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Creating SustainabilityThe Science and Myths of Building
High Performance Non-Profits
E. Ted Fujimoto, PresidentLandmark Consulting Group, Inc.
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Your Mission
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“Sustainability”
Your Core Operations
Earned Revenues
Philanthropic Funding
Your Mission
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“Sustainability”
Opportunities
Scaling
CoreOperations
RisksPhilanthropic
Funding
Earned Revenue
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“Sustainability”
• Enough capital ($) generated from earned revenue to:– Pay for core operations to fulfill mission– Surplus to pay for scaling, risks/mistakes, as well
as new opportunities
• Dependency on philanthropic funding only for:– Scaling, Risk Mitigation, and New Opportunities
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“Sustainability-Principle”
• Sustainability is about creating more “perceived” value by customers than the cost to operate that activity and business.
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“Five Sustainability Killers”
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Meet Mark• Real estate agent• Mortgage Broker• Organize your move• Interior Designer • Home Insurance• Life/Health Insurance• Financial Advisor, Securities Broker • Tax Preparer• House cleaning• Yard Service• Pest Control• Auto mechanic• Windshield repair• Kids tutoring
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MYTH – To be a great Association, we must solve as many member needs as possible.
To be a great Non-Profit, we must solve as many constituents needs as possible.
To be a great CMO, we must solve as many of our school site needs as possible.
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“Hedgehog Concept”
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Association
Advocacy
Events
Services
Products
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Radical IdeaCase Study
State A Association State B Association
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How to
Core Operations:Membership
Products & ServicesEvents
Marketing & SalesFinance
HR
BoardState B-Member
CouncilState A-Member
Council
State B AdvocacyState A Advocacy
State B – Unique Services/Support
State A – Unique Services/Support
CEOCEO
State BED
State BED
State AED
State AED VP/COOVP/COO
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CMO
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MYTH – The association will be a near-automatic first choice by members for solutions .
MYTH – The non-profit/CMO will be a near-automatic first choice to receive help for customers/schools.
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“Survey Myth”
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“The Perfect Fit”
Marketa
bility
Significan
tValue
Profitability
Do charters perceive a huge need and want to buy a solution?
Does the business model support creating short-term and long-term profit?
Does the solution save charters significant costs and/or create huge additional value?
What we can be deeply passionate about?
What we can be the best in the world at?
Passion
Exp
ertise
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“How To Get Real Market Input
Be Humble
Your best ideas
• Talk to 50 customers• Open conversation of biggest issues they feel like they need help with• Association won’t be able to solve all their issues• Which issues do they think the Association is or can be capable of providing the most value• One on one, small groups
• Validate needs and perceived value with broader customers• Larger groups, survey
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Value Principle
• Perceived value is what counts• Too expensive to change perceived value• Customer does NOT have to purchase with the
“right motives” to receive benefits/value• Your offering does NOT need to be a complete
solution to be the right product• Thirst/Desire/Comfort is why people buy from
one versus another
Customer Perceived Needs
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Product MixEntry
Entry
Mid-Level/Partial
Solutions
Mid-Level/Partial
Solutions
Big CompleteSolutions
EntryEntry
Mid-Level/Partial
Solutions
Big CompleteSolutions
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“Myth of Earned Revenue”
$1M additional expense to generate $1.4M in earned revenue (71% profit margin)Core Operating
Base Line
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“Myth of Earned Revenue”
MYTH – More earned revenue = less philanthropic funding needed
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Activity• More perceived value than actual cost• Generates more cash than it costs• Generates margin – for risks, growth, and opportunities
ActivityActivityActivity
Earned Revenue Principle
Examples:• Services – 2-3x times cost = minimum 30% margin• Products – higher volume = 5-10% margin
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Cash Flow – Generating more cash inflow than outflow
Biggest enemy of cash flow is TIMING!
Q1$100K
Expense
Q2$100K
Expense
Q3$100K
Expense
Q4$100K
Expense
Q1$200K
Expense
Q2$300K
Expense
Q3$400K
Expense
Q1$0K
Revenue
Q2$0K
Revenue
Q3$100K
Revenue
Q4$200K
Revenue
Q1$400K
Revenue
Q2$600K
Revenue
Q3$800K
Revenue
$ (100K)Period
$ (100K)Cumulative
$ (100K) $ 0$ 0 $ 100K $ 200K
$ (200K) $ (200K)$ (200K) $ (100K) $ 100K$ 100K
$ 300K $ 400K
$ 400K$ 400K $ 800K$ 800K
Year 1 Year 2
Planned Launch Profitable Cash Positive
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Cash Flow – Generating more cash inflow than outflow
Biggest enemy of cash flow is TIMING!
Q1$100K
Expense
Q2$100K
Expense
Q3$100K
Expense
Q4$100K
Expense$100K
Expense$200K
Expense$300K
Expense
Q1$0K
Revenue
Q2$0K
Revenue$100K
Revenue$200K
Revenue$400K
Revenue$600K
Revenue
$ (100K)Period
$ (100K)Cumulative
$ (100K) $ 0$ 0 $ 100K $ 200K
$ (200K) $ (200K)$ (300K) $ (100K)
$ 300K
$ 400K$ 400K
Year 1 Year 2
Planned Launch Profitable Cash Positive
$ 100K$ 100K
$ (100K)
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Cash Flow – Generating more cash inflow than outflow
Biggest enemy of cash flow is TIMING!
Q1$100K
Expense
Q2$100K
Expense
Q3$100K
Expense
Q4$100K
Expense$100K
Expense$200K
Expense$300K
Expense
Q1$0K
Revenue
Q2$0K
Revenue$100K
Revenue$200K
Revenue$400K
Revenue$600K
Revenue
$ (100K)Period
$ (100K)Cumulative
$ (100K) $ (100K) $ 0$ 0 $ 50K
$ (200K) $ (400K)$ (300K) $ (400K)
$ 200K
$ (150K)
Year 1 Year 2
Planned Launch Profitable
$ (350K)
$ (100K)
$400KExpense
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TeamTeam
AdvocacyBusiness
EventBusiness
ProcurementBusiness
ConsultingBusiness
EtcBusiness
TeamTeamTeamTeam
AdvocacyBusiness
EventBusiness
ProcurementBusiness
ConsultingBusiness
EtcBusiness
•Timing•Commitments•Volume•Skill/Exprience•Staffing•Rhythm
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TeamTeam
AdvocacyBusiness
EventBusiness
ProcurementBusiness
ConsultingBusiness
EtcBusiness
TeamTeamTeamTeam
AdvocacyBusiness
EventBusiness
ProcurementBusiness
ConsultingBusiness
School daily operations Business
•Timing•Commitments•Volume•Skill/Exprience•Staffing•Rhythm
CMO
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MYTH – Having smart/experienced people is enough to launch/operate multiple businesses.
Business Team
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“In Action”
Organization Focus
Business TeamTeamTeamBusiness
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“Using Small Teams”Each Business TeamTeam
Team Leader (Owner – Accountable – Authority)
Team Members – Resource Pool
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“No Silos”
Business/Team
Business/Team
Deliberate and StructuredRelationships, Cooperation, Collaboration
DependableSpecific DeliverablesTimelinesQuality Levels
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Governance
Business
Business
Business
Board of Directors
Board of Directors
Advisory BoardAssociation
Association
Contracts
InternalStaff
A
B
C
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MYTH – Build it and they will come!
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“Know your customer”
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•Know how many have need•Create 100% awareness•7 multi-mode communication hits•Communicate value /benefits•Stay on message/Keep it simple•Create predictable rhythm•Use entry and up-sell opportunities•Build trust/credibility•Don’t wait for perfection
How to
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“Generate Results”
50% qualified lead rate25-50% close rate
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“Five Sustainability Strategies”
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More than SustainabilityIncreased Capacity, Scale, Growth!
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Discussion/Q&A
E. Ted Fujimoto, PresidentLandmark Consulting Group, Inc.
www.ConsultLandmark.org
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CharterConnectState
Association
-Advocacy- Events- P&S offerings- Visits/Meetings
Charter School Leaders
100% Immediate AwarenessRapid, Personal, and Informed Communications to all your members
Hi Joe, this is Gwen from the association…how are you? George
wanted me to give you a quick call to let you know the bill AB 231 actually passed…this means $100 more per student next year…how do you like
that?We thought you would love to know because I know you had helped us with your letter to Senator Brown.
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Thank you!!!
E. Ted Fujimoto, PresidentLandmark Consulting Group, Inc.
www.ConsultLandmark.org