Increase Sales Blog

Posts Tagged ‘business development’

Not for profits differ from for profits in three ways:

1. How they file taxes
2. The words they use to generate revenue
3. Where these organizations reside within the Revenue Hierarchy

All organizations require revenue. This is essential. Yet for not for profits appear to have some significant challenges beginning with the words they use to secure or generate revenue.  One hears the word business development to foundation director, but never the word sales representative or sales director. In all of these cases, the main goal is to increase sales.  Yet to say this word to a not for profit administrator is almost like using a swear word.  This belief restricts the ability to increase sales or if you prefer the more neutral words of revenue or business development.

Having several not for profit clients I am always amazed at their reluctance to actively sell.  Sometimes I think the belief that people should want to donate to this or that organization just simply overrides common sense.

People exchange their dollars for a real perceived value, not the belief held by not for profits that their organizations are worthy ones. Yes that belief of a worthy organization may be present, but it is secondary to value.  [Note:  I am not saying not for profits are not worthy, but the value must be shown to potential "donors" (buyers). This article is also not addressing religious institutions such as churches, synagogues, etc.  as they are funded by a different belief.]

The other challenge is the availability of where to find potential revenue funds.  Using the above graphic which I call the Revenue Hierarchy, once the following are subtracted from revenue:

• Direct costs
• Employees’ salaries
• Indirect costs
• Profits to shareholders

the DNP – Disposable Net Profit – is very small.  This is a very real challenge especially during turbulent economic times. Even those who sell support services and products come before not for profits unless the not for profit can show a direct link to indirect costs.  Grants are a viable revenue source, but there again must be a balance between grants and donations along with contracts according to U.S. tax laws.

Beyond the real differences is the belief focusing on delivering the programs or services first and not building the revenue base first.  Revenue must be established first before any programs are delivered. By delivering programs first without revenue, the not for profit is always playing catch up and may eventually succumb to business failure.

Until not for profits understand this Revenue Hierarchy and actively work to “sell” the value of their products or services, these well intentioned organizations will continue to miss the business boat.

Yesterday, I received an email notice from a government sponsored organization (meaning my tax dollars are paying for their existence) whose goal is to help small business owners, entrepreneurs, etc. increase sales. The announcement was for a author from out of the Northwest Indiana region to speak on social media. Point of Honesty: After being a resident of NW Indiana for over 50 years, I am somewhat jaded because this area of the state has always been viewed as a step child by Indianapolis. They love taking our tax dollars, but provide little in return.

One of my biggest gripes is that government and in many cases institutions of higher learning are clueless about how to develop sustainable business. Governments from the local to the federal increase taxes, create profit draining compliances and foster an environment that works against those who take the risks and truly are the economic engines of this great country. And they will be the first to ask for more money to fund this need or attend this locally beneficial event. Give me a break!

When I received this announcement, I immediately thought how many times has this person from out of the area freely given of his time to help this local small business development agency? Answer – Probably None! How many articles has he written to be included in the monthly newsletter from this agency. Answer – Probably None! How many times has he spoken without any compensation in this area of NW Indiana per the recommendation of this agency? Answer – Probably None! The reason I write probably none is that I am only 99% sure and not 100%.

The director of this organization did call and leave me a phone mail. He said he was at the direction of his boss. Fine, I can appreciate that. However in my return voice mail (don’t you love phone tag?), I asked had he suggested bringing any one from Northwest Indiana to Indianapolis or did any other regional office suggest a local speaker. Why is government always one way?

Government is all one-sided because it is all about what is in it for them. They are truly clueless about customer service and creating mutually beneficial relationships. The latest efforts on health reform demonstrate that given that small businesses will be paying for the fast majority of this wealth distribution because personal responsibility and accountability has gone right out the window. When 75% of the American public did not approve of the proposed legislation what they read of it, tell me it is not one-way. And what does student college loans have to do with health care?

Excuse this Friday rant. However when government organizations that are supposed to support their local small business owners and entrepreneurs fail to take that action, why should any regional business look to these small individuals to provide products and services? This behavior only further entrenches the 50 mile rule. Live 50 miles outside of the area and you are an expert. Great for Indianapolis, but terrible for Northwest Indiana.

Give me a break! Government related organizations (those who are supported with taxpayer dollars) need to take a fresh look in the mirror and truly be honest with themselves. Of course, this will happen when pigs fly.

I may be doing a weekly rant. So come back next Friday and what irritates me.