Having worked with traditional for-profit businesses as well as non-profits with mission-based initiatives, I have found that non-profits have less direct measurement of their impact, and often need to put a greater emphasis on strategic planning.
For a traditional for-profit business, measuring success for the entire organization is easy: make a profit, generate more revenue, expand customer base. From that, they can create a business strategy that the entire organization can understand and work from (though, the strategic planning process is also a great way for for-profit organizations to develop their culture, accountability and productivity!)
Mission based organizations are under stricter constraints for how they operate. It's often more challenging to generate additional revenue (since that's not the reason for their existence), and they have to accomplish their mission within the boundaries of their operating budget set out at the beginning of the year/period.
That's not to say that non-profit organizations can't generate additional revenue, just that it can be trickier for them than for-profit businesses.
SME Strategy is accepting applications from non-profit organizations who wish to receive our strategic planning facilitation services at a heavily discounted rate.
*Our next intake will open May 2022, but you're welcome to apply early.
How do non-profits become more profitable?
Before we get into the how, I just want to clarify that with more money in the operations (I'll use the word profits), the organization can have greater impact in their business to fulfil their mission, and thus be more profitable.
Every organization (for-profit or not-for-profit) operates in the same manner, and they all follow the supply chain/value chain model below.
Each of these: Operations, Production, Marketing, Sales and Service have a set of activities associated with them. The activities on the left of the value, Operations and Production are typically cost driven, as in they cost money to do. The activities on the left are also typically revenue driven, and they make money.
Each category of activities has a sub section of processes and tasks that comprise that functional area. If as an organization you went though reviewing these sub tasks and processes, you would probably find many opportunities for improvement, and as a result, extra free time and money by implementing improvements.
Whether as part your next strategic planning session, or as part of a special project, take time to re evaluate and analyze your current business model to see where improvements are able to be made to increase your supply chain for efficiencies.
This might mean leaning out operations by creating a more effective system, or it could mean tweaking your marketing program to add an extra opportunity for revenue generation or follow up. Creating the system is a core part of running a profitable venture. It's important that even in your non-profit activities you look at your business model for opportunities to create more value.
Other ways to be more profitable:
If you've already maximized the operations of your organization, then it's a good time to review your activities and evaluate if you could have a greater measurable impact by focusing on fewer goals and objectives, but making greater strides in those specific activities (i.e. setting strategic priorities).
There's more to the process than setting your strategic goals: getting alignment, increasing staff and team member effectiveness, and overall implementation of a strategy are all big topics as well. But for now, take a look at your current operations and process flow to see if there are opportunities to reduce costs or increase profitability.
These improvements to your business model will help you create more free capital to fulfill your mission.