We’d like you to consider these questions:
- What kind of car are you driving? A 1980 Oldsmobile with rusty fenders? A fuel efficient Prius? A 2019 Porsche?
- Do all the drivers agree on the destination (your vision) for the trip you are taking? Have you mapped out the best way to get there (your strategy)? Do you have enough fuel (staff and $$) for the journey?
- How good are the Drivers? Are they fighting each other for control? Do they know how to drive your type of car? Do you have the Car’s Manual in case of an emergency or new driver?
- When is the last time you had the car inspected? Is the engine running efficiently? Have you checked the brakes as well as the accelerator? How will you make the necessary repairs?
Read Kate's article below to learn more about how your Business Model is analogous to the things you find under the hood of your car - parts that must work together in order for the car to go forward.
Does Your Engine Work? Adapting Your Business Model to a Changing Reality
- A large human service organization relies primarily on government fees-for-service. Funding at the state level is staying flat, but the cost of service delivery rises each year. Although the organization can cover its costs now, within three years that won’t be possible if conditions (funding levels?) don’t change.
- A grassroots advocacy nonprofit consistently runs a deficit each year. Although able to cover costs using some historical cash reserves, it is clear that it cannot survive in the long-term without doing something significantly different.
- A small start-up environmental nonprofit gets a large multi-year grant from a single foundation to build its programs and infrastructure. Although the mission is highly current and relevant, there is no guarantee that after the initial grant period the foundation will continue to fund at the same level and no replacement funding streams have been identified.
Sound familiar? These examples illustrate that a nonprofit’s business model encompasses its financial picture - money in, money out, and what assets are needed to ensure financial stability and consistent mission delivery. However, a common misconception is that a business model is solely about dollars and cents, and can be easily read on financial reports. Rather, the business model is the design for how an organization creates and delivers value to its clients/community in a sustainable way.
Your financial picture is not your Business Model; rather, it is THE RESULT of the business model. Revenues, expenses, and assets don’t exist in a vacuum. Each of those dollars that go in and out are connected to the strategies, processes and activities that happen within a nonprofit that lead to successful mission delivery. And those strategies, processes and activities are impacted by numerous factors, some of which are in your direct control, and some of which are not. READ THE REST OF THE ARTICLE HERE