Stephen Halasnik: What We Can Learn From For-Profits
Let’s not fawn over for-profit companies. Not everything they do carries over to our nonprofit community. But some things do. Like building systems and processes; diversifying revenue; knowing KPIs cold; relentless customer focus; and, more. Plus, let’s look at what nonprofits do better. Stephen Halasnik walks us through the best of both. He’s co-founder of Financing Solutions.
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Welcome to Tony Martignetti Nonprofit Radio, big nonprofit ideas for the other 95%. I’m your aptly named host and the podfather of your favorite hebdominal podcast. We have a listener of the week. Rusty stall in Beacon, New York. On LinkedIn, Rusty asked me for an old, very old show going back to 2010, the year we started the show. And we had some comments back and forth and uh in one of his comments, he said that he loves that I do nonprofit radio for the other 95%, and he had other all caps. Obviously avid listener, says the tagline of the show correctly in, in, in print. Uh, oh, and also that, uh, nonprofit radio had inspired his own podcast, Fund the People. So we have spinoffs, we’ve got, uh, uh, loyal listeners, and one of those loyal listeners is our listener of the week. Thank you very much, Rusty. I’m glad that the show really inspired you to launch your own podcast and, um, that I’m glad I helped you out some time ago. Our listener of the week, Rusty Stahl. Oh, I’m glad you’re with us. I’d get slapped with a diagnosis of broncho candidiasis. If I had to breathe in the idea that you missed this week’s show. Here’s our associate producer, Kate, with what’s going on. Hey, Rusty. And Tony. This week it’s what we can learn from for-profits. Let’s not fawn over for-profit companies. Not everything they do carries over to our nonprofit community, but some things do, like building systems and processes, diversifying revenue, knowing KPI’s cold, relentless customer focus, and more. Plus, let’s look at what nonprofits do better. Stephen Halaznik walks us through the best of both. He’s co-founder of Financing Solutions. On Tony’s take 2. Hails from the gym, the Halloween parade. Here is what we can learn from for-profits. It’s a pleasure to welcome Stephen Halaznik to nonprofit Radio. Steven is co-founder of Financing Solutions. The largest provider of lines of credit for small nonprofits. He has built 7 successful businesses over the past 30 years and 2 of the companies made the Inc 500 fastest growing list. The company is at financingutsnow.com. And Steven says he’s not very active on social media. Steven, welcome to nonprofit Radio. Tony, thank you for having me. I, I’m looking forward to this. Oh, thank you very much. Uh, you have some uh interesting ideas about what we, uh, on the nonprofit side can learn from our comrades over on the, on the for-profit, uh, business side. Um, but first I want to explore your, uh, your Jersey roots. It looks like you’re a New Jersey boy. I am. I, I live in, and I love saying it because, you know, the connotation for New Jersey is that it’s ugly and Uh, it’s, uh, anybody who’s been to a lot of New Jersey know, knows that’s not true. Uh, it’s, uh, I live in the lake and mountain region of New Jersey which people are always shocked to know that there’s a lake and mountain, there’s lakes and mountains and so it’s a beautiful area. I live about 50 minutes outside New York and I’ve traveled the world and I, I tell you, it’s, it’s the area I live is special and so I’m proud of it. Uh, wonderful. Uh, I, I saw your, your town, uh, we can shout the town, Boonton. That’s where my offices are, yes, and, and yeah, so I live 15 minutes away. I, it’s, uh, I, I think I’m living in a little more rural than Boutin, but Boughton is a, an interesting town. Mountains and lakes. It’s mountain lakes and yeah, and I saw that you, I saw that you went to Rutgers also. So between the two, I thought Jersey boy, yeah, I grew up in, uh, up in Bergen County in the northeast corner of the state in a little town called Old Japan. Oh sure, beautiful. I went to a 1776 house there. Oh yeah, the 76 house. Yeah, that, OK, you were, you were 5 minutes from my house. The 76 house. um, I used to go there with my parents. That’s in that’s actually in Japan, New York. That’s right, right, it’s right over the border. It’s, it’s a 5 minute drive. My parents used to go for Sunday brunch so often that I could tell you where the Eggs Benedict was located. And I had a funny Eggs Benedict because that’s where, uh, that’s where Benedict Arnold was put in prison. That’s right, yep, and then he was hanged up on, uh, on, uh, no, Colonel Andre, yeah, Andre. Uh, up on, uh, Andre Hill, they walked in from the courthouse at the 76 House to the hill, and there’s a monument there where he was hanged. Yep, yep. So it’s really old building. It’s beautiful. I had my rehearsal, my wedding rehearsal dinner there. So, oh, wonderful. Well, where did you get married then? Uh, well, uh, a chart house in, uh, on the Hudson, the one in Weehawken, yeah. OK, but you had the rehearsal, who was so close to, we were living in Nyack. Oh, Nyack, New York. OK, Rockland County. OK, you were living close to the 76 house. Yeah, yeah, um, yeah, I’ve been there probably dozens of times with my parents through the, through the years. It’s beautiful, it’s a cool place. Yeah, right, fantastic. So welcome. Uh, another another level, another level. We can we can share. All right. Um, So learning from, uh, for-profit businesses I’m all in favor of, um, I, I don’t get that many pitches like this, but, um, I, I like them when they come, so that’s, that’s what attracted me to your, uh, your pitch to, to come on the show. Um, why don’t you acquaint folks with, uh, since you do work for your company is around nonprofits, uh, acquaint us with uh financing solutions. So, uh, for the last 12 years we’ve been the largest provider of lines of credit to small nonprofits in the United States, um. Anybody who’s ever tried to get a line of credit from a uh commercial bank knows that it’s almost impossible. Um, typically a bank’s gonna want a personal guarantees, uh, they’re gonna want collateral. It’s a very laborious process and to be quite honest with you, banks don’t want to work with nonprofits. There’s too many, um, concerns they have in regards to if they have to declare the fault and the press, the PR behind it. So, especially for small nonprofits, um, so we, we are, uh, we, we, we have that niche for ourselves. We’re one of the only companies that really kind of does it. We are providing, uh, we use our own money. So that’s the reason why there’s no PGs personal guarantees, there’s no collateral. It’s the best way to use this product, uh, is, is you have uneven cash flow. And you know, if, if, if you know the money’s coming in. It’s a good, and what’s really interesting is we’re actually a little slow right now, uh, and you would think that would be the opposite and it tends, and the reason being is that nonprofits tend to be very responsible. And if they know that money’s not coming in, Then they tend to not go into debt. That’s very good to hear. I’m glad we’re, I’m glad we’re overall, we’re responsible. They are, yeah, but that’s why we do the line of credit for 2 weeks, 30 days or something, you know, that, that’s not the end of the world. That’s that’s, that’s the purpose of the, of the product, get you over a low cash flows period. Now, if you’re because you’re relying on your, I don’t know, is it like 90 days if you’re relying on your credit line too much, that’s a, that’s a bad sign. I, I think so. I think 90 days would be 90 days is a little much. I mean, we had certainly have clients that go way past that. I, I would tell you is that you should understand, and I’m not selling you on anything, you know, you, you know, it’s, we are, we’re 5 star rated, and the only reason I point at the statistic is whenever we, you know, I talk to clients all the time, they love that they. have this ability. I never had a client say, oh my God, it’s expensive, or, oh my God, I, I, you know, you know, I, I wish I didn’t have this. I have just the opposite, uh, I hear the just the opposite. Um, it’s really valuable. And, you know, if we’re gonna bring it into our discussion, for-profit businesses use lines of credit all of the time. So, it’s, it’s. A way for them to manage cash flow. And by the way, if you think you’re a nonprofit and you think that you’re unusual that you have ups and downs in cash flow, what you’re not. Everybody has ups and downs in cash flow. I’m a little, I’m a one person, uh, solo consultancy and I have a line of credit at my bank. Yeah, because there are months when, uh, someone pays slow or there’s nothing due or you gotta get by. Yes, all right. So, um, so your idea, your idea for coming on was, uh, things we can learn. On the nonprofit side, as I said, from, uh, from our, our friends over in for-profit, um, like strategies during tough times, what do you, what, what’s your advice there? Like this is, I guess these are things that you don’t see nonprofits doing that they ought to consider doing, is that, is that it? Well, yes, and so business wise, yes, and listen, other than building 7 companies over the last 30 years, I’ve been an entrepreneur my whole, uh, almost my whole career. Um, I also am lucky enough to work with executive directors all the time, so I, you know, I know what’s going on in nonprofits. I’ve also served on two boards. So I have a little insight as to both sides of the table. Now, uh, you know, Tony, you know, during this talk, I, I’d like you to really kind of give a little bit more insight as to, you know, I have 10 areas that I think uh uh really successful business owners do. Um, that, uh, that I’ll share with everybody, um, and then maybe, you know, because you know the nonprofits, uh, much better than I do, you can just give us your take on it and it kind of apply it even more. So, uh, you know, I, I’m happy to address the crisis. I just actually did a, uh, um, uh, uh, a white paper on what to do in a uh uh crisis as well. Um, and I’ll, I’ll give you, that’s, that wasn’t on my list, but I’ll, I’ll, I’ll give you my two cents and, you know, the idea behind a crisis is survival. It’s, I mean, that’s not a big deal. But you always wanna fight, be able to fight the next day, so you have to really buckle down, cut costs extremely fast, um, I think the worst is gonna come down the tubes and really reduce your cost structure as quickly as you can. I’ve been through 3 major recessions in the United States and all my companies that I had during that time. Um, you know, really had to survive and, and so I know what it’s like, and, uh, you know, it’s a little late now and if you haven’t done it, but you, you unfortunately you got to really cut costs and uh, you know, unfortunately 65% of all nonprofits costs go into often payroll so you uh unfortunately have to look very closely at that. So, so this is saying you you’re saying as the crisis emerges. Yeah, well, we’re in crisis mode right now, right? Yeah, well, yeah, uh, well, not as bad as 2008, 2009, or, or 9/11, not like, well, I’m talking about nonprofits if you’re, you know, the government funding, we saw a lot of our clients nonprofit, yes, you’re right by State Department. I mean, the 12 years I’ve been doing this, this is the worst time in nonprofit’s history in, in, uh, and during COVID, you know. The the donors stepped up and then all of the nonprofits got money that they weren’t expecting and people did a really nice job and now we’re seeing not over the government funding stopping, but, uh, also, uh, uh, we’re not seeing uh donors stepping in like they did in in COVID. Yeah, no, I understand. um, and a lot of that, you know, during COVID was. Uh, initially nonprofits were very reluctant to ask because they were afraid that, you know, everybody’s we’re all staring down our own mortality but we’re like, you know, at, at the early stages we didn’t know if a trip to the grocery store, you know, could, could end up uh getting, we, we get a disease and, and there’s no cure for it, there’s no, uh, vaccine for it yet. Like a trip to the grocery store could be deadly. So, so no profits backed off, but our, our advice, you know, the, the, the advice consistently was you still have needs and you have to share those needs, and people, people, yes, people have greater concerns about their own health and mortality and their families today than they did 3 months or maybe even just 3 weeks ago, depending on, you know, when we’re talking, but you still have, you still have needs and let your donors balance. Give them, give them the, give them credit for being able to balance their own now greater concerns and maybe needs with your still continuing ongoing, you know, your needs, but give the donors credit and, and I think that’s you don’t step up. I agree. I, and I said cut costs, but the second part of that is, but I think this is more obvious to people that you have to be putting everything you can into fundraising. Uh, you know, grants, uh, donors, uh, you know, you have to be putting a lot of that into, and that, that kind of moves us into like the 10 points that I thought I wanted to communicate today, um, to everybody about what really good people do who let me just add a little point to what you just said about not cutting fundraising, you know, that, that’s very shortsighted is when you know because that revenue fundraising is your revenue. All the, all the streams you just mentioned, uh, you know, that’s, that’s your income. And when you cut your income sources, then, then you, you may as well cut everything else. And the other thing you need to be, you need to be cautious about knee jerk reactions. I think, I think what happens you start to really be, uh, what’s really effective, what’s working, and you, you kind of zero in on those, uh, things and. Uh, uh, you know, one of the things that during recessions, uh, that I learned, uh, in this case of recessions we’re talking about for businesses and we’re gonna be going into a recession, if we’re not already, uh, and again, let’s be clear what a recession is. A recession is a negative GDP for two full quarters. That’s the consensus. So, uh, negative growth, so of the United States. And so, uh, do you foresee, you foresee a recession. We don’t don’t statistically have one no brainer. No, no, we can’t tell because statistics aren’t coming out. Yeah, we can’t do we know what the statistics are, but all right, assuming. Right, well, that, again, it’s gonna be 2, it’s gonna be 2 full quarters, so it’d be 6 months, you know, we’re, uh, we’re definitely in a, in a huge slowdown. But, uh, this is, I think this is something I’m about to say that’s very helpful. I think you want to look at your organization and, and I did this and say, where do I want to be in 3 years from now? And it, what it, you know, it, it allows you to have a sense, once you’re past that initial stage of, oh my God, I, you know, think once you are able to stabilize your nonprofit, and you can get to this next phase, the next phase is what do I want our organization to look like when this gets better? Cause it’s gonna get better. But, you know, whether it’s one year. 2 years, 3 years out, it by doing something like that, it galvanizes the purpose of your staff and you, and it gets you out of this negativity and more into a positive. And that really helped me through recessions, I know. OK. But, so like, let me read off the 10 things and, uh, and then we’re gonna then if we can, we circle back. I don’t know if we’re gonna get to all 10 of them. A good exe a good business owner, and I’m talking about for uh a business that’s between, uh, well, there’s two types, but Steven, just tick them off quickly. Don’t go into detail on any of them and then that’ll give us the most time to be able to go back. Go ahead, read them off. Works on their business and not in it. OK. Uh, they build systems. Uh, number 3 is to make sure 10% of their business doesn’t come from one client. They know their numbers cold. Uh, they are not overly optimistic and more, uh, and idealistic, they are, uh, realistic. They focus relentlessly on customers. Uh, they know exactly their perfect client. Uh, if we could translate to nonprofits, that would be their perfect donor. Uh, what that person would look like. They, uh, they, uh, they are business owners who are really good at what they do, communicate company culture, purpose, goals, and company direction, and they know them inside and out. And their staff knows them inside and out. And uh they keep learning constantly, and lastly, they manage their cash flow. So those are the, uh, the, the 10 I have, and I tried to rank them in order. Um, the first one, which was works on their business, not, is not in it, is what I often see with executive directors who are under, uh, the revenue is under 2 million like so to speak, in revenue a year that usually those executive directors are doing everything. And they’re they’re in the weeds, they’re in the weeds and not in the treetops, and you, you may not be able to get there, uh, so the, you know, the way that you do that is you, you, you either delegate to get out of the weeds, or you get to a point where you can hire a second in command. And that, you know, it may not happen to 2 million, but that’s the goal is for you to not be the, uh, the person who’s doing everything at the organization. You, and by the way, usually you know it because you’re burning out, which is very common. Yes, you’ll feel, you’re right, you’ll feel that. Um, I have a suggestion for transitioning from one state to the to the next one employee to the second or third to be where you can where you can hire a 2nd or 3rd, and that’s using. Consultants, freelancers, help you, help you build up some of your some of your capacity maybe in grants. So then you then you can hire a grants person full time because you can justify that or your individual fundraising, uh, maybe it’s, uh, events. I’m not, I’m not keen on events as primary fundraisers. Maybe I should like that that would be like a footnote, um. But, uh, you know, building up your sustainer base, building up your social media presence so that you have a funnel of folks that you take from, you know, the people who engage with you on Instagram and you try to, you move them, whoever’s willing, into donating or volunteering. Volunteering can also be a valuable transition method. So between those two consultants and, and using volunteers. Uh, those can sort of be a bridge to, you know, you as the sole employee to being able to expand the, the full-time employees. Yeah, and I, I’ll also add one to that too that I learned. I, I, when I was, I had one company when we were at 5 million, um, I, it wasn’t enough for me to hire a second in command. So I gave somebody on my team who I really liked a dual role. Not only did they do the job that they did, um, but then I asked them to take over as director of staff, and then I paid them an extra 5000 or $10,000 I forget what it was, um, to, because they took on some additional responsibilities and it allowed me to transition. So, uh, well, you know, if you’re talking about like in this same topic. Uh, working on the business, the executive director, or let’s just talk about the business owner, they really good business owners typically focus on one or two things that are the most important for the organization. In a business, it’s about revenue. It’s about how can I drive revenue. And that’s where they spend their time and I think it should be similar in the executive director for a nonprofit where they’re really, you know, 95% of their time should be in regards to driving revenue. Unfortunately, what happens is the the smaller the nonprofit, often time the more the executive director is much more comfortable working in the, the, you know, the, the other side, which is how can I help. The people in the cause, you know, my cause and you know it’s the operation side of it, yeah, right, let’s go to number 2. I want, I would like to get some detail on each of the 10. So let’s, let’s go to your second. They build systems, so they, they make sure they have processes and procedures in place. They make sure their employees follow those processes and procedures. They use technology really, really well, um, to make everybody productive, but they don’t, you know, they, they build processes so that think of it this way, if one of your key people were to leave and you have to have somebody else come in and fill that spot. Would they be able to get up to speed super quickly? And um and there’s a, there’s a, there’s a reason for processes are so important is because it builds a standard in your organization about how things are gonna get done. In essence, they replicate the way you would do things, um, and you’re, you know, now you’re, you’re documenting it and you’re making sure this is the key, you got to follow up to make sure people are following the processes. What’s your third? Uh, make sure this is a big one. Make sure 10% of your business doesn’t come from any one client. So often what we see at financing solutions, in fact, this is one reason why we will not fund somebody, uh, uh, is because if there are a large percentage of the business only comes from one or two, either people or grants. Um, so if you, you know, in a. I, I don’t know what the magic number is for a nonprofit, but in a business, if more than 10% of your business comes from one area, then that’s not a good sign. When you say one area, you mean one client, one client, not, not one industry or market or something like that. OK, alright, so yeah, um, I mean, look, you know, our listeners are small and mid-size nonprofits and it’s, it’s very possible that. More than 10% of fundraising revenue could be coming from either one person or one foundation or one government agency. It’s a big red flag if that’s the case. I mean, yeah, I mean I’ve heard of like substantial amounts of revenue coming from. Well, maybe it’s not a single government agency if it’s different government agencies, then that’s a little different. Um, OK, but if it’s a single agency, just to be clear, this happens, uh, so many small business owners who are not, you know, you know, are not that experienced, uh, or not very good at what they do, they get like it happens all the time. They’ll get 90% of their clients from one, a 90% of their business from one client. That’s a big problem. If you then the reason being, of course, the most obvious if you lose that client, you’re really in trouble. So Decentralized, like, you know, revenue, revenue sources need to be decentralized. Um, look, you know, in your first year or something, you know, if, if you, if you’re successful, I mean, a foundation grant, well, it could be, uh, it could be a foundation that funds start up, you know, like they’ll fund you for the 1st 2 or 3 years, and then after that, you know, they’ll wean you off or they’ll just cut you off. You need to be self-sustaining. So look, in your first year, you can take what you can get. If that’s a foundation or a large donor or I mean, look, it could be even the funder, and it could be the founder funding it him or herself, obviously that’s an exception, but you need to get off that, you know, you, you. It is, it is dangerous. It, it’s, I mean, think about, think about it like if you’re $3 million of revenue and you know you go to bed at night just hoping that your biggest donor doesn’t, $300,000 or more, a million dollars doesn’t just go 1/6 of your revenue doesn’t go out because the donor had a bad year, had a fire in their home, you know, whatever. All right, enough said. It’s time for Tony’s take too. Thank you, Kate. I know tails from the gym. The on Halloween week. The there was a little uh a preschool parade right through our community gym, because the preschool is just across the hall from the gym in the community center. So the kids came through, uh, interrupted my elliptical workout. I, I mean, how can I keep running on the elliptical when the kids are going by. I had to stop. I had to give them their due. So otherwise I would be an old crotchety, you know, so and so, so no, of course, everybody stopped in the gym. There was like, I guess it was about half a dozen of us in the gym. We all clapped. Little preschoolers went by. There were two Supermans. There was a princess Arielle, uh, a cowboy, and a cookie monster, and the there was a girl who was the cookie monster. So it was all very cute, of course, they just, they just marched through with their little preschool, well, not the adults aren’t little, with the preschool leader and, and then there, there was a a woman following. Uh, and they did a little parade just through the gym. And it was adorable, so. Great, uh, uh, a fun, you know, every, every tale from the gym is not a crotchety curmudgeonly, you know, why is somebody doing this to me type, right? Of course not. Halloween parade, it was great fun. Loved it, very adorable. And that is Tony’s stick too. Kate. Sounding like the Scrooge of Halloween over here. Well, yeah, I mean, they, they came through, they’re parading through the gym. I’m busy, I, I have things to do. I, I, I don’t have time for parades, especially, you know, impromptu, unplanned, um, you know, I’m on the elliptical here. Come on people, please. No, it was, it was fun. It, it was, it was fun to see the, of course, see the little preschoolers walk through. It was very adorable. We’ve got Bou but loads more time. Here’s the rest of what we can learn from for-profits with Steven Halaznik. The next one is, uh, they know the numbers cold. They, they know the key performance indicators KPIs. They’re the things that really matter to their organization. They know them off the top of their heads all the time. So these, you know, what are, what are some key KPIs? Well, for, well, for a for-profit business, uh, uh, number one would be profit. Well, well, let’s do the nonprofit. Can we do the nonprofit side, or you can help me with it, but I would say revenue, profits are revenue, revenue of all sources. Yes, revenue of all sources. I earn income as well as fundraising. Number 2 would be, um, I, I think. would be, uh, uh, where your costs all are, what the percentage of your costs, costs are, where they come from. So what percentage of your, uh, are you paying in salary and versus revenue? Um, what, what, um, let’s say, uh, uh, you know, some of you maybe the three biggest areas of cost in your organization, I think it would be really, really important. Um, what, what else would you think, Tony? Um, cash on hand, cash on hand. Oh, definitely, yeah, OK, how many, how many months of cash should we have? I, you know, I Yeah, I, I don’t know. I, you know, they say, uh, for an individual, they all say, oh, come on, you started 7 businesses and 2 of them were on the Inc 500 fastest. You must, what did you look for? I always had a line of credit. Oh, so you, yeah, I always had a line of credit, you know, this is, but the one area that you should know that that nonprofits blow away businesses, for-profit businesses that is budgeting. And forecasting. Yeah, you have some you have some things where nonprofits do better. They do. I was gonna get to those after we did 5, then I’m gonna get to get to the nonprofits do this, but this is more about that. Yeah, well, they just nonprofits are fantastic at budgeting and forecasting and, and, and also making and following up on it. I don’t know, listen, you understand, I know. 3300, 400, 500 business owners because I’m constantly involved in that circle. And I don’t know, I literally do not know one business owner, right? And this is from businesses from 1 million in revenue to 20 million revenue that budget and forecast. I don’t, I just don’t know anybody like that. I’ve never done it. And I don’t know any other business owners who do it, but all the clients that we talked to with, they all budget really, really well, and that’s a, that’s a positive. OK, all right, um, all right, so know your numbers. So, all right, so we talked about, uh, oh, so you asked me then, OK, so cash on hand. Um, Not sure. I mean, You know, you might have, you might have, uh, well, especially in the 4th quarter, you might have weekly production goals. You probably have at least biweekly production goals in the 4th quarter, if not weekly production goals. So you’re, so you’re, you’re paying attention to those, um, I’d I’d like to know. Yeah, away from the money side, but meaningful contacts, how, how many meaningful contacts are is your individual fundraiser or are your individual fundraisers? Having in uh I guess over a month, meaningful contacts. I mean, a meaningful contact could be, could be just left a phone message. I mean that can be a meaningful contact, not, you know, not call me back, that’s not meaningful, but happy birthday, left a phone message, happy birthday, happy anniversary. It’s the anniversary of your very first gift to us. That’s always a very meaningful one. Remembering people’s donor anniversaries you gave to you gave your first gift to us eight years ago today. Nobody, nobody tracks that no individual tracks that fundraisers who track that so fundraisers who track that you can really touch your donors. So I’d say meaningful contacts, uh, from your individual fundraisers that, that, that’s another, that’s a metric I’m interested in. Yeah, and so, uh, what my suggestion to everybody who, who’s listening is, um, is you should have an Excel spreadsheet and on Excel shell shells uh spreadsheet, yeah, you should have, yeah, you should have your KPIs that you care the most uh uh about. Uh, I, I would tell you not to overdo it. Um, and I have a reminder on your calendar or if you do have an, uh, someone who’s working internally as an accountant or something like that. Um, a bookkeeper, give that to them and say, I want this every single month, or you do it every single month, you know, yourself. And every single month, you, you, you update that calendar, I’m sorry, that spreadsheet so that you know your numbers and also so you can see trends, and I, I would tell you it’s very helpful to be able to look back eventually at 2 years ago, 3 years ago, 5 years ago to see where your numbers trended. Um, and so that’s my suggestion. OK, do one more and then we’ll go back over to the what nonprofits do better side. Yeah, um, 5, you’re on your number 5 now. We’re on number 5. So, uh, this is one I got from my business. I have a business partner and, uh, he, he works more on the, uh, operation side, so he’s dealing with a much more documentation regards to, uh, to, um, nonprofits and also talks to executive directors, uh, even more than I do. And he’s the one who gave me this and he said executive directors are too optimistic and idealistic, um, and, you know, when it comes to, uh, uh, so that’s what the, you know, that’s one that he kind of wanted to put that down over optimistic and over idealistic, yes. OK, um, can you, can you channel your, your, uh, your co-founder and say a little more about, I mean, what would be generally an upbeat class of people, I think. Well, I think that’s, I think, uh, he, he said overly. So, uh, it’s, I think more experienced business owners know, um, to not grow too fast until they have their model down. And they, they, they, they really minimize making mistakes, uh, when they’re too small. The whole idea is to build a build a runway. It typically, uh, as a small business owner, you, you, it takes you 3 to 5 years to really understand your, your business and the marketplace you’re in. And, um, you want to be able to, uh, uh, I used to have a great business, uh, mentor. I had him for 25 years, and he said, the longer you stay in business, the more chances is that you’re going to figure everything out. And so that, that is kind of what your goal should be to, to grow, um, uh, not too fast until you really figure out, you really have your model down. Let’s move over to the uh nonprofits do it better side. So budgeting, we’re OK, tick off what else, what else, one other that we do better? Nonprofits have a built-in purpose that really galvanizes the team, the mission, the mission, and really, uh, for profits have to, uh, they all and good ones, really good ones. Um, uh, have to uh work on understanding what their true mission is, so that, uh, and, and make sure that they have buy-in from the people who work for them. Um, and that’s, that’s not, uh, really good experienced business owners know how to know what their culture is, know what their mission is, uh, know what their goals are. Um, but it’s, it’s it from what I’ve seen is nonprofits have it, uh, the, the purpose built in and that really allows you to have a energy in the Nonprofit with your employees, um, that is, is hard to duplicate. So over on the business side, you all or some folks need to be more, you know, I mean, this is, you’re talking about essentially like culture and that that’s gonna start from the top. That that the the CEO of the business is clear about the values, the, the culture, the, the, the just the overall the, the spirit of the organization, what you know, I, I hope that it’s more than just profit. It’s maximizing we’ve got maximize profit. That’s that’s such a shall I don’t know, but you know I work on the nonprofit side, but to me it’s such a shallow. Uh, pursuit, I itemize profit. That’s why we’re here to maximize profit. That I don’t, I don’t know any good business owners who, I don’t know any business business owners who do that. I don’t know one, not one. They are all, they’re, you know, I listen, going on this podcast talking about, you know, for-profits versus nonprofits, it’s, it’s, it’s a little scary for me because. Yeah, because it’s a safe space, it’s a safe space here. Yeah. And that’s why I’m asking you for advice, but um nonprofit, people who are in a nonprofit sector, often are don’t look favorably upon for-profit businesses. But when you’re in a for-profit business, uh, and I like the the hardest decision. I think people are gonna be surprised to hear this. The hardest decision that a business owner has to make is to lay off people. It’s the hardest decision that you make. And I think most people who are not in a for-profit business are surprised to hear that. Um, I know that that gives, uh, all the people I know angst when that’s something like that has to happen. Um, so, you know, the. Uh, for-profit businesses, uh, want to have a purpose, um, uh, and, and a mission and, and a culture, and really good executive director, I’m sorry, really good business owners. Get to that really, really early. And the reason why I put this down is that I’m a big believer in building culture, purpose, mission, and goals really, really, really early. I, I actually did that before I started the companies, you know, so. Let’s go back to your number 6 because I really, I don’t want to shortchange nonprofit radio listeners. So you’re number 6 for what we can learn better. Now, I, I wanna relate it back to nonprofits after I say this, but, uh, really, really good companies focus relentlessly on customers. And, um, and I think when you look at customers for nonprofits, um, I think the area is, uh, your customer, you, you have two. You have your cause, uh, the people that, you know, I mean let’s use the word your clients who are you’re doing your services for maybe and you know that everybody’s different, but, uh, but I, you know, you’re in, and the other side is your donors, you know, focusing relentlessly. On the donors who are donating money to, to your cause. And, uh, and that’s what I, uh, that’s what for-profit businesses do really well. And it’s something for you to consider if you’re running a nonprofit. And the only thing I would add is uh volunteers. Yeah, you’re right. The people who are benefiting the people who are doing, getting the benefit of your work or the animals or, you know, relentless focus on them, also they’re donors and, and I would add volunteers. I agree, agreed. Next one, number 7 is, uh, knowing exactly their perfect clients. That’s what for-profits do really well. And the reason for this is, uh, uh, in a for-profit business, you, this is for marketing, so that you know where to put the money and where you want to put your effort into getting clients that really can use your services. And if you translated this to a nonprofit, I think where this could be used is, do you know what your perfect donor looks like, or your, or your volunteer looks like? Do you know where to find them? Do you know how much money it costs you to get them? Yeah, um, do you, like, why, you know, you’re perfect client. And I, the way you analyze this is you look at the people who are giving you money now. And you say, hey, you know, how did they find us? and what do they care about and what resonates with them and why did they give to us? And uh where they, where else do they hang out? You know, it’s the client model, and that allows you to focus your energy very efficiently and effectively because if you don’t have a lead generation system to get donors or clients to you, Then, um, then you, you’re really spinning your wheels a lot. Uh, uh, on the business side is because your, your ideal client profile, is that something I ICP or do I have a right, is that acronym I your ICP? OK, OK. I’m surprised. I’m surprised I got the right. OK. I that’s by the way, that’s like. The end of the business that I’m really good at. I spent a lot of time, I spent 95% of my my time in the understanding of that and where do we find our clients. I don’t go out and do it. I just, uh, work on the model of that to really understand it. What’s your number 8? Uh, experienced owners for businesses know, know, uh, they, they, we talked about it already, but they communicate company culture, purpose, goals and company direction. And they, they really stay laser focused on those, and they’re always talking about it, and they’re always making sure that it’s, that the company is doing it, and that their staff knows what the company culture, purpose goals and and company direction is. So what I used to do, uh, uh, you know, what I do with my company and uh ones in the past, is whenever we have a meeting, I make sure I review those things and I ask the staff, are we living up to this? You know, and uh and and really, really good business owners make sure they they they they stay true to that. You do that in every single meeting? Uh, I do it, uh, in every, every monthly meeting that we have as a team. That’s correct. OK. People don’t roll their eyes. No, because if you get, here he goes again with the culture again. I gotta hear this. Well, I, I’ll tell you if someone like, uh, if, if I, I would be paying attention to that, but I, I wouldn’t be, I, when I go into meetings, I don’t lecture. I, I ask questions. I think as long as it’s being lived, then it’s, it’s not eye rolling. I mean, as long as they’re witnessing it in between the monthly meetings, they’re seeing the company live up to it. In just day to day, you know, just day to day decision making, then, then it, then it’s true that the company is in fact grounded in, in these values in this direction and these goals, right? I mean it has to be lived in between the meetings. Yeah, I mean, it’s all you need to say is, you know, this is our company culture, our purpose, our goals, and, well, don’t go over goals yet, but that’s too big a deal. But here’s our company culture our purpose and our direction, um, is over the last 30 days, did you say, did you see any instances where we didn’t live up to what we’re trying to do? You know, that’s, that, that doesn’t dictate that asks. And, um, I, I’m not an intimidating person. I mean, my, my, the, the people who have worked, uh, with me, they, uh, feel like they’re part of the company, uh, that it’s not my company, that they’re a part of it. Um, so yeah, I’m a big believer in buying and the only way I’m gonna get buy in is if they really believe in this stuff. Right, right, that, that’s essential, that, that’s essential culture and they’ll be again, you know, they’ll believe in it if they see it in practice. What’s your number 9? Uh, uh, really, uh, good business owners are continuously learning. They’re just constantly learning. And you know, this goes back to, um, and I think they’re not just learning as a company, I’m sorry, they’re not just learning as a person, but they’re helping, they’re helping people, um, in their company learn, um, they create a learning atmosphere. Um, and it’s constantly, you know, how can we be better at what we do, um, how can we better, how can we be better for our customers, um, you know, it’s, and, and the business owner is always reading, learning, asking questions, really, really gives the best business owners that I know. In fact, I just spoke to one of, 11 of my friends who’s a fantastic business owner. And he, uh, he, uh, he’s just such a, um, uh, he just is always, uh, a benchmarking, uh, you know, learning from other companies, even in his own sector. So I think in nonprofits is, you know, I, I, you, you know, one of the things you, how you can translate this is also, you know, do you have a, a group of people. People that are, uh, other nonprofit executive directors that you talk to, uh, that’s very valuable, right? Having a peer group, definitely, because, because when you’re in the leadership, it, it, it can be lonely at the top, uh, people have agendas, you’re not sure who to who to trust 100%, you know, so having someone who’s objective about your business and nonprofits are a business, they just, they just happen to be incorporated as a not for profit corporation, but it’s. They should, I always say they should be run as businesses. Someone who’s objective about your business, who doesn’t have a stake in the outcome or your decision. Can be a very valuable, right, peer supporter, mentor, call them whatever you like, friend, friends are good. We like having friends, you know, friends we can bounce things off. So yeah, what’s different with this, what’s different with this guy I talked to yesterday, he was, he’s Dwight, is he, uh, he and I actually had a had a company, uh, uh, he had his own, I had mine that we were both competitors. And that’s, you know, most people think, oh, well, if you’re competitors, you don’t talk. Well, Dwight and I talked all the time. And, you know, his, his company was at the time was $90 million my company was $11 million. We were in a $13 billion dollar industry, so we were both small potatoes, and we both knew that it didn’t matter. We weren’t gonna cannibalize each other’s business. We were gonna help each other’s business. So look at it that way. Your final, final one is, is, uh, it is self-serving, but uh I wanna leave I wanna leave a little time to go back to nonprofits do it better side so. Don’t, don’t, don’t go too long on number 10 because I wanna, I wanna end with, and with that. Go ahead. What’s your number 10? Um, they just, uh, they have a plan to manage cash flow, um, and that is right, you know, there’s gonna be ups and downs and either, you know, they have a certain amount of money that they figured they put aside. again, you got, uh, uh, nonprofits are better at budgeting, um, you know, or you have a donor who, who will always step up to help you when things are, uh, when, uh. When your cash flow is down or you have a line of credit in place, or, but you have a plan. You have a plan, uh, uh, that, that, that handles when there’s ups and downs, uh, in cash flow. You mentioned something about donors having trusted close donors they might be board members, maybe they’re not board members, but trusted donors who you know you can go to when there is a crisis, uh, you know, they’re investors, they love your work, they know your outcomes, they respect the CEO. You don’t come to them on a knee jerk, but you know we something happened, uh, you maybe had a catastrophe of, of whatever sort imaginable, and these are the folks you can go to and say, you know, can you help, can you step up, help us in this help us in this crisis moment? Yeah, the problem that I’ve seen is that, um, that sometimes OK once, maybe twice. But when you have to go back to that person over and over again, yeah, well, that’s then that’s kind of becoming the knee jerk, right? It’s a little embarrassing. That’s like, yeah, that’s like having your relying on your line of credit for, for 6 months. Uh, yeah, no, it, it is right, then they’re gonna start to question the leadership. Like why do you have so many crises? OK. Let’s go back to the nonprofit to do a better side and wrap up, give us a, give us a third one that uh you all on the commercial corporate, well, we’re all corporations. You all over on the for-profit side can learn from us. Uh, Yeah, you don’t have a 3rd 1, do you? I really don’t have a 3rd 1. Yeah, yeah, I, I would be, I’d be like shooting in the dark, I think, you know, I, I, you know, I think, I think employees want to stay with your organization longer, you know, they, they care more, so they tend to be happy, but, you know, the problem actually I just wrote a paper about this today, which was, um, about, uh. Your, your staff needs still to be fairly compensated fairly as well. And a lot of nonprofits think, well, the, you know, you’re here for the cause and I don’t need to pay you as much. Yeah, that’s bad. Yeah, yeah, it’s not really great. What about something around passion. I, I mean, I’m sure business people are passionate, but keeping the passion, it’s related to what you said, mission, you know, mission alignment, keeping that passion burning. In, you know, uh, I, I use animals as uh as an example a lot. I’m not sure why, but let’s. Clean water, clean water. You know, just reminding folks every day, every day, not literally, reminding folks routinely that we’re here for, we’re here for drinking water for children, for, for, for the infirm for, for those of us who are healthy every day, we all need clean water and you know, and sort of keeping that passion alive. I don’t know. You’re, you’re on the business side. I’m not sure. I, I, I, I maybe I’m stereotyping business people, but I, I wonder if the, if the, the, the early on passion, does it stay? Does it stay 5, 10 years, the passion for, for, for why you built that business because that’s what I’m advocating, keeping that passion burning in yourself. and, and on your team. I, I, so I, I’ll answer it indirectly and I think that the burnout at nonprofits for executive directors is much, is, is significantly higher than it is for uh business owners of businesses. So it’s interesting you should say that because the built-in purpose, you would think would lend itself to not burning out as much, but maybe it’s because the nonprofits have to fight so hard. Um, to get funding and it’s such a, it’s such a much more difficult, I think, um, uh, uh, issue than it is for a for-profit business, uh, to succeed. Um, I, I don’t know statistically if nonprofits fail higher than non than for-profit businesses, but the burnout syndrome in a nonprofit is much higher and I I, you know, I often say, um, remember that this is a marathon and not a sprint, and you need to be, you, uh, you know, nonprofit owners and business owners need to remember that, um, you need to take care of yourself first because you’re no good to your employees, you’re no good to your customers, you’re no good to your cause if you’re burnt out. Perfect. Self-care, absolutely. Leave it there, that comes first. That should have been your number one. Steven, Steven Halasnik. You’ll find the company at financingutsow.com. Thanks very much, my fellow, uh, my fellow Jersey boy, thank you very much for sharing. Thanks for having me. It was fun. I’m glad. Next week, another conversation with Art Taylor, the CEO of AFP. If you missed any part of this week’s show, I beseech you. Find it at Tony Martignetti.com. Our creative producer is Claire Meyerhoff. I’m your associate producer Kate Martignetti. The show’s social media is by Susan Chavez. Mark Silverman is our web guy, and this music is by Scott Stein. Thank you for that affirmation, Scotty. Be with us next week for nonprofit Radio, big nonprofit ideas for the other 95%. Go out and be great.
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