

• to be proactive vs reactive to external forces of the environment

• to guide decision making at all levels

• to be accountable to the key stakeholders and to the public

• to improve organizational learning and capacity

• to communicate to the public what is important

Business Model: the step to business planning

Mission

Vision

Strat.

LT Plan

ST Plan

Stakeholders Segments

For who are we creating value? Who are our most important stakeholders?

Value Proposition

What value do we offer to the Stakeholders? Which one of our stakeholders problem / need are we helping to solve? What bundle of products and services are we offering to each stakeholders segment?

Channels

Through which channel do our shareholders want to be reached? How do we reach them? Which channels work best and which ones are the most cost-efficient?

Shareholders relationship

What type of relationship does each of our stakeholders segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with our model?

Revenue Streams

For what value are our shareholders and customers really willing to pay? For what do they currently pay? How much does each revenue stream contribute to the overall revenues?

Key Resources

What key resources do our value proposition require? Our distribution channels? Stakeholders relationships? Revenue streams?

Key Activities

What key activities do our value proposition require? Revenue streams? Stakeholders?

Key Partners

Who are the key partners? Who are the key suppliers? What key resources do we retain from partners? What key activities are performed by partners?

Cost Structure

What are the most important costs inherent in our business model? Which key resources are most expensive? Which key activities are most expensive?

Architecture of the value creation, delivery, and capture mechanismsThe 9 building blocks of a business model

Stakeholder Segments

Stakeholder Relations

Channels

Revenue StreamsCost Structure

Key Partners

Key Resources

Key ActivitiesValue Proposition

Fundamental Questions

• Where are we now? (Assessment)Where are we now? (Assessment)• Where do we need to be? (Gap / Future EndWhere do we need to be? (Gap / Future End State)State)• HowHow will we close the gap (Strategic Plan) will we close the gap (Strategic Plan)• HowHow will we monitor our progress (Balanced will we monitor our progress (Balanced Scorecard / KPIs)Scorecard / KPIs)• HowHow will we integrate all components of the will we integrate all components of the

organization in one model.organization in one model.

Business Model)

Mission

Vision

Strat.

LT Plan

ST Plan

Created in 1980

No little changes in Statutes

Environmental Changes in Oncology

From ‘Grocery store’ to ‘Supermarket’ …. To chain of supermarkets

From ‘ad hoc’ planning to growth modeling

ESTRO in 2009 Starting Prespective

Clear vision & mission of the social profit organisation

Clear strategy to involve stakeholders in the realisation of the organisation’s goals

Clear roles & positioning of the different functions

Clear delimitation of tasks between the different functions

Balanced and educated Board of Directors

Close attention for the decision-making process

Complementary tasks to the members of the Board

Integrity of management

Recommendations received Key Paths to Growth

From Strategy to Business Planning

Mission

Vision

Strat.

LT Plan

ST Plan

Strategic Plan

Business Plan

WP1: Review current organization and governance model

WP2: Review of laws and bye laws (legal perspective)

WP3: Review future objectives

WP4: Consolidate observations and present recommendations

WP5: Draft action plans and provide plan for implementation

Mission/Objectives

Organization/Governance

Laws/Bye Laws

1980

2010AS IS

2010TO BE

WP 1

WP 2

changedchanged same

WP 4/5

2015 / 2030 WP 3

MISSION: Organizational Audit and New Articles of Incorporation and Internal Rules

VISION: New Statement

VISION: New Statement

ESTRO Vision for 2020

Vision

Every cancer patient in Europe will have access to state of the art radiation therapy, as part of a

multidisciplinary approach where treatment is individualised for the specific patient’s cancer, taking

account of the patient’s personal circumstances.

Vision 1.1: Optimal individualised patient care will be achieved by

integrating, new clinical and preclinical evidence from biology,

molecular/functional and anatomic imaging, and the use of novel systemic

agents together with the delivery of high-precision radiation therapy in a

safety-aware environment.

Vision 1.2: The majority of patients will live cancer free with minimal

toxicity following the use of radical radiation therapy when used as a single

curative modality of treatment or when used in combination with surgery,

systemic chemotherapy and/or systemic targeted therapeutics….

Every cancer patient in Europe will have access to state of the art

radiation therapy, as part of a multidisciplinary approach where

treatment is individualised for the specific patient’s cancer, taking

account of the patient’s personal circumstances.

In order to achieve this vision ESTRO will support the following

initiatives and model of clinical care as part of the future strategic

development of the Society:

1. All patients are entitled to access healthcare systems that

enable the highest quality radiotherapy delivered within a safe

healthcare environment, and on completion of treatment have

access to appropriate long term follow-up, advice and support

from members of the clinical radiation oncology team.

2. All patients are entitled to receive full information on the

primary benefit, and where unavoidable, the potential side effects

associated with their proposed radiation therapy treatment

programme.

Business Model: the step to business planning

Mission

Vision

Strat.

LT Plan

ST Plan

Vision Linked to the Business Model

Vision Linked to the Business Model

• vision linked to model

Economical Information

Influence PracticesProtection Practices

Vision Linked to the Business Model

• vision linked to model

Economical Information

Influence PracticesProtection Practices

Vision Linked to the Business Model

• vision linked to model

Economical Information

Vision Linked to the Business Model

• vision linked to model

Economical Information

Influence PracticesProtection Practices

Vision Linked to the Business Model

Protection Practices:•Patents•Contracts•IT platforms•Membership•…•Legislation

Vision Linked to the Business Model

• vision linked to model

Economical Information

Influence PracticesProtection Practices

Vision Linked to the Business Model

Influence Practices:•Lobbying•Marketing•Professional Practice standards•Organizational models•Patients awareness

Vision Linked to the Business Model

• vision linked to model

Economical Information

Influence PracticesProtection Practices

Focus on ‘Vision initiatives’ with budgetary impact on reference period:

Action 2:

•To implement a renewed ICT platform To provide a solution for internal and external communication (in terms of responsibility,

management and affordability) according to state of the art modern technology 

Action 3:

•To create a new structure (committee) that will enable an oncology intelligence /horizon scanning & monitoring function for the society

 

Action 4:

•To create new categories of membership offering an expanded range of choices

  

Action 6:

•To invest in a stable, affordable and reliable engagement of young inside the ESTRO organisation

STRATEGY: 13 Actions

Membership

• The objective of ESTRO is to increase significantly its representation factor by growing its membership reaching a higher percentage of the total Radiation Oncologists, physicists, radiobiologists and RTT in Europe, focusing on providing relevant benefits and services, and linking those to the ESTRO activities.

• ESTRO can count on a basis of around 4.400 members in good standing and on a base of over 8000 persons which every year attend an event or a teaching course or are members without participating to any activity.

• Three Membership programmes exist today: individual, joint and corporate. A new Programme will be launched to meet the growth opportunity with a revised set of categories.

•  • Based on the previous considerations, ESTRO aims at reaching the

ambitious goal of 8000 members in a three to five years timeframe.

STRATEGY: 3 years KPIs, translating vision in measurable objectives

Education: Teaching Courses

• The educational offering of ESTRO is one of the most important “stars” of the Society, having grown steadily in the last years.

• Over the years the number of Teaching Courses offered by ESTRO hasn’t stopped increasing. For 2010, 31 courses and 4 pre-meeting courses are scheduled. Out of those, 3 are new courses.

• The faculty of ESRO is today made of over 190 teachers. Plateau?

• The offering of teaching courses is planned to grow to 33 in 2011 and to 35 in 2012.

STRATEGY: 3 years KPIs, translating vision in measurable objectives

Multi year and annual Plans

Mission

Vision

Strat.

LT Plan

ST Plan

FINANCIAL PLANNING : THE CONCEPT

Starting point of the model:

• Input = budget based on actual figures and averages on long term

• Explanations for the deviations between the budget and the actual

figures

To facilitate decision making, the model should:

• Allow working with changing assumptions

• Allow measuring the expected revenues and costs of a single scenario

• Include a cash flow analysis next to the P&L (costs & revenues)

In order to be a working instrument, the model should be made dynamic, allowing to:

1. Verify the financial impact of strategic choices

2. Verify the actual economic investment and return of a single action

3. Allow assumptions and scenario changing

4. Allow variable input

5. Allow comparison with actuals

6. Payroll cost is normally split over different levels

7. Allocation of indirect costs is normally on a more activity based principle

8. Include measurements for KPI’s, both qualitatively and quantitatively

9. Include both P&L and cash flow analysis

FINANCIAL PLANNING : OBJECTIVES

• The budget of the plan has been based on historic data (accounting data for previous years or meetings)

• Assumptions are based on the strategic choices made by the board or are based on assessing specific information by management, such as:

• Clustering activities, and their respective revenues and costs

• Indirect costs (overhead)

• Growth of the organization (FTE)

• Specific information (eg: estimation of forum costs and revenues, negotiations with Elsevier…)

• Indirect costs:• Based on historical data

• Calculated as an amount per FTE

• Together with salary costs, fixed at 110 Keur / FTE

• Evolution in FTE and turnover is possible

FINANCIAL PLANNING : PRINCIPLES

New dynamic budgeting and controlling tool:

• Starts from historic and audited data

• Consolidates data against a structure to accomodate new strategic plan

• Defines assumptions for each component of the budget

• Defines a growth model through dynamic scenarios

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FINANCIAL PLANNING : OUTCOME

Q&A