Eight Pieces of Advice for Nonprofit Start-ups By Chataun Denis
1.Anticipate financing the start-up of your company with personal funds. It’s highly likely that you won’t be awarded grant funding during your first two years in business. The days of getting a grant simply because you had a good idea are long gone. Nowadays, funders want to see two years of measurable outcomes before they even consider your application. Businesses start and fail every day. If you can prove that your company has longevity, is profitable, and can make a positive difference then you’re a good candidate for a grant award.
2.Write a business plan. I can’t say this enough. The cliché if you fail to plan, you plan to fail is very true, especially as a nonprofit. As a registered tax exempt organization you’re being held accountable by the IRS. As a sole proprietor, Limited Liability Corporation, or Partnership you’re not. Not only is the business plan a way to help you stay compliant, it details your plans for recruiting partners, board members, donors, and volunteers. It is the document that describes the course of action to reach your goals. Trying to manage this information in your head is a recipe for mental illness.
3.Don’t quit your day job!!! Since you’re likely financing your own start up, take baby steps. Don’t let passion override rational decision making. Don’t take out a lease on a building for a new day care if you know it won’t pass inspection and you know you don’t have money for repairs. This may sound insane but I see these types of mistakes made all the time.
4.Be patient with your vision. Many of us tend to dream big. Dreaming big is not the problem. The problem is expecting the dream to realize instantly. Developing a business takes time and when progress doesn’t occur as quickly as you would like, don’t give up on your dream. Persist.
5.Work with a nonprofit business coach. If you are new to the nonprofit scene or you’ve never been on the managing side of a nonprofit, get some help! Chances are you need it. Coaching helps you set goals and create an action plan for the achievement of those goals. Coaching holds you accountable for what you say you want to do. It’s helping you work smart.
6.Learn first. Take a few classes. Attend a few workshops. Successful nonprofits have successful business models. Learn how to develop a profitable business model before you apply for tax exempt status. You may find that running your business as a for-profit is the better option. In fact, if you use a social-based business model you can help people and make money. It’s a win-win! This is where a nonprofit business coach is invaluable!
7. Don’t give your products or services away for free! Far too many people start nonprofits and plan to offer their services and/or products for free but yet they have no means for generating revenue. This is another bad recipe. Businesses that don’t make money go bankrupt. With the right business model you can simultaneously fulfill your charitable and your financial goals.
8.If you don’t know people with money and you don’t have a profitable business model, don’t start a nonprofit! Tax exempt status is for entrepreneurs who know people who have money to give away in exchange for a tax deduction. If everyone in your circle of influence is always crying broke, I guarantee you’ll have a hard time fundraising, and nonprofit is 80% fundraising. Instead of starting a nonprofit, start a for-profit. You can always adjust your pricing according to what your target market can afford.