Friday, July 25, 2008

You Can Pay Me Now Or You Can Pay Me Later

OK, here is your homework. It is an open book test. It is not a quiz. It is a test. As a commercial announced for an auto repair shop talking about regular maintenance for a motor vehicle and failure to provide it: “You can pay me now or you can me later”. This is about the cost to you right now. It will cost more later if you don't pay now.


Take the second question below, "What is the purpose of your nonprofit?" (It is really not yours, you know; it belongs to the board and the community, not an individual) Your answer may be to save whales, to overcome AIDS, to work with troubled youth or to have a community development corporation. Go beyond those broad answers. Review and work on the rest of the questions and come back to the second one and see if you have some additional purposes or reasons for starting a nonprofit. Put your answers down on paper. Save them, review them and amend them every so often as you progress.

1. Are you being HONEST with YOURSELF? What do you want out of this for yourself? What is it in your character development that makes you the one to do this? What do you stand for ethically? Are you looking for a job or control or an organization that will be active the day after you die? Will you be honest with others and up front about what you are looking for? Do you have personal knowledge and/or experience with details, budgeting, managing people and leadership? What are your personal strengths and personal weaknesses and will you talk about them with others to make this organization happen? Are you an ethical person?

2. What is the purpose of your nonprofit? Why are YOU starting a nonprofit? Why are you starting THIS nonprofit? What is your vision, your mission? Describe the opportunities that are available.

3. Can you partner or join with another nonprofit organization performing the same or similar mission without incorporating another group? How will you avoid duplication of mission, services and work?

4. What are your qualifications and experience to open and operate this nonprofit business?

5. What kinds of activities will the nonprofit involve or sponsor? Who will be responsible for these activities? When will they be accomplished? How will you KNOW they were successful?

6. Will you be providing a service? Will that service be limited to certain customers/clients/others? Who? How? Why? When? By whom? What will be the proximity of your office and service to your customers/clients/others?

7. Will you have membership? If so, who will be eligible and what duties, obligations, authority and dues will members have?

8. What will be the name of your organization? Have you reserved that name with the State? Does the name reflect in some manner the mission, the vision or the activity of the organization?

9. Where will you be opening and operating this nonprofit? Do you intend to use property you or a family member owns?

10. Who will you have on your board of trustees? Will they and other people provide money and assistance? Why will you have them on the board? What part will they have in decision-making? What part will they play in the organization? Please note that some states call the board “trustees” and some call them “directors”. Be consistent with your state. Your state law may also list the required officers.

11. What are the advantages and disadvantages to incorporating THIS organization? Make two columns and list both advantages and the opportunity and the disadvantages and risks. Talk to others who are working with you to add to both lists. Do the advantages outweigh the disadvantages?

12. What are your resources? What are your talents, experience or education to operate this organization? Will the board contribute financially to the organization annually?

13. Will you have paid staff and personnel? Will you have volunteers? What are their responsibilities and authority? What roles will they play in the organization? What are the responsibilities of the organization to its employees and volunteers? Who will handle those responsibilities? What written policies, procedures and forms will be required?

14. What is your experience in managing a nonprofit organization or other endeavor? How good are you in writing and maintaining records, policies, procedures and forms? Do you know what reporting you will have to do, when and with whom?

15. Will your organization or personnel require licenses, registrations, approvals, certificates or permits? Will your staff require licensing, professional degrees, criminal background checks, or drug testing?

16. Do you own equipment or other forms of property? Do you plan on acquiring property and equipment? Will you purchase or lease the equipment and property? How will you acquire these resources? How will you pay for renovations, furniture, equipment and signs at an office? How will you pay for the continuing maintenance and improvements?

17. How and where will you keep supplies, stock and inventory?

18. What are your financial needs? Does the organization have a bank account? What are your financial skills? What kind of grants or funds will you need? How much money will you need to begin to open this organization and sustain it - for 1 to 6 to 12 months, or for three years? Where will that money come from? How will you assure fiscal integrity?

19. What potential liability and risks does this nonprofit have? What insurance protection will you need? How will risk management be assessed and handled?

20. Have you received any training, education or technical assistance to operate a nonprofit business? If you have not received any training, education or technical assistance, will you need that kind of help? Where will you find that help? How will you pay for it?

21. Have you developed a business plan? Do you know what a business plan is and why you need one?

22. How will you keep financial records and other important records such as contracts, orders, wage payments, vouchers, bills of lading, bank accounts, tax information, personnel records, annual reports, audits and so on?

23. Are there other nonprofits or for-profit groups - competition - like yours in the community where you will open? How and why is your nonprofit different than they are?

24. What are the major impediments for you to start this organization? What are the barriers? How will you overcome these impediments and barriers?

25. How will you advertise or market the nonprofit's service? How will you get customers/clients/supporters? What will be your niche or specialty in the community you serve, the market place?

26. Have you or other members of your family and friends operated a business or another nonprofit? Will they help you in this enterprise? What will that help be? Are you aware of rules on conflict of interest and intermediate sanctions?

27. Does your group plan on dissolving after a period of time or is it a long-range project?

28. Do you believe the organization will be involved with lobbying, advocacy and/or political activities?

Do you have the right stuff to create, maintain and sustain this dream? Are you ready to pay the price?

Starting a nonprofit is complex. You cannot simply have a great idea and a community need and look for funders, customers or clients. You do not simply put up a webs site and expect things to happen. You need a plan, a plan in writing. Such a written plan is called a business plan. A business plan can be short or it can be long. A business plan can be a narrative or an outline. If you sat down and started writing answers to the 28 questions listed above, you have a start to producing your business plan.

Start your engine...

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