Do you feel fully on top of the business-side of running your organisation? You might be delivering outstanding social impact, but are you confident that your business practices are fit for purpose?
We work with hundreds of not for profit organisations and we see first hand the challenges of juggling the operational realities of delivering community services with the management and planning needed to run a purpose driven business. We know that many organisations do not have the time – and sometimes don’t have the in-house skills – to invest in adequately planning ahead, managing corporate functions, and continuous improvement.
As part of our commitment to reinvest some of our own funds into supporting the sector to build its business capability, we are offering a series of Community Business Grants in 2019/20. Grants will be offered on a staged basis through 2019/20 and will take the form of pro bono consulting projects in areas such as understanding your market opportunities, and financial management.
The first round will open to applications soon. Sign up for news and updates on our Community Business Grant program here, including announcements as rounds open, and access to the grant guidelines.
“A business that looks orderly says to your customer that your people know what they’re doing.”― Michael E. Gerb
Systems and process, the ‘how’ you do the things you do in your organisation, may seem boring and of not much importance, but they matter more than think.
Inefficient ways of conducting your work can include using outdated tools or technology, double handling information and a lack of transparency in the work being done. These are some of the most common ways systems and processes are outdated and inefficient. Using fax, paper forms and technology that hasn’t been updated in years are specific examples of these.
“When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000 pound trucks across it” – Warren Buffett
All organisations need cash to live, breathe and operate on a daily basis. Cash is very much like oxygen, not really a big deal until you don’t have any and then it’s a really big deal, really quickly. Furthermore it doesn’t matter how healthy you are, if you’re without air for a short period, you’re in trouble.
Organisations are exactly the same. An organisation can be extremely prosperous for many years but become unstuck if they are left without the required cash to meet their commitments for even a short period of time. How long will employees be willing to work without pay? How long will suppliers continue to provide their services on credit?
We’ve all heard of the expression – don’t put all your eggs in one basket. It’s a valid expression with merit. If you earn all your income from just one source and that goes away, then it’s highly likely that your organisation will go away too. So does that mean you should diversify your income? Not necessarily.
Before we jump into whether or not you should diversify the income of your organisation, we should cover what diversification of income is.
Income can be diversified in two ways
1 Different providers of the income
These are the actual people and organisations who hand over their money to your organisation. The two extremes here would be one customer vs thousands of customers. It worth noting that we are talking about people and organisations that provide income to your organisation and as such this includes grants and donations. Another way to look at this may be one annual grant vs 20 annual grants.
What does your finance team look like? Some of you might be asking ‘what team?’ As a core cost that is rarely funded under grant programs, financial management is often an ‘add-on’ to another admin role within small organisations, whilst larger, complex not for profits often have a full team with a range of skills to manage day-to-day financial transactions as well as planning for the longer term.
So, what your team looks like will depend very much on the size, nature and financial structure of your organisation. But no matter the size of your team, there are some financial skills that all not for profits should have access to – whether that be in-house or outsourced. Below we’ve put together our top five.
What role does your finance manager (or person responsible for your finances) serve on your leadership team? Are they ‘just a bean-counter’, watching the budget, worrying about revenue and keeping expenses down, or do they play a more strategic role?
I saw some promotional material recently that asked if your board knew the difference between cash and profit. The question gave me cause for concern. Not for profit (NFP) boards hold ultimate responsibility for the financial viability of their organisations so, while this is clearly a legitimate question, such a fundamental gap in financial understanding at a board level represents a significant risk for any NFP.