When it comes to running a business, nonprofits and small businesses have a lot in common. Founders are passionate, books need to be kept, and a solid team must be in place to be successful. Like most small businesses, nonprofit organizations are born out of passion and the desire to make a difference. Even though the financial goals of nonprofits seem different on the surface, they’re actually both striving for the same thing: to generate revenue and then distribute it. There’s much to learn about running the organization like it’s a small business. Below are four key lessons to take note of.
1. Plan to Succeed
Profitable businesses begin with a business plan, and nonprofits should adopt the same strategy. It’s important to have a plan to show you have clarity in what you’re trying to do, why it’s important that you do it, and to communicate to the other stakeholders the value of what you’re doing. In the competitive world of fundraising, investors want to be sure there’s a strategy in place for thoughtfully spending what they donate.
2. By the Book
When it comes to managing any business, for-profit or nonprofit, meticulous bookkeeping is a critical component of keeping up with the bottom line. The ability to demonstrate that you can handle your books builds confidence externally for further support from donors. There are times when nonprofits can be tempted to push good bookkeeping to the back burner while handling what seems to be other issues that are more immediate. Even though the bookkeeping isn’t urgent, it’s very important because it’s much more difficult to go back in time and build a story.
3. Surround Yourself with Good People
All small business, whether they’re for-profit or nonprofit rely on a team of people to get things done. For nonprofits, that team centers around the board of directors. In the beginning, many nonprofits are run by friends of the founder, but as the nonprofit grows and evolves, the board becomes more sophisticated. In today’s business environment, it’s important to have a legal expert who can review documents, a marketing expert who can help with promotion and a board member with government expertise can be as asset as well. The bottom line is, the board wants to know where the money is going and if it’s being used for maximum impact- exactly what a donor would want to know as well.
4. Look Ahead
Nonprofits should be planning for future success by constantly evaluating the surrounding environment and remaining flexible to potential changes in the marketplace. One way to stay relevant is to partner with other nonprofits and make your mission that much more attractive to investors and donors. For example, a nonprofit that aids in providing clothes to needy children could partner with another agency that provides food to the same market. When nonprofits join forces, supporters feel good about contributing to more than one good cause at the same time.
Just like for-profit businesses, nonprofits were founded with the purpose of redistributing the money they collect. For that reason, they should be guided by a business plan, dedicated to proper accounting, run by a savvy team and managed with an eye toward the future.
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