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Advice / Succeeding at Work / Management

Want to Increase Your Bottom Line? Think Like a Nonprofit

Most people think of the term “nonprofit business” as a contradiction. They picture nonprofit offices as unkempt, executives as more worried about peace and love than a balanced budget, and staffers as hostile at the very idea of sustainable business practices.

While there certainly are organizations that fit that description, so many more are doing their best to build strong organizations that will survive recessions, natural disasters, and sharp increases in demand. And they’re doing all of this with greater government oversight, unreliable funding streams, and tiny budgets.

With the economy still struggling to recover, nonprofits aren’t the only ones trying to survive in a hostile environment. So despite powerful voices that say that nonprofits need to learn to be better business managers, I would suggest that for-profit businesses take a look at these organizations and see how they’re able to stay nimble and manage the extraordinary challenges that arise when you’re trying to change the world—and use those lessons in their own operations.

In fact, here are three ways that thinking like a nonprofit can actually boost your company’s bottom line.

Think Thin

When I talk to friends who work at big corporations, I often can’t believe they’re telling the truth about their setup. Private offices? Ping-pong tables? Functioning printers? Comparatively, my nonprofit offices have been downright Spartan. Frankly, I consider myself lucky if my organization keeps its supply closet stocked with tissues during cold season.

Nonprofits not only have smaller budgets than their for-profit counterparts, but they’re also held to strict rules about how they can spend that money. For example, one of the biggest boogeymen in the nonprofit world is overhead. That is, staff benefits, the electric bill, office supplies—in other words, the business expenses. To pass the tests set up by foundations or watchdog groups, nonprofits can’t present a budget with overhead greater than 20% of their overall budget.

This means that we don’t have a choice about creating—and sticking to—a slender budget that prioritizes on our programs. It forces us to think concretely about what expenses are truly necessary for achieving our mission and what can be eliminated.

For-Profit Tip: Regularly review your budget and figure out where cuts can be made without sacrificing employee productivity.

Play Nice and Make Friends

A few weeks ago, I was in a board meeting where we were brainstorming the next phase of a project. We ended up, of course, with a long list of things that we wanted to do and were temporarily stunned by the immensity of it.

Luckily, one of my colleagues quickly pointed out that there was an organization that did a number of those activities quite well. We looked again and saw even more partnership opportunities. Soon, we were able to sketch out a program strategy that leveraged our relationships with other organizations and a plan for joint fundraising. We recognized that there was no reason to reinvent the wheel or claim ownership of an idea when someone else was already doing something similar.

Although there is plenty of competition in the nonprofit world, most organizations recognize that their work is not a zero-sum game. After all, success is based on the community’s wellbeing—not dollars in a bank. So rather than try to be all things to all people, nonprofits often bridge the gaps in service by bringing in partners they trust. Moreover, funders want us to partner up and are more likely to reward (i.e. increase funding to) an organization that plays nicely with others.

For-Profit Tip: Take a look at companies that work in your field but are not your direct competitors. Think of ways that you can leverage each other’s work to reach a new customer base.

Focus on Mission

One of the newer synonyms for the term “nonprofit” is “mission-focused.” Nonprofits take their missions very seriously—they’re the only reasons they exist. And in many cases, staff members have an individual stake in those missions, whether it’s focused on ending poverty, curing disease, or caring for vulnerable people. The mission is our motivation, and it allows us to overlook a somewhat lower salary and deal with the stresses of a smaller budget. It also helps us simplify our daily decisions; if a particular activity doesn’t support the mission, we don’t do it—end of story.

For-Profit Tip: If you don’t have a mission, develop one now and make sure that everyone who works for you knows it by heart. It doesn’t have to be grandiose—something as simple as “prioritizing customer service” or “providing the most comprehensive services” offers you and your employees a direction and a way to differentiate yourselves in the market.

Although some of these lessons may seem drastic, they can make all the difference in for-profits’ survival in the new economy. Even if you don’t need to put these into practice right away, consider how you can incorporate them into your next decision to keep costs low and impact high.

Photo of ties courtesy of Shutterstock.