Business Basics _ Marketing on a Mini Budget Workshop.ppt

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Serving Medina, Portage, Summit & Wayne Counties




                           Not-For-Profit Basics
                                     The Key Steps to Building
                                     a Successful Organization

    One Cascade Plaza
    Akron, OH 44308
    akronscore81@aol.com
    www.akronscore.org
    330-379-3163
    1-877-AKSCORE                                                                                                 TM


                                                                                   We teach new dogs old tricks
           SCORE is a resource partner of the U.S. Small Business Administration


Ref: Not for Profit – 10/27/09
Part 1   Akron SCORE®
Part 2   NOT-FOR-PROFIT vs. FOR-PROFIT
Part 3   NOT-FOR-PROFIT as a Business
Part 4   Setting Up a NOT-FOR-PROFIT




                                                            TM


                                  We teach new dogs old tricks
  SCORE’s Mission Statement

Stimulate the Greater Akron
economy, which includes
Summit, Medina, Portage and
Wayne Counties, by using the
business knowledge and skills
of our volunteers to
successfully guide and lead
entrepreneurs and existing
small businesses
toward their goals.                                                TM


                                    We teach new dogs old tricks
                                3
                             SCORE®

         Nationwide                             Akron SCORE
■ Resource Partner with SBA              ■ 70+ volunteer Counselors
■ 11,500 volunteers — 390 chapters       ■ 40+ years of service to the
■ Small Business mentoring
                                           business community
  and advice                             ■ 3,000 client services per year
   – Face-to-face or e-mail counseling      – 40% follow-on mentoring
■ Skills in business planning,                relationships
  strategies for growth, and all            – 60% existing businesses counseled
  aspects of business operations         ■ Satellite locations: Kent State
■ Business workshops for                   University, Wayne College, Medina
  start-up and existing businesses         Economic Development Corp.



                                                                  4
                                 Counseling &
                              Business Workshops
■ Free and confidential
■ Long-term follow-up at a SCORE location, business
  or a convenient place
■ Skill Sets:
  -   Accounting              -   Education               -   Inventory Management
  -   Advertising             -   Engineering             -   Leasing
  -   Bidding & Estimating    -   Environmental           -   Marketing & Sales
  -   Buy & Sell              -   Financial Analysis      -   Patents
  -   Cash Management         -   Franchising             -   Product Development
                                                          -   Public Relations
  -   Community Relations     -   Human Resources
                                                          -   Research & Development
  -   Computer Applications   -   Insurance
                                                          -   Sales
  -   Construction            -   International Import/
                                                          -   Taxation
  -   Credit & Collection         Export



                                                                           5
                    Workshops Offered

♦ Business Basics
♦ Marketing on a Mini Budget   – Day & evening
                                 workshops
♦ Business Plan
                               – Various locations
♦ Great Customer Service       – Customized
                                 presentations
♦ Leadership & Management
                               – All services are
♦ Financial Management           FREE & CONFIDENTIAL

♦ Not for Profit
♦ Resume Writing


                                            6
Part 2


NOT-FOR-PROFIT
    vs. FOR-PROFIT




                                        TM


              We teach new dogs old tricks
NOT-FOR-PROFIT vs. FOR-PROFITS


 For-Profits
   Produce, market and sell products or services
   to make money for owners and investors



 Not-For-Profits
   Produce, market and sell products or services
   to improve the community




                                               8
          Characteristics of a
        FOR-PROFIT Business

■ Privately or publicly (stock) owned
■ Income/profit benefits the owners
■ Governed by the owners
■ May be bought and sold
  with profits of sales going to the owners




                                              9
         Characteristics of a
      NOT-FOR-PROFIT Business

■ Community ownership. No private interest. No stock.
■ No one may personally benefit from the earnings
  (board members, employees or volunteers)
■ Income/profit must go back into the business
■ Governed by a Board of Trustees/Directors
  (representatives of the community)
■ Can never be sold for a profit. If the organization
  goes out of business, the profit (if any) from sales
  must go to another Not-For-Profit


                                               10
    MYTH: Not-For-Profits may not make money.


  FACT: Not-For-Profits not only can, but SHOULD
  make a profit.


Profit must go back into services of the organization
Profit allows the Not-For-Profit organization to
operate effectively
Profit allows the Not-For-Profit to reinvest in services

                                              11
Not All NOT-FOR-PROFITS Are Charities

Examples of Not-For-Profit organizations
that are NOT charities
  ■ Services organizations (Kiwanis, Rotary, Elks…)
  ■ Educational organizations
  ■ Religious organizations
  ■ Scientific organizations
  ■ Business leagues
  ■ Chambers of Commerce
  ■ Social clubs
  ■ Labor organizations

                                              12
    NOT-FOR-PROFIT Organizations
             Advantages
■ Tax exemption
■ Deductibility of donations
■ Grants
■ Lower costs
■ Tax exempt bonds
■ Lower postage rate for bulk mailings




                                         13
     NOT-FOR-PROFIT Organizations
          Disadvantages
■ Loss of control
■ Limited purpose
■ Lobbying activities are limited
■ Public scrutiny
■ Not-For-Profit reporting requirements are
  more extensive than required of For Profits
  (grant reporting)



                                          14
Part 3


NOT-FOR-PROFIT
    as a BUSINESS




                                        TM


              We teach new dogs old tricks
NOT-FOR-PROFITS are Businesses

■ Legal entity
■ Must be incorporated in the state
■ Must obtain Federal ID (Federal Tax) Number




                                        16
    FOR-PROFIT Laws Apply
                      (excepting Taxes)

■ Personnel Laws & Regulations, etc.
  – Personnel Manual/Personnel Policies
  – Job Descriptions
     –   Paid Positions
     –   Volunteer Positions
     –   Board Officers
     –   Salary Schedules

■ EEO (Equal Employment Opportunity)
■ OSHA (Occupational Safety…)
■ Insurance Laws & Taxes

                                          17
              FOR-PROFIT Laws Apply
                      (excepting Taxes)
(continued)

  ■ Occupancy Permit
       – Zoning
       – Facilities must meet local, state & federal regulations
  ■ Local, State & Federal License & Certifications,
      Food License
  ■ Annual Meeting of the Board
  ■ Annual Audit of Finances
  ■ Minutes of all Board & Committee Meetings

                                                          18
            NOT-FOR-PROFITS
                Do Not Pay

■ Federal taxes
■ State taxes
■ Local taxes
■ Sales taxes
■ Corporate taxes




                              19
           All NOT-FOR-PROFITS
    Must Pay These Taxes

■ Local assessments (water, street cleaning, etc.)
■ Social Security taxes
■ Workers Compensation taxes
■ Unemployment taxes
■ Employee income taxes (withholding)




                                          20
   Unrelated Business Income Tax
                    (UBIT)

■ Income from any activity not related to the
  mission of the organization
■ Income in excess of $1,000




                                          21
           Why Businesses Fail
                (9 out of 10 cases)

■ Owner/Manager inexperience…
  – in the specific line of business
  – in management
■ Owner/Manager inability…
  – to manage tasks
  – to manage others
■ Costs…
  – underestimated
■ Cash Flow…
  – not understood or not watched

                                       22
Part 4


 Setting up
  the NOT-FOR-PROFIT




                                         TM


               We teach new dogs old tricks
          BEFORE Filing for
   NOT-FOR-PROFIT Designation

■ Put together your Board of Trustees
■ Define the Mission
■ Define the services to achieve the Mission
■ Define the population of service
■ Develop a 3-year budget




                                          24
            Define Your Mission
   (Its Purpose & Key Activities)

■ Research the community
  – Who else has a similar mission?
  – Is there any other organization/group with which
    to partner?
  – Who is going to compete with you for money?
  – Are others providing the same or similar services?

■ What is your niche going to be?




                                                   25
Define your Service(s) or Product

 ■ What are you going to do?
 ■ How are you going to do it?
 ■ Where are you going to do it?




                                   26
        Define the population
            to be served
■ Population (adults, teens, children?)
■ Age
■ Geographic area(s)
■ Income status
■ Problems/Needs
■ What are the needs of your customer base?
■ Where will they come from?
■ How are you going to make contact with them?
■ Determine qualifications of staff needed to serve
  the population

                                              27
    Develop a 3-Year Budget

■ Determine start-up funding needs
■ Define annual expense needs
■ Define sources of income
■ Determine the sources of ongoing income




                                       28
Filings with Ohio Secretary of State

 ■ Articles of Incorporation
   – Defines who you are and what you do

 ■ Bylaws/Code of Regulations
   – Defines how the organization will be governed

 ■ Filings with the Internal Revenue Service
   – Application for tax-exempt status (501(c)(3)
   – File after Ohio Secretary of State applications submitted




                                                     29
Part 4   (continued)



 Setting up
 the NOT-FOR-PROFIT
     GOVERNANCE




                                                 TM


                       We teach new dogs old tricks
 Setting Up the NOT-FOR-PROFIT
                   GOVERNANCE
Board of Directors/Trustees
  ■ Number
    – No legally required number
    – Enough to do the work of the Board
    – Odd Number
  ■ No relatives
  ■ Term limits for members of the Board
    – Staggered terms



                                           31
 Setting Up the NOT-FOR-PROFIT
                  GOVERNANCE
Expectations of Good Board Members
  ■ Committed to Mission
  ■ Willing to give of their time, talent & money
  ■ Able to influence others
  ■ Have community contacts
  ■ Knowledge of Not-For-Profit board operations
  ■ Willing to learn
  ■ Willing to raise money


                                              32
 Setting Up the NOT-FOR-PROFIT
                 GOVERNANCE
Duties of the Board
  ■ Governance of the organization
  ■ Establishes agency policy, goals & objectives
  ■ Hires/Fires the Executive
  ■ Sets salary of Executive
  ■ Evaluates performance of Executive
  ■ Evaluates agency performance against
    set goals and objectives
  ■ Decisions of the Board are collective decisions

                                            33
  Setting Up the NOT-FOR-PROFIT
                     GOVERNANCE
Picking Board Members / General Principles
 ■ Board members are going to make the rules — pick them
   carefully
 ■ Board is the ultimate boss
 ■ Board hires and fires the executive
 ■ You cannot get rid of the Board — only the Board can
   get rid of Board members
 ■ No relatives — No friends unless they can contribute specific
   expertise (be careful)
 ■ Avoid conflicts of interest/have a disclosure policy & process


                                                      34
  Setting Up the NOT-FOR-PROFIT
                      GOVERNANCE
Pick people who can contribute expertise
 ■ Try to find people who have experience with Not-For-Profit boards
 ■ Accountants/Not the same person as the auditor
 ■ Lawyers
 ■ Bankers
 ■ Marketing
 ■ Public Relations
 ■ Insurance
 ■ Business
 ■ Mentors & Advisors
 ■ Involved Community Volunteer

                                                       35
  Setting Up the NOT-FOR-PROFIT
                GOVERNANCE
Officers
  ■ President
  ■ Vice President
  ■ Treasurer
  ■ Secretary




                             36
 Setting Up the NOT-FOR-PROFIT
                  GOVERNANCE
Board Committees
  ■ Governance Committees
    – Finance & Audit
    – Planning & Evaluation
    – Nominating
  ■ Operating Committees
    – Marketing/Public Relations
    – Fundraising
    – Personnel


                                   37
  Setting Up the NOT-FOR-PROFIT
                 GOVERNANCE
Roles of Board & Staff
  ■ Clearly define (in writing) the roles of each in
    the Bylaws
  ■ Define the duties of each officer in the Bylaws




                                             38
  Setting Up the NOT-FOR-PROFIT
                     GOVERNANCE
Meetings (written in the Bylaws of the Corporation)
   ■ Board should meet as often as is necessary
      for the work of the organization
      – Minimum number: 4 meetings per year
      – Could meet monthly — must meet annually
   ■ Date, time, place established to maximize
      attendance
   ■ Agenda and supporting materials sent ahead
      of meeting

                                                      39
 Setting Up the NOT-FOR-PROFIT
                GOVERNANCE
Advisory Boards
  ■ No governance responsibility
  ■ Do make recommendations to the Board
  ■ For specific advisory purposes and projects
  ■ Retired trustees or members of specific interest
    groups or skills
  ■ Persons of influence



                                           40
  Setting Up the NOT-FOR-PROFIT
                GOVERNANCE
Policy vs. Operations
  Most boards are Policy boards. However, those
  boards without staff also become Operations
  Boards. In this case, Board Members take on the
  day-to-day responsibilities normally performed
  by paid staff.




                                         41
Part 4   (continued)



 Setting up
 the NOT-FOR-PROFIT
    MANAGEMENT




                                                 TM


                       We teach new dogs old tricks
    Setting Up the NOT-FOR-PROFIT
                     MANAGEMENT
Role of the Executive/CEO
■ Answers to the Board            ■ Conducts or supervises
■ Does not serve on the Board       all daily agency operations
    other than as ex-officio —    ■ Hires/Fires all other
    should not vote                 employees
■   Implements Board policy          – Employees must meet standards
                                       of certification/licensure
■   Staffs all Board committees
                                     – Must be citizens or legal aliens
■   Implements agency programs       – Must be bonded
    and services                     – Professional liability
■   Responsible for management    ■ Pays bills
    issues


                                                         43
 Setting Up the NOT-FOR-PROFIT
                 MANAGEMENT
Hire Great Employees
  ■ Start with an accurate job description
  ■ Create an attractive job environment
  ■ Creative classified ads
  ■ Go for the best that will grow the business
  ■ Hire the disabled
  ■ Part-time, part-time job share, part-time older
  ■ Motivating the applicant
  ■ Check previous employment

                                              44
 Setting Up the NOT-FOR-PROFIT
                  MANAGEMENT
Train Great Employees
  ■ Use the job description
  ■ Initial and follow-up training
  ■ Communicate the business image, goals
    and mission
  ■ Answering the phone
  ■ How to handle the price question


                                       45
 Setting Up the NOT-FOR-PROFIT
                MANAGEMENT
Motivating & Leading Employees
  ■ Pass on the passion and dreams
  ■ Make the employee feel that he/she is
    important to the success of the business
  ■ Give responsibility and authority
  ■ Monitor job performance
  ■ Adequate compensation
  ■ Customer feedback

                                            46
Part 4   (continued)



 Setting up
 the NOT-FOR-PROFIT
         OPERATION




                                                 TM


                       We teach new dogs old tricks
  Setting Up the NOT-FOR-PROFIT
                   OPERATION
Policies
  ■ Have a file or notebook of all policies established
    by the Board
  ■ Written statement of policy
  ■ Procedures for implementation
  ■ Title/position of the person(s) responsible for
    implementation
  ■ Date policy was approved by the Board
    (also in the Minutes)

                                              48
 Setting Up the NOT-FOR-PROFIT
                  OPERATION
Finances
  ■ Organization money MUST be separate from
    any personal money
  ■ Checking and savings accounts must be
    organization accounts — not personal
  ■ Finance committee of the Board oversees
    organization finances
  ■ Executive/CEO or other staff prepare budgets
    for review by the Board

                                           49
 Setting Up the NOT-FOR-PROFIT
                         OPERATION
Finances   (continued)
  ■ Keep written minutes of all finance meetings
  ■ The organization must operate within the budget.
    Executives should assure this. Board must review
    and affirm it
  ■ Annual Audit — completed by outside accountant
    chosen by the Board




                                            50
 Setting Up the NOT-FOR-PROFIT
                   OPERATION
Budget Income
  ■ Fees & Dues             ■ Government Grants
  ■ Government Fees         ■ Investment Income
  ■ Government Contract     ■ Special Events
    Income                  ■ In-Kind Income
  ■ Private Contributions   ■ Other Income
  ■ Foundation Grants




                                         51
 Setting Up the NOT-FOR-PROFIT
                    OPERATION
Budget Expenses
  ■ Salaries              ■ Public Relations
  ■ Benefits                & Marketing
  ■ Taxes                 ■ Legal Costs

  ■ Housing Costs         ■ Accounting
    (rent, utilities,     ■ Audit
    maintenance, etc.)    ■ Program & Operating
  ■ Insurance Costs         Costs
  ■ Office Costs          ■ Fundraising

                                          52
 Setting Up the NOT-FOR-PROFIT
                    OPERATION
Insurances
  ■ General Liability
  ■ Directors & Officers Liability
  ■ Professional Liability
  ■ Building & Equipment
  ■ Health Care Insurance for Employees
  ■ Business Interruption Insurance
  ■ Workers Comp
  ■ Unemployment

                                          53
Part 4   (continued)



 Setting up
 the NOT-FOR-PROFIT
 FINANCIAL SUPPORT




                                                 TM


                       We teach new dogs old tricks
Setting Up the NOT-FOR-PROFIT
                FINANCIAL SUPPORT
■ Fees charged to persons who receive the benefit(s)
  of your programs and services
   – Estimate the annual income from these fees
■ Donations
   –   Donations must be acknowledged in writing
   –   Designated/restricted donations
   –   Undesignated/unrestricted donations
   –   General operating donations
   –   Estimate the annual amount of donations you expect
       from individuals


                                                       55
Setting Up the NOT-FOR-PROFIT
            FINANCIAL SUPPORT
■ Donations greater than $250 must be provided
  by letter stating that nothing was given/received
  in exchange for the donation
■ All donations must be acknowledged in writing
■ Information filed is public information




                                            56
Setting Up the NOT-FOR-PROFIT
               FINANCIAL SUPPORT
■ Grants (Gifts)
   – NO BUSINESS CAN BE RUN ON GRANTS!
   – One-time contributions
   – Do not expect to receive these for multiple years
   – Foundation Grants (local or national) are most common
   – Require a written proposal usually as defined by the
     foundation
   – Sometimes require written reports to the foundation




                                                         57
Setting Up the NOT-FOR-PROFIT
             FINANCIAL SUPPORT
■ Proposal Writing
  – 20% success rate is good
  – Preliminaries are a must (mission, program, description,
    budget, etc.)
  – Research foundations which fund your mission
  – Make preliminary contacts
  – Request only what they will grant
  – Follow foundation guidelines
  – Follow-up
  – Foundations share information


                                                      58
Setting Up the NOT-FOR-PROFIT
              FINANCIAL SUPPORT
■ Contracts
  – Agreements to buy services/products at a specified rate
  – Lag time between delivery of service and payment
  – Competitive
  – Require a written proposal in response to a published RFP
  – Time limited — may be renewable
  – Can provide ongoing funds but are NOT guaranteed
  – Open to public review
  – Contain specific list of requirements (do’s and don’ts)
  – Materials and products often belong to the government entity

                                                        59
Setting Up the NOT-FOR-PROFIT
              FINANCIAL SUPPORT
■ MATCH Requirements
  – Hard / Cash Match
  – Soft / In-Kind Match

■ Government Contracts
  – Local (City or County)
  – State through specific departments
  – Federal




                                         60
 Setting Up the NOT-FOR-PROFIT
               FINANCIAL SUPPORT
■ Fiscal Years vary (may differ from this)
   – City and County – January through December
   – State – July through June
   – Federal – October through September

■ Unit Rates
   – May / May Not be negotiable
   – Definition of the ―Unit‖ varies and may be negotiable




                                                        61
  Setting Up the NOT-FOR-PROFIT
               FINANCIAL SUPPORT
■ Tax Deductible Contributions
  – Must be designated as a charity, 501(c)3 by the IRS
    (i.e., must have a letter of designation from the IRS on file)
  – Charities must obtain at least 30% of their annual funds
    from public support (donations, in kind gifts, foundations,
    etc.)
  – Must file annual tax return (Form 990) if revenue exceeds
    $25,000
     – Effective May 15, 2008, Form 990-N must be filed electronically
       by organizations with revenue from $1 to $25,000


                                                          62
  MYTH: Not-For-Profit organizations may not
  engage in lobbying activities.

  FACT: Not-For-Profit organizations MAY
  lobby within certain limits.


Lobbying is permitted by IRS, but limited to an
“insubstantial” amount of time and money (5%)


                                           63
                  Lobbying

DEFINITION:
 Effort to influence legislation by influencing
 the opinion of legislators, legislative staff and
 government administrators directly involved
 in drafting legislative policies.
                (Nonprofit Kit for Dummies by Hutton and Phillips)




                                                        64
           Lobbying Activities

■ Promoting specific candidates for office
■ Promoting specific pieces of legislation
■ Writing legislation




                                             65
       Non-Lobbying Activities

■ Holding candidate forums including all candidates
■ Explaining your mission or services to legislators
■ Asking for general support for the mission and
  services of the organization
■ Advocating for the needs of your client population
■ Responding to requests from legislators for
  information



                                            66
                     Reputation

■ Guard it carefully
■ Think how this or that will look in the newspaper
■ Once tarnished, it will be difficult to restore
■ Concerns
   – Adverse personnel actions
   – Misappropriation of funds
   – Deficit spending
   – Failure to pay bills of any kind
   – Unresolved client concern

                                             67
                   Reference

Nonprofit Kit for DUMMIES
by Stan Hutton & Frances Phillips




                                    68
                                One Cascade Plaza
                                Akron, OH 44308
                                akronscore81@aol.com
                           TM
                                www.akronscore.org
                                330-379-3163
We teach new dogs old tricks    1-877-AKSCORE

				
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