Despite the tough funding environment facing the Australian Not for Profit sector it’s time to start talking about and investing in the exploration of sustainable business models, writes NFP strategy expert George Liacos.
As we approach the time of year traditionally dedicated to strategic planning, Not for Profits face pressure unlike many of us have seen in a long time. Although existing funding is under question for thousands of NFPs, planning for the future still (perhaps now more than ever) needs to happen.
Don’t make the mistake of searching for new grants, or rushing to rebrand. Instead, this year, take a fundamental look at your business model - this may help to unearth new opportunities where your organisation can deliver value, and accordingly may open up new avenues for financial sustainability.
There is no point regaling you with all the factors at play. Suffice to say, funding is hard and getting harder. So what’s changing? The sector is now not just talking about, but investing in, the exploration of sustainable business models. That’s what’s changing. There is a real sense of momentum. The Big Mo (as they say in US presidential races) - The point where the conversation turns from ‘what if’ to ‘how to’, where it’s harder to swim against the tide than keep moving.
If you only do one thing this differently this planning season – catch this wave - make it the year to start seriously addressing long term financial sustainability – don’t only talk about funding models or fund raising this year, talk about your business models. Whether your company hosts a formal planning session, a 2 day retreat or just updates last year’s numbers, dedicate at least 25% of your planning time to exploring and stress testing your future business model and sustainability and see what funding models appear.
Here are a few tools and techniques that might help you guide your team on the sustainable business model journey:
- It’s time to start from a different place
Put some things on the bench – don’t do SWOT, PESTEL, environmental analysis yet. Also bench quantitative analysis – revenue lines, price per service, funding per person. We will go through these – but later on.
- Redesign around what social problem you will solve
a. What’s your Value Proposition? What’s your Impact Goal? Question what problem you exist to solve (or will have solved in 5 years) with your customers, stakeholders, partners. This will generate modifications to existing services and may uncover new ones. Be prepared to let go (in the workshop at least) of the major current funding source in pursuit of delivering value (the key to sustainability).
b. Using tools like the acclaimed Business Model Canvas, develop a business model around these value propositions & services.
- Go even further
a. See if digital innovation can fundamentally transform either the external or internal dimensions of your organisation – or both.
b. Run same logic over partnerships. Outsource, co-source etc.
c. Look to innovative payment models to not just alter your funding stream but as a way to keep you afloat.
- Break your new model
a. Use old school strategic planning tools to try to break your shiny new model. These tools have a place and it’s right here.
b. Get your Excel on! Model out your changed and new income lines, weave in your expenses and use your innovative payments ideas to massage the cash projections.
c. Develop an appropriate budget. Run through some scenarios: shoestring, surplus, steady.
- Find, and then Line up, the ducks …
a. Create your roadmap/action plan. Try a simple four step mode for creating usable roadmaps
i. Get down all the projects you need to do to reach a sustainable model
ii. Sort them into the four rows Financial Projects, Client Projects, Internal Projects and Growth & Development Projects (thanks, Balanced Scorecard!)
iii. Sequence them into three columns, this year, next year and later. No one really keeps the roadmap past two years anyway so this little technique keeps the team happy that they have been heard but pushes less important projects backwards
iv. Chose no more than 2 projects per year per category… doing less can be more
b. Most NFP’s don’t have one or both of these skills: Commercial / Business development OR Technology. Find them. Secure them. Put them to work.
c. Set the cultural tone and tempo to one of change and engage already well-documented change management techniques.
The transformational journey to sustainability is as uncomfortable as it is inevitable and delaying the outset is simply irresponsible. 2015 is the year to be taking the first step towards a sustainable business model. There is a large and growing community of organisations that have already begun. It’s time for you to embark.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.”
― J.R.R. Tolkien, The Lord of the Rings
Step out with purpose. Keep your feet.
About the author: George Liacos is the Managing Director of Spark Strategy, an agency that works with Not for Profits and Social Enterprises to realise their social mission objectives. Liacos has advised Not for Profits, Social Enterprises, Governments and Commercial organisations for over 18 years in the areas of new business and funding models, business and digital strategy, and system transformation. He has also held roles as the National Lead Partner for Transformation at Grant Thornton, Program Director for the Department of Premier and Cabinet as well as Chairman and Non-Executive Director on a number of technology and service businesses.
This article first appeared on ProBono News. Please see the
original article here.
