Planning for SuccessKey Elements of
Successful CDFI Business Plans
Economic State of US Households• 30% (73 million adults) are finding it difficult to get by• 32% adults say that their income varies to some degree from month to
month• 44% cannot cover an emergency expense costing $400• 26% of all adults and 54% of non-Hispanic black adults are either
unbanked or underbanked.• Over three-fourths of respondents are somewhat or very confident in
their ability to obtain a credit card were they to apply for one. • 7.0% of US households were unbanked (9.0 million households) • 19.9% of U.S. households were underbanked (24.5 million) • Wealth Gap: White household (median) $110,000 vs. Black household
(median) $7,000 and Latino (median)$ 9,000, (Prosperity Now)• $141 billion in fees & interest from financially underserved households
Why CDCUs Matter• Social enterprises with a shared mission• Part of community based solution to financial access gaps• Responsive, innovative, sustainable products and services
CREATE
DELIVERREALIZE
FINANCIALAND
SOCIAL VALUE
Why CDCUs Matter• Social enterprises with a shared mission• Part of community based solution to financial access gaps• Responsive, innovative, and sustainable products and services
CREATE
DELIVERREALIZE
FINANCIALAND
SOCIAL VALUE
HOMEOWNERSHIP & WEALTH CREATION
SAVINGS & ASSET BUILDING
SMALL BUSINESSES & LOCAL JOBS
FAIR & AFFORDABLE ACCESS TO CREDIT
Key Elements of Successful Organizations
https://www.bridgespan.org/insights/library/organizational-effectiveness/key-elements-effective-organizations
Attributes of Successful Business Plans• Alignment • Awareness • A defined and measurable set of goals and objectives• A living roadmap to achievement
CAPITAL
IMPACT
• Financial • Human
Resources• Assets• Marketing
Attributes of Successful Business Plans• Alignment • Awareness • A defined and measurable set of goals and objectives• A living roadmap to achievement
CAPITAL
IMPACT
• Financial • Human
Resources• Assets• Marketing
• Financial• Social
Business Planning…it’s about the PROCESS + PRODUCTfor the PURPOSE of RESULTS AND IMPACT
Business Planning…it’s about the PROCESS and the PRODUCTfor the PURPOSE of RESULTS AND IMPACT
How do you and your team define success?How do you operationalize community development mission and strategies?
Top 5 Business Plan Mistakes1. The plan is incomplete or no plan2. The plan is too vague or too detailed 3. The plan makes unfounded or unrealistic assumptions.4. The plan includes inadequate research.5. No identified risks or competition.
Business and Community Impact Plan Outline
1 Executive Summary, including summary of growth strategy.
2 Credit Union Description. History, Current Field of Membership, Organization and Management
3 Market Analysis
4 Loan Products and Development Services + Growth, Delivery and Outreach Strategies.
5 Community Development Impact Plan
6 Financial Projections.
Market AnalysisKey Questions To Consider:• Industry description + outlook• Information about current and target market• Size of target market• Potential market share• Pricing and gross margin targets• Competitive analysis• Niche market/ product
Market AnalysisResearch and Analysis- Seek first to understand
1. Internal/ Primary- Understand how your current market/ members use your services and potential opportunities within
Sources: Core data, marketing information, credit management reports, and social media analytics, focus groups, team members + experience with members, and surveys
Datapoints: Member engagement, dormant accounts, #/ type of transactions, credit migration, impressions
Market Analysis2. External/ Secondary- Understand industry trends, environmental
changes
Sources: Industry reports, Census information, Unbanked/ Underbanked, Datausa.io, NCUA.gov, FDIC.gov
Datapoints: Regulatory changes, other financial service providers,consumer needs, competition
SWOT ANALYSIS-INTERNAL ATTRIBUTES FINANCIAL RESOURCES
HUMAN RESOURCES
ASSETS(TECHNOLOGY,
BUILDING, OPERATIONS)
MARKETING
STRENGTHS
WEAKNESSES
SWOT ANALYSIS- EXTERNAL FACTORS
COMPETITIVEENVIRONMENT
MARKETENVIRONMENT
ECONOMIC ENVIRONMENT
POLITICAL ENVIRONMENT
TECHNOLOGICAL ENVIRONMENT
OPPORTUNITIES
THREATS
COMPETITIVE ANALYSISFACTOR STRENGTH WEAKNESS COMPETITOR
ACOMPETITOR
BCONSUMER
IMPORTANCE
PRODUCT
PRICE
EXPERTISE
LOCATION
REPUTATION
SERVICE
SALES METHOD
MARKETING
Marketing & Growth PlanFour strategies:1. Market penetration2. Growth strategy (internal,
acquisition)3. Distribution channels
(indirect lending, participations, community partnerships)
4. Communication strategy
Two Elements:1. Salesforce2. Sales activities
Marketing & Growth PlanWhat is your growth strategy?• Expanded membership?• Increase member engagement and lending?• New products and services? Operations and infrastructure?
Targets, goals and benchmarks:• Asset growth, lending, impact, membership
How will you achieve growth?• Advertising• Distribution Channels & Partnerships• Pricing strategy• Location
Community Impact Plan
Organization, Human Capital & Management
• Organization Chart• Experiences and skillsets of current staff• Roles, responsibilities and workflows Operational Plan• Assess for gaps, potential changes and training and development
opportunities • Team member engagement and satisfaction• Diversity and inclusion
• Enterprise Risk Management
Repeat process with Committees and Board
Financial Projections• Past Performance and Trends – growth, consistency• Assumptions• Capital Adequacy • Asset Quality • Earnings, including net operating income ratio• Human Capital Resource Allocation• Capital Projects • Incorporates strategic growth plans and initiatives
Refining Your Business PlanPreparing For Funding Requests and Proposals
1. Know your purpose2. Review and assess application, relationship & performance
expectations3. Review evaluation process and criteria4. Addendum to business plan and update executive summary for
application specifics
CDFI Applications
CDFI Applications-Evaluation Process and Criteria
CDFI Applications-Evaluation Process and Criteria
CDFI Applications-Evaluation Process and Criteria
Earnings Metrics = Earned Income ÷ Total Operating + Financing Expenses
Operating Liquidity = Unrestricted cash & cash equivalents PLUScash & cash equivalents restricted for operations ______________________________________Total Expenses from prior fiscal year MINUS Non-cash expenses
X 12
Capital Liquidity Ratio =Liquid Assets + Specific % of Current Loans Receivable______________________________________________Current Investor Notes Receivable
CDFI Applications-Evaluation Process and Criteria
Thank you!
Questions/ Comments:Cathi Kim
Director, Community Development Investments ProgramNational Federation of Community Development Credit Unions