For Profit vs. Non Profit Business Plans (Part Two): Which Is Best For You?

I Know Things Now

While researching business plans this month I came to an important conclusion: Whether you are considering starting a nonprofit or for profit business, if you’re your plan is solid, you should still be able to break even or show a profit. By their very nature, nonprofits are not allowed to show a profit. This is because usually you are giving or donating a large portion of your services to somehow enrich your community and it is why the government gives you the tax breaks.  Most arts organizations, it is assumed, are usually going to be nonprofit.

The question I had to ask myself this month was: “If the only way I can make a new arts organization successful, is as a nonprofit, is it really a good idea?”

There are many financial benefits of running a business as a nonprofit. Two of the most obvious are tax breaks or tax-exempt status (if you qualify) and many grants from the government and for profit sector are only geared towards nonprofits. The bottom line: there can be no profit. So then I have to ask, “Is this taking the easy way out?” Sometimes I think there are arts organizations that use nonprofit status as the excuse for not being run better. Is it a bad business plan? Is there no business plan?  It can be a great excuse (nonprofit) for poor planning or a poorly run business, letting others pay for bad decisions (in the form of grants and government assistance).

Let me stop here and say that I fully support and understand the necessity of nonprofit companies and the good work they do. There are nonprofits, however, that totally rely on outside assistance to continue to operate. I think this is what needs to change.

For me, I found a more important issue in debating the two types of businesses was personal income and control. If you follow a nonprofit structure by the letter of the law, you cannot run a nonprofit business and profit from it financially. This may mean no paycheck. So unless you are independently wealthy, you must give control of the company to a board of directors if you want to be paid for your services as an employee of the company. There is a huge personal risk here, especially when you are in effect, donating many hours of time, money and your passion.

A nonprofit board of directors, in the best-case scenario, is a group of people that you have assembled because of their passion, drive, knowledge and experience. They are volunteers, donating their time (and often their money) to a common cause. No matter how much you think they support you and your vision, at some point there will be disagreements. Those disagreements could lead to your dismissal. In some cases this might be what’s best for the future of the organization but it could leave you and your vision without a home. If you follow nonprofits in the news, you will find there seems to be an unusually high rate of turn over of the paid leadership.

A good alternative might be to form a for profit LLC or Limited Liability Company. You lose the financial benefits that nonprofits receive, but you can be paid and retain control of the company. Your company can also show a profit.

So back to my question, “If the only way I can make a new arts organization successful, is as a nonprofit, is it really a good idea?” I had to think long and hard about the benefits to the community and why arts organizations are so important.  I looked at it both philosophically and financially and came to these conclusions:

• Art is an integral part of society. You can’t wake up in the morning without art somehow influencing your life. Whether its in business, marketing, education or entertainment, the creativity of art is the basic mechanism that drives our interests.

• Changes in society, government and funding for public schools is having a detrimental effect on how future generations will be exposed to, and learn the fundamentals of art. These changes open up the marketplace, at least in the area of education for profitability of a target business.

•Realizing and understanding the importance of art in our daily lives, leads to the assumption that there is a consumer need and desire, thus making a for profit’s ability to be successful a true possibility.

I talked about Guy Kawasaki and William J. Byrnes in my last post. Both men have spent their lives studying and developing ways to build better businesses and make them successful. Both men agree that planning and structure are ultimately the keys to success.

Kawasaki wrote a terrific blog post about writing a successful business plan. In it, he stresses the importance of writing the pitch first and perfecting it before writing the plan. It makes sense, doesn’t it? You are selling an idea, product or service. What is it? Why is it beneficial and who needs it? How can it be profitable?  Answer these questions first and then write the business plan for success.

Kawasaki also says the ideal business plan should be 20 pages or less. Eleven pages of crucial information and he allows for 9 pages of what he calls the “fudge-factor”. He says to “make it a solo effort” (usually written by the CEO), “put in the right stuff” and “keep it clean”.

About 6 months ago I worked on writing a team event project as part of my masters’ program. Five people, in different parts of the country, trying to write a business plan for a one-day event. I can describe it in one word: difficult. Not only were we trying to combine five different ideas and perceptions of what the event should be, we also differed in how it would be executed.  The end result was 75 rambling pages without a clear focus or voice. Another team of two people wrote a 17-page project, clearer focus and voice and they got the better grade. 

Another important factor I discovered was that you have to allow the business plan to evolve. As you research and analyze your market, competition, and plan for execution, you make all kinds of discoveries that can enhance and make your plan stronger. Business plan writing is a long and fascinating process.  I used to think that all you needed was an idea and a good budget. It’s not enough. With what I’ve learned, I can’t even imagine trying to start a business or project without a fully analyzed plan that in the very least, increase the chances of real success. 

Non Profit Business Plan Advice for Building and Growing Your Organization (Part One)

Advice From A Caterpillar

I’ve worked with dozens of non profit organizations over the years, some successful and some not. The one thing they all seemed to have in common: no business plan. Many small businesses think it’s all about the budget. (Most of the non profits I’ve worked have been small to mid-size theatrical companies.) In every community group, amateur theatre company, charity organization and professional non profit theatre I've been involved with, the budget was the thing that mattered most.

No matter what your organization’s focus, it must be run as a (for profit) business in order to achieve longevity and success. Though it might seem like common sense that a new start up should have a well thought out plan, you might ask why an established organization needs a business plan.  The answer is pretty simple: to have direction, measure your progress and achieve your goals. The business plan is your blueprint or road-map to success. It is also the most necessary tool your business will need when seeking financial assistance, whether it be investors, grants or loans. All the information you will be asked for should be concisely worded and demonstrated in your business plan.

The U.S. Small Business Administration says, “A business plan should be a work in progress. That's because your business will evolve over time, and be influenced by outside factors such as the economy and local conditions. Even successful business owners should maintain a current business plan to ensure they remain knowledgeable on the elements that can affect continued success.”  Truly sound advice.

In this first part, I thought I’d take a look at a couple of business experts. The best place to start when formulating a successful business plan is to examine the philosophies and achievements of those who know it best. In part two, I’ll be discussing how to take their advice and apply it effectively to your business.

Guy Kawasaki is a popular business guru. If you want to be inspired and stay in touch with the current business trends, I highly recommend you follow him on Twitter @GuyKawasaki  and Facebook. The author of ten critically acclaimed books, Kawasaki is currently offering three of his older books: The Macintosh Way, Database 101, and The Computer Curmudgeon, FREE in an effort to persuade readers to purchase his latest book, Enchantment : The Art of Changing Hearts, Minds and Actions. 

Kawasaki rose from a humble childhood in Hawaii, to attain his BA at Stanford in Psychology, followed by his MBA at UCLA. He was influential at Apple before starting Fog City Software in 1989 and then returned to Apple in 1995 as an Apple Fellow. He left Apple to start Garage.com, which later became Garage Technology Ventures, which serves as a venture capital firm, directly investing in start up tech companies.

Guy Kawasaki is currently a co-founder of Alltop (Innovation.alltop), an “online magazine rack” in addition to continuing with Garage. 

 

Kawasaki’s book, The Art of the Start, is described on his website as “getting down to the real-world tactics of pitching, positioning, branding, recruiting, bootstrapping, and rainmaking”. Important information we all can use when setting up a new business plan. 

Kawasaki's charisma and enthusiasm are infectious .  It’s no wonder his books and advice are highly sought out around the world. Guy Kawasaki's approach to business focuses heavily on social engagement. He believes in the passionate involvement of the employees and the public (consumers). Branding and connecting your business with your target market, building a strong relationship, are key strategies used by Kakasaki.

   

William J. Byrnes

 The main reason I selected William J. Byrnes was because of his wonderfully detailed book, Management and the Arts (which is actually a textbook) that I having been reading over the past year as part of my own research. An academic scholar, Professor Byrne focuses his life work on educating students and companies on how to successfully set up, run, and manage arts organizations around the world.

Byrnes received his BA in English from the University of New Mexico and his MFA in Design and Production from the School of Theatre, Film, and Television at UCLA. Immediately after completing his education, Byrnes spent the early part of his teaching career working for numerous universities and in various capacities with different arts organizations. This hands-on experience as an administrator, teacher and designer, greatly increased his knowledge and ability to formulate good standards for arts administration and business practices.

Byrnes first notable work was his 22 years with the renowned Oberlin College in Ohio where he started as a lecturer, became a professor of theatre and Assistant Director of the school’s conservatory dance and theatre programs. He left Oberlin to serve as Florida State University’s Director of Theatre Management master’s program where he also taught Arts Administration.

Internationally, Byrnes has taught and lectured at schools and conferences in Tokyo, Singapore, Bejing, and across Germany. He currently serves on the Editorial Advisory Committee for the Asia Pacific Journal of Arts and Cultural Management. 

In the U.S., Byrnes is a member of the National Theatre Conference, a director on the ESTA Foundation board, and the Association of Arts Administration Educators (AAAE). He has been actively involved with the United States Institute for Theatre Technology (USITT) since 1985, having served on the board, as Vice President and President (2000-2002); he currently is the editor of Inside USITT.

Byrnes currently serves as Associate Provost and Dean of Graduate Studies at Southern Utah University. William J. Byrnes management concepts for arts organizations are geared toward structure and stability. Quality and community involvement are two of his keys to success; while constantly striving for a strong management and business development, blending the creative goals with the necessary planning and management for continued success.

 Your Business Plan:

Here are a few of the critical key components Kawasaki and Byrnes suggest donors and investors are looking for in your business plan:

• Keep it simple. Donors and investors aren’t going to spend a lot of time reading your business plan. Too many unnecessary details may cause them to put your proposal down and go to the next. Keep it simple and keep them engaged.

• Be specific. Vague generalities will make the reader think you haven’t done your homework, or haven’t truly established your niche in the market. Simple, clear and concise wording describing exactly what your business will accomplish is what investors and donors are looking for.

• Prove your ability to provide a unique product. What is your niche? What makes your business or product unique compared to the competition? Make it clear that your business offers something others don’t, showing the value and need for your existence.

• Be profitable in 3 to 5 years. You need to show that your business can make a substantial profit and be self sufficient in a period of no more than 3 to 5 years. This is a little different for non profit organizations (especially charities) but your financial information should show that you have carefully planned for the financial stability and the well-being of your organization. Investors want to see a profit. Donors want to see responsible and substantial results. Loan institutions want to be sure to get their money back with interest.

What is the most important part of your business plan? The Executive Summary.  

It is the first thing (possibly the only thing) that investors and donors see. If it isn’t informative, short, concise, well written and attention-grabbing; they probably won’t even look at the rest of your plan. It has to be specific and dynamic. It’s the first thing they see and the last thing you’ll write.

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Part Two will explore more details for writing the perfect business plan.

 • • • • • 

References, recommended reading and links:

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Alltop website. http://alltop.com/about/

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Management and the Arts website.  http://www.managementandthearts.com/

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Guy Kawasaki’s Enchantment on Facebook. http://www.facebook.com/enchantment?sk=app_176217385757369

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Guy Kawasaki on Facebook. http://www.facebook.com/guy

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Guy Kawasaki on Twitter. http://twitter.com/#!/GuyKawasaki

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Guy Kawasaki Website. http://www.guykawasaki.com/

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U.S. Small Business Administration. http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan/essential-elements-good-busines

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William J. Byrnes Biography. Southern Utah University. http://www.suu.edu/faculty/byrnes/professional.html

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Real Life Drama Stranger Than Fiction: Casey Anthony Found Not Guilty

Sue Me

Having spent the past month closely following the Casey Anthony trial, I felt the need to voice my opinion on it.  If this had been a stage drama or movie it would have been a flop-- with all the unexplained twists and turns, leaving the audience confused, angry and unfulfilled.

 

To get it out of the way, my gut tells me she did it. Luckily for Casey, judgments in America are not made based on gut feelings or appearances of guilt. Our Constitution and laws were set up to protect and provide for a fair trial: Innocent until proven guilty. We have to remember those words. Unfortunately, I have to agree with the jury: I don’t think the evidence proved beyond reasonable doubt that it was Casey that killed her daughter.

What the Evidence Proved:

·      Casey Anthony is a compulsive, if not calculating liar.

·      Casey Anthony is an irresponsible, self-centered young woman.

·      George and Cindy Anthony are both liars.

·      The Anthony family is extremely dysfunctional.

·      Caylee Anthony is dead and was either murdered, or horrifically disposed of, in an unthinkable cover up.

·      The body or remains of Caylee Marie Anthony were disposed of like garbage.

      The defense admitted in their opening statement that Casey knew her daughter was dead from the beginning. Still, no evidence was presented to prove or disprove whether the death was a homicide or an accident.

Casey Anthony: Tears for Caylee or for Casey?

What the Evidence Didn’t Prove:

·      Who killed Caylee.

·      When (date/time) Caylee died.

·      Where Caylee died.

·      What circumstances caused Caylee’s death.

·      Who knew about the death and participated in the cover up.

Without those answers, how can you prove guilt beyond reasonable doubt?

Accusations Made By the Defense That Were Not Proved:

• Caylee Marie Anthony’s death was accidental.

• Casey Anthony was sexually abused by her father and brother, George and Lee Anthony.

• George Anthony disposed of, or found someone to dispose of Caylee’s remains.

In my opinion, accusations made by the defense, not proven, in an attempt to establish reasonable doubt, were in themselves a criminal act. The court system exists to seek out and uncover the truth. I think the defense acted recklessly and should be held accountable.

Casey Anthony: American mother.

Innocent Until Proven Guilty. Important words. The media doesn’t uphold them. They are quick to judge long before any of the evidence is presented. As a society, I believe we are all so quick to judge, especially when any horrific crime is committed. We want immediate answers and don’t want to be left pondering an unsolved crime that leaves us feeling vulnerable. We want to feel safe. We want to be able to identify and lock up someone for a crime, allowing us to feel safe again.

Crimes Were Committed

No matter how you look at this case, or what scenario you believe, crimes were committed. Not just one, but many crimes were committed. A death, a cover up, evidence tampering, and perjury just to name a few. I’m unclear why the prosecution chose not to charge Casey Anthony with failure to report the disappearance and criminal neglect of a child. The evidence shows she is at the very least guilty of that.

Caylee Marie Anthony

No Justice for Caylee

Despite Jose Baez’s statement that there was justice for Caylee by the jury returning a not guilty verdict, “ Caylee would never have wanted to see her mother suffer this way” he told Barbara Walters, for ABC News. 

There has been no justice for Caylee. Her young life is over and no one is being held accountable.

People across American and the world are outraged over the verdict, angry with the jury and issuing death threats toward the jurors and Anthony family. Is this any way for a civilized society to react?

Porchlight Event honoring Caylee. 1.7 million people signed up in less than 12 hours. At the time of this publication, it stands at over 2.5 million participants.

Some people have united in several ways to channel their frustration and grief in a positive way. In the hours following the verdict, a Facebook event was created, Porchlights on for Caylee Marie Anthony, as a way for people around the world to honor Caylee’s memory. In less than 12 hours, nearly 1.7 million people had joined the event.

There are also several petitions available online to encourage state and federal legislation to be know as Caylee’s Law.

Final Thought

I think we will all find, as more and more of the main and fringe players in this drama speak publicly, there are so many pieces to this puzzle that may change many of our opinions and beliefs in this case. Casey Anthony faces years of civil suits based on her actions, which may prevent, or at least put a damper on her new celebrity and profiting from her daughter’s death. There is talk of prosecuting George and Cindy Anthony for perjury, and other charges have been discussed. Until the truth is revealed, there will never be justice for Caylee Marie.

If you want to explore this case further, ID Discovery has an excellent site devoted to facts, timelines and evidence at:

http://investigation.discovery.com/blogs/criminal-report/casey_anthony_full_coverage/caylee_anthony.html