How a lean cost structure can improve financial sustainability

Like most commercial organizations, non-profit organizations and social enterprises should strive to keep their fixed costs as lean as possible. Those that do this properly will be more likely to survive financial shocks and stresses, and create dynamic and sustainable organizations.

While many of these organizations have already achieved this state, this article targets those social entrepreneurs who believe their organizations have become too expensive to maintain on an ongoing basis, or are about to enter a risky and uncertain financial territory.

This article shares some important lessons I’ve learned through assisting these organizations to develop budgets, build financial models and review their financial structure.

Thinking about income generation and profit in a non-profit world

Non-profit organizations and social enterprises that wish to design sustainability strategies need to have clarity around the concepts of income generation and profit, and how to achieve them.

This article aims to debunk some misconceptions around income generation, equity investments, loan finance, and the profits or surpluses that these organizations may generate or receive.

It explains that income and profit emerges from how an organization transacts with its customers. This approach will require organizations to learn new skills, practice new habits and adopt a different mindset. Although embarking on this process may feel intimidating at first, the benefits of being in a stronger strategic and financial position should make it worthwhile.

Cultivating strategic clarity.

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