Tag Archives: finance

Beyond funding

IMG_2377I’m sure you’ve done a bit of day-dreaming in your time about how you’d spend £1M if you won the lottery.

I avoid such speculation (mainly because I don’t do the lottery) but I do imagine from time to time what I’d do if I had an unlimited amount on money to invest in my current ‘good cause’ whatever that may be.

Interestingly, it’s not as easy an exercise as you might think (try it yourself…) even though most not-for-private-profit organisations seem to be fixated about money.

While concern about ‘the bottom line’ is sensible of course, I sometimes think that money, and the responsibility that comes with spending other people’s, gets in the way of organisational success. It’s the old conundrum – being too busy fundraising to do the work for which you’re fundraising!

Which is why I’m looking at non-financial resources for organisational success below, and at a training day at the end of February.

What makes an organisation sustainable?

Years ago I came across a brilliant toolkit which explored what it takes to make an organisation sustainable (note: there was a separate list for financial sustainability). Their recipe for success included…

  • having a clear strategic direction
  • being able to scan the environment to identify opportunities
  • being able to attract, manage and retain competent staff
  • having adequate administrative and financial systems
  • being able to demonstrate effectiveness and impact to attract resources
  • getting community support for, and involvement in, the organisation’s work

How does your organisation stack up in these areas? Be honest now.

Being a train…

Worth re-visiting the Gina Negus (founder, The Projects Company) analogy of viewing your organisation as a train – firmly on track, destination ahead down the line, resources fuel the journey, all on board travelling in the same direction, in control of the speed and direction of travel.

Is your organisation a train or an octopus (drifting, reaching out in all directions, just ’going with the flow’)?

The power of people

Online: I have a love-hate relationship with social media. I love the fact that (along with the rest of the universe of course!) I can now communicate with thousands of others easily, affordably and, if it’s done well, effectively. But it also brings what Adrian Ashton describes as ‘faux companionship’ that has a place in reducing isolation but, in my opinion, is no substitute for ‘face-to-face’.  For me the ideal blend is using the arm’s length facility to make things happen face-to-face*  In your organisation do you use social media effectively?

Offline: Here’s another question for you. If your organisation was threatened with closure, which 10, 20, 30, 40 people (that’s 100 in total) would you contact first for support? Applying the pareto principle [that 80% of your business comes from 20% of your contacts] which 100 of your 500 best contacts are the most important for your organisation’s survivial? The list could include your local newspaper editor, the printer who gives you extended credit, or maybe your frontline staff – the people who greet visitors and answer the phone – and an ever-dependable volunteer.

If you don’t already know who these people – your VIPs – are, find out and make 2015 the year you really look after your greatest assets!

If you’re interested in exploring these and other non-financial routes to sustainability and success, join me for a training day at the end of February. Details at http://www.voluntarysectortraining.org.uk/courses/event/89/Beyond-Funding-its-not-all-about-the-money and book now for a 10% early bird discount before the end of 2014!

*More about online and face-to-face communication at https://enterpriseessentials.wordpress.com/2014/04/08/local-social-online-and-connected-2)

Enterprise essential – Get on top of the figures that matter

In a fast-changing business environment you may need to identify new performance indicators and tighten up your financial monitoring – including actual, against forecast, income and expenditure. Do this more rigorously and more often and share your findings throughout the organisation. If you don’t know the figures that matter, find out!

 

Enterprise essential – Make sure the figures add up

If you expect to spend someone else’s money when starting up an enterprise, the figures will need to convince them you have the potential to trade profitably. Solid research should help you present figures that will stand up to scrutiny (and save you a lot of time, money and stress in the long run!)

 

Running on fumes – a case for lean business start-up?


Month six of my year-long journey on the Lloyds Bank School for Social Entrepreneurs start-up programme. The creative environment at our monthly group learning sessions in Ipswich at the Eastern Enterprise Hub is always stimulating. Our last gathering got me thinking…

running-on-fumesStarting a new enterprise is always a balance between getting going and doing your homework first. Clearly having a sound plan and a solid funding base before developing a business makes sense, but could the ‘lean start-up’ approach be a quicker route to financial viability?

When I was at primary school, my mother seemed to be driving around on very little petrol much of the time. If I pointed out the petrol gauge was in the red, she would simply speed up – “to get home before it runs out” she’d explain.

Yes, pressure – to get home, to meet a deadline, to get a business up and running – can lead to irrational behaviour. But maybe real entrepreneurship means just that – cutting corners and taking risks (with due regard for health and safety) and doing things differently – however irrational and ill-advised it may seem at the time.

Bedford-based social entrepreneur Lynn Serafinn uses the phrase ‘running on fumes’ in an excellent blog post on social enterprise start-ups in which she passionately argues against letting your heart rule your head when it comes to money. But maybe, just maybe, there are benefits to be had from taking my mum’s approach to overcoming a shortage of fuel for the journey? Four thoughts on this subject:

Motivation: We know that in a dangerous situation, our adrenalin kicks in to enable physical feats – jumping clean over a sofa to avoid a violent confrontation was one such achievement for an unfit friend of mine. More general discomfort can also encourage us to go further, faster. I know a couple who built a house in just less than a year while living in a garden shed that was little bigger than the double bed inside it. Their friends decided to do the same thing – but while living in a nice, comfortable warm house. They were struggling to get their house finished many years later.

Real market testing: In his much-praised 2011 book The Lean Start-up, Eric Ries suggests that it’s a good idea to put a product out into the marketplace before it’s fully developed. Getting a product developed for sale at ‘just beyond pro-type stage’ will get more genuine feedback from purchasers than will more theoretical market research. Also, Reis argues, by launching the unfinished article in which you’ve invested relatively less cash and care, you’re more likely to respond to criticisms positively and adapt your product – which is what innovation is all about.

Less padding, more purpose: Without the luxury of unlimited resources, the new enterprise is forced to hone in on essential spending (assuming you have some objective ways of defining ‘essential’) with a keen focus on purpose; what are we trying to achieve? I’m currently watching a national programme of activity evolve through two broad development routes – top-down (the deluxe model) and bottom-up (the lean machine approach). A few years from now I’ll be intrigued to see which route has been the more sustainable and, ultimately, more successful.

Attracting finance: Even when seeking start-up funding, it may be a good strategy to get your business out there before you have all your proverbial ducks in a row. A social lender recently told me “proof works” when pitching for finance. A shining business plan with figures to impress is just that – a plan and a promise – whereas hard evidence, of demand for new real products and services, counts for a lot.

What do you think – is ‘running on fumes’ the way to go fast, or go bust?

References:

Lynn Serafinn’s blog post http://the7gracesofmarketing.com/2013/10/show-me-the-money-thoughts-on-social-enterprise-start-ups

The Lean Start Up by Eris Ries www.hive.co.uk/book/the-lean-startup-how-constant-innovation-creates-radically-successful-businesses/13291794

Funding your social enterprise with or without money www.theguardian.com/social-enterprise-network/2014/feb/10/how-to-guide-funding-your-social-enterprise