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Mission Delivery With Sustainability with Melinda Emerson · The SmallBizChat with Melinda Emerson

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  Three, two, one, zero.
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  Ignition.
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  Lift off.
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  Ending small business failure.
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  Welcome to the Small Biz Chat podcast with the number one small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure, and she'll give you the information
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  you need to succeed and live the life you dream of.
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  Now here's your host, the small biz chat lady herself, Melinda Emerson.
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  Have you subscribed to the small biz chat podcast?
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  Well, it's time.
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  Every Wednesday, we offer listeners bite sized actionable tips to start and grow a successful
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  small business.
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  In just twenty minutes or so a week, you can get a ton of insight and resources to propel
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  your business forward.
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  Be sure to subscribe to the Small Bitch Chat podcast today.
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  Hi, everybody, and welcome to another edition of the Small Biz Chat podcast.
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  I'm Melinda Emerson, the small biz lady, your host and America's number one small business
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  expert.
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  And I am so excited to talk to you guys today about, hey nonprofits, y'all need to be
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  thinking like businesses too.
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  Now, I know that you guys, if you've been following me, you know that I've been talking
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  about helping nonprofits turn into social enterprises a lot lately.
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  And there's a reason for this.
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  I have had so many friends of mine, and actually clients that have for profit and
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  nonprofit entities reach out to me for help.
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  Because with all of this grant cancellation culture that we've got going on coming through
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  the federal government, and a lot of corporations are pulling back, Grants are
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  shrinking, donor fatigue is real, and a lot of nonprofits only have two general funding
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  sources, which is extremely dangerous with the landscape of fundraising changing, nonprofits
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  have to become more entrepreneurial.
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  And you really can't solely rely on philanthropy anymore.
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  You've got to have a revenue base and you gotta be able to create your own unrestricted funding
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  dollars and things like that.
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  And social enterprise really is not a mission drift, it's actually mission delivery with
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  sustainability.
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  And what I wanna talk about in today's podcast, why your nonprofit needs a social enterprise
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  and how it really is a win win win scenario.
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  Now, when we think about social enterprise, what is that?
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  It's really a revenue generating business that aligns with a nonprofit mission.
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  And it's really that simple.
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  But you have to understand business principles to really pull this off.
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  You've got to get out of this begging for dollars mentality and go and earn your dollars
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  and get you some customers like the rest of us do out here in the business world.
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  And the great thing about it though is if a nonprofit can figure out a revenue engine in
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  their business, this will allow them to reinvest the profits in their nonprofit
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  programs and operations.
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  For example, a thrift store that's being run by the Goodwill, that's their revenue generating
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  source.
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  Or if you have training programs, you might be able to train not just your constituents, but
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  other organizations to deliver your training programs.
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  You can provide consulting services or actual product sales.
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  I know of a nonprofit in Wilmington, Delaware.
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  They have this amazing youth apparel shop.
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  And they're not just making t shirts and hoodies you guys, they're making uniforms for
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  businesses in their local community and generating money because their stuff looks
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  good.
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  It's well made.
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  It's not your typical cleaner's uniform.
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  It's more interesting than that because they're allowing them to be a little bit creative.
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  And this organization has been able to create hundreds of thousands of dollars selling
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  uniforms, selling t shirts, selling hoodies, selling other stuff too.
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  So there's lots of ways you can leverage what we call social enterprise for your actual
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  social enterprise within your nonprofit.
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  And why is this so important right now?
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  Well, we've got inflation, we've got all these economic shifts that are impacting everybody
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  from their funders to the people that they actually serve.
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  In other words, everybody's money is tight.
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  So if you create a social enterprise, you're really creating income that you determine,
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  reducing your dependence on external funding cycles and praying for somebody to say yes to
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  your grant application.
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  This really gives your organization agility and the power to say yes to opportunity and no to
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  mission creep.
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  And so let me just walk you guys through what I like to call my win win win framework.
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  Number one, if you create a social enterprise, you are still serving your constituents because
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  you can create jobs, you can do job training, and really all of this leads to paths to
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  economic self sufficiency.
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  The other thing too is you can develop life changing programs that also teach real world
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  business skills.
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  So think about an organization that creates a drone program, teaching people how to build
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  drones, how to service drones, how to fly drones.
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  That is something that they can go out in the commercial world and get a job with.
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  But it's a program that you can get funding dollars to create And then you charge people to
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  get the training.
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  Charge people for the placement of these people after they're done.
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  I mean, there's so many different things you can leverage on top of the services and
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  training that you're providing, whether it's job placement or whether it's setting these
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  people up in business for themselves.
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  There's lots of ways to leverage this to support your constituents that you already
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  serve.
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  The other thing is that you give people dignity by offering services that help empower people.
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  So if you train somebody to be a carpenter and then you help them get carpenter gigs, you
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  guys, that's a business.
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  So this is the thing that I want you guys to understand.
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  I have never, ever, ever thought that nonprofits were organizations.
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  I just never bought into this idea of nonprofit.
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  I feel like nonprofits are businesses that file their taxes differently.
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  Because think about what a nonprofit is.
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  You have your donors and you have your constituents.
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  So let's say they have two, a primary and secondary market that they serve.
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  That's the only difference and they have to file a nine ninety instead of a traditional tax
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  return.
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  But they still are running a business.
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  They still have to follow HR guidelines.
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  They still have to have staff and payroll and all this stuff.
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  You are running a business, but now let's get business y.
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  Let's create an entrepreneurial mindset around it and turn this thing into real dollars that
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  makes you less dependent on external funding sources.
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  So here's the second W in my win win win framework.
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  You are serving the community.
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  If you are providing a service that's needed, whether it's affordable childcare, catering,
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  eco friendly cleaning products, whatever it is, that is a service to the community.
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  Those are things people need and people are gonna pay for them some kind way.
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  You guys could be getting that money and funding your nonprofit organization.
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  You can have multiple impact through these kinds of partnerships with local businesses or
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  residents.
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  And really you become that trusted community anchor and not just a service provider.
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  You're not just a business, you're somebody that's invested in the community already.
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  So you automatically will have trust.
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  So when people trust, that's when people will buy.
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  So you wanna leverage the good name that you've built up for your organization and then
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  leverage it by launching for profit services.
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  And I think you're well within your right to do that.
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  And here's the other thing I want to say.
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  Just because you're a nonprofit, you don't have to deeply discount.
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  You can charge market rate for your services.
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  So I don't want you guys to feel like just because you're a nonprofit, you have to charge
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  $2 for sodas when everyone else charges $5 No, charge more.
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  I just want you guys to realize that there's real money to be had if there's real value that
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  you can provide to the communities that you operate in and serve.
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  And the last part of the win win win framework is raising your critical operation fund.
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  You can use your earned income to cover overhead operations and innovation, not just
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  programs.
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  You reduce your reliance on the grant lottery or annual fundraising galas.
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  Lord have mercy.
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  There's so much effort that goes into that for the amount of money that is raised.
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  If you could raise 25% of your operating expenses with a social enterprise, who out
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  there wouldn't do it?
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  That's the kind of money I'm talking about you guys can raise.
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  And the other thing that's awesome about creating a social enterprise within your
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  nonprofit is you can build a scalable recession resistant income stream that fully aligns with
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  your mission.
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  So think about that.
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  Think about what you already do, who you're already serving.
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  How can you monetize it?
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  That's all we're talking about.
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  And let me give you guys some other examples of folks that have done this really well.
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  Think about a domestic violence shelter that launched a cleaning service to employ
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  survivors.
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  Put a little change in their pocket, but also leverage the credibility of the shelter to get
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  these ladies work and get these ladies back on their feet.
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  A lot of women come to domestic violence shelters with their kids and they need a way to
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  earn some money in a safe and protected environment.
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  A cleaning company that employs women from the shelter, that's a win win win.
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  Or how about a youth organization that created a graphic design studio run by teens?
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  You need a logo, come to them.
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  You need a brochure, need a flyer, come to them.
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  And it's a great way for these kids to learn skills, learn how to be professional, learn how
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  to meet timelines.
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  And that is an amazing project that one youth oriented nonprofit out of New York is doing.
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  And then how about the food pantry that now sells gourmet sauces through local grocers?
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  There's all kinds of gems and amazing things that you might have going on in your
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  organization that you can flip into a business too.
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  So what do you gotta do to get started with all this?
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  Well, first of all, you have to believe you can.
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  There is a mindset shift, there is a money mindset shift that has to happen in order for
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  your business to be a business.
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  You've gotta understand that you gotta charge money.
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  You do run a charity, but your business is not a charity.
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  You have to be willing to charge people what it really costs.
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  So how do you get started with all this?
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  Well, you need to do what we call a revenue opportunity assessment.
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  You have to look at what do you already do well, and how could it be monetized ethically?
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  You don't wanna take advantage of your constituents.
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  You wanna pay them a decent wage for the work that they're gonna be doing.
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  And then figure out who your paying customer is.
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  Is there a business in the community that you guys could partner up with and do business?
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  You got to figure out who's gonna pay for it before you do it.
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  And I'm a big fan of launching with a pilot before you scale so that you can get feedback
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  and get better and figure out what the actual sales cycle is.
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  You might have to make some samples or give away free product to get people to taste and
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  see that this is a great idea.
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  So there's lots of information you're gonna have to get.
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  The other thing you're gonna have to figure out is if you have a skill set within your
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  nonprofit to help you launch this new initiative.
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  There are people probably working for you right now that once worked in small businesses or
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  maybe their family had a small business.
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  You might be able to put together a tiger team of folks within your nonprofit to stand up this
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  social enterprise.
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  But you won't know if you don't ask.
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  So either have a town hall meeting and talk about it, send out a survey, ask for
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  volunteers, ask if anybody has any business background.
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  I would start with that to figure out who might be able to lead this initiative until you can
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  figure out, the resources you need to pull in.
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  The other thing I wanna say too is that you might even be able to get a capacity building
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  grant from your main funders to build out the staffing plan and what you need, to build this
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  social enterprise as well.
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  Now let's talk about some myths that I constantly hear.
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  We're a charity, not a business.
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  No, you are a financial steward of your mission.
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  That's what you are.
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  And however you get that done is your business.
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  But you have to be thinking about more than one way to keep your nonprofit afloat.
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  I'm so tired of hearing about churches that have had to close down since the pandemic,
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  nonprofits that have had to shut down since the president zeroed out all USAID funding.
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  I don't wanna hear about this anymore.
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  I want you guys to save yourself.
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  And this is what I'm trying to tell you.
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  I am the small business lady.
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  I am America's number one small business expert.
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  I teach people to start businesses every day.
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  And now I'm teaching nonprofits how to start businesses too.
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  That's what I'm doing.
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  So listen, here's another one I have heard people say, social enterprise means selling
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  out.
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  No, it does not.
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  It means showing up smarter and stronger.
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  And if you do not have staff, you can build a team, you can build staff around you, and you
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  can recruit people strategically that can even work for you part time to set up this new
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  business enterprise.
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  All right, thank you so much for joining us for this edition of the Small Biz Chat podcast.
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  I'm Melinda Emerson, your host.
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  And I wanna leave you with this, you never lose in business, either you win or you learn.
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  All right, if you are a woman business owner and you're looking for support in a
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  confidential community to support your small business, head over to smallbizladyacademy.com.
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  We have tons of resources, mentoring, and coaching by me to help you take your business
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  to the next level.
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  Whether you're just starting out or looking for ways to scale your business, please head over
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  to smallbillsladyacademy.com.
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  This is how I support you out in the community as you build your business and your dream.
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  All right, take care everybody.
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  I'll see you on the next episode of the Small Biz Chat podcast.
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  Thanks for listening to the Small Biz Chat podcast with Melinda Emerson.
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  Subscribe to this podcast wherever you listen to podcasts, and join us next Wednesday for
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  more fantastic information and interviews.
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  You can find more sources and small business success strategies by visiting Melinda's
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  website, succeedasyourownboss.com.
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  Thanks again for listening, and we'll see you next week.