Some for-profit business practices you should use

“You can’t do today’s job with yesterday’s methods and be in business tomorrow,” according to often quoted advice from an anonymous pundit. And nonprofits often get the best results when they use some of the most successful practices pioneered by for-profit business.

Executing your strategies

The strategic plan — a map of near- and long-term goals and how to reach them — lies at the core of most for-profit companies. If your nonprofit doesn’t have a strategic plan or has been lax about updating an existing plan, creating or updating your plan should be a top priority.

The scope of your plan will be specific to the size and nature of your not-for-profit, and to some degree your changing audiences. But basic principles used in for-profit business apply to most. Pay particular attention to each strategic goal’s return on investment.

For instance, consider the resources required to implement a fundraising campaign using social media. You’ll need to consider the employee hours involved relative to the minimum donations you’ll likely bring in. Working through the financial implications of ideas can help your nonprofit avoid the kind of initiatives that sound good in theory but are unlikely to provide returns — financial, social or otherwise.

Being SMART

Many for-profit companies use “SMART” principles when setting their strategic goals. Such principles help leaders focus on priorities and create achievable objectives.

To be SMART, a goal must first be specific. Goals should be as clear and detailed as possible. Include names, dates, locations, processes and requirements for completion.

Goals also should be measurable. Clearly identify the outcome you’re seeking. For example, if your association needs corporate sponsors, your goal might be “Find at least five sponsors for this year’s annual meeting.” Simply wanting “some sponsorship” isn’t measurable — or motivating.

Additionally, your nonprofit’s goals should be attainable. Set goals that are within your control. Although it would be great if you could raise 50% more in donations this year over last, is it really within the realm of possibility?

And they must be realistic. While there’s nothing wrong with dreaming big, it pays to be realistic. Focus on initiatives that you’re both willing and able to pursue and that you believe your organization can accomplish. But be careful not to lowball your goals and shortchange opportunities.

Last but not least, goals need to be timely. Building in a time factor is essential to staying on track. Time frames can vary by goal. Perhaps you want to increase membership by 20 each month, or have a new program up and running by the end of the year.

Fueling your mission

You probably already develop an annual budget, but how closely does it follow your strategic plan? For-profit businesses use budgets to support strategic priorities, putting greater resources behind higher priority projects.

Businesses also routinely carry debt on their balance sheets in the belief that it takes money to make money. Nonprofits, by contrast, typically do everything in their power to avoid owing money to a bank. But, it’s possible to operate so lean that you no longer meet your mission. Although bare-bones budgets are unavoidable in times of economic hardship, consider putting some muscle behind your more promising initiatives as the economy improves.

Applying for a loan or even creating a for-profit subsidiary could provide you with the funds to grow. Building up your endowment also will help provide the additional cash flows essential to pursuing strategic opportunities in the future.  

Budgeting for experience

Successful companies usually budget for experienced leadership. Although nonprofits typically can’t pay their executives as much as for-profit businesses do, they can ensure compensation is competitive relative to nonprofits of a similar size and mission.

Paying for experience is particularly critical when you’re embarking on major fundraising campaigns or looking to expand your program outreach. You may even want to consider candidates from the for-profit world, who might bring to the table greater marketing and financial management expertise as well as new ideas.

Also ensure that you’ve planned for management succession. Successful companies don’t put all their eggs in one basket — or, in this case, one executive — and you shouldn’t either.

Grow and learn

In the business world, standing still or being inflexible often is tantamount to failure.  Nonprofits can learn from business by applying best practices — both new and traditional — to their not-for-for-profit worlds.