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The 7 Steps to a Successful Not-For-Profit Version 1.0.

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Presentation on theme: "The 7 Steps to a Successful Not-For-Profit Version 1.0."— Presentation transcript:

1 The 7 Steps to a Successful Not-For-Profit Version 1.0

2 2 7 common reasons for Business Success Have a plan, not just a vision Monitor your financial position Manage cash Flow Understand the relationship between price, volume and cost Manage growth Borrow properly Plan for transition version 1.0 7 Steps to a Successful NFP Have a plan, not just a vision Monitor your financial position Manage cash Flow Understand the relationship between price, volume and cost Manage growth Borrow properly Plan for transition Workbook: Page 4

3 version 1.0 3 1.Have a plan, not just a vision. 7 Steps to a Successful NFP “Fail to plan, Plan to fail”. Workbook: Page 5

4 Purpose Product PeoplePlacePricePromotion Performance The 7 P’s of Planning Workbook: Page 5

5 version 1.0 5 Mary & Friends Soup Kitchen Mary & Friends Soup Kitchen Ltd was formed in 2005 with the sole purpose of helping those less fortunate with the basic necessities of food and drink. As the result of a natural disaster a number of years back, Mary and two of her friends experienced the hardships and challenges of being temporarily homeless. Mary and her friends saw the creation of the Soup Kitchen as a way of giving back to the community that had helped them, all those years ago. With a common passion for cooking for family and friends they first began operating one night a month using the local community hall’s kitchen facilities. Over the years the organisation has certainly grown. Whilst serving the majority of their meals in the local community hall, there was an opportunity 2 years ago to purchase a soup van that now allows the organisation to set up mobile soup kitchens in other areas. As more and more people started to make use of the service they began to see the need to make the service more available, more often. As a result by the end of the 2nd year they had 6 volunteers helping to provide meals every second Friday at the local community hall. This has now grown to 30 volunteers and 3 remunerated positions (CEO and 2 paid supervisors) and the organisation now serves over 2,500 meals per year. A number of strong relationships have been built over the years with local food retailers and restaurants who are encouraged to donate surplus food, rather than throw it out. Activity: Review the business plan over the next few pages and provide Mary and the organisation with some thoughts on what has been done well and where the plan could be improved. Workbook: Page 6

6 version 1.0 6 Mary & Friends Soup Kitchen

7 version 1.0 7 Action Plan Workbook: Page 9

8 version 1.0 8 1.Have a plan, not just a vision. 2.Monitor financial position. 7 Steps to a Successful NFP

9 EquityAssets = Liabilities + Revenue Surplus Expenses Purpose The Financial Operating Cycle 2 uses of Surplus 1. Reinvest in Assets 2. Reduce debt Workbook: Page 10

10 version 1.0 10 Case Study – Mary & Friends Soup Kitchen Workbook: Page 11 In order to understand and monitor their financial position the organisation has provided the last 3 years financial statements and has requested your assistance in putting together a comprehensive report for delivery to the Board.

11 Case Study – Mary & Friends Soup Kitchen Income Statement for the 3 x 12 months ending 30 June YYYY Workbook: Page 12

12 Case Study – Mary & Friends Soup Kitchen Balance Sheet as at 30 June YYYY Workbook: Page 13

13 Case Study – Mary & Friends Soup Kitchen Workbook: Page 14

14 version 1.0 14 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 7 Steps to a Successful NFP

15 Purpose Price, Volume and Cost Break Even

16 version 1.0 16 Case Study – Mary & Friends Soup Kitchen The organisation is looking to produce and sell a cookbook to the local community as another way of raising much needed funds for the service. What Mary would like to know is how many books the organisation needs to sell if they were priced at $20. She has calculated that the fixed costs for the book will be $360 and the variable cost per book will be $8. Workbook: Page 18

17 version 1.0 17 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 4.Manage cash flow. 7 Steps to a Successful NFP

18 Purpose Cash versus Accrual Workbook: Page 20

19 Purpose Cash Flow Budget & Surplus plan Workbook: Page 21

20 Purpose Seasonality Workbook: Page 22

21 Purpose Seasonality Workbook: Page 23

22 version 1.0 22 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 4.Manage cash flow. 5.Manage growth. 7 Steps to a Successful NFP

23 Cash Clients Stock Debtors Staff Equipment Space Plan and Manage for Growth

24 Cash Gaps Additional Clients / Revenue Cash Cash Gap 1. How much will it cost? 2. Where will I get it from? 3. Do I like the picture I’m painting? Workbook: Page 24

25 Impact of Growth Workbook: Page 25

26 version 1.0 26 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 4.Manage cash flow. 5.Manage growth. 6.Borrow properly. 7 Steps to a Successful NFP

27 Match the life of the loan to the life of the asset. The Cardinal Rule

28 The Asset Funding Model INCREASING DEMAND FOR SERVICES Fixed Assets Fluctuating Current Assets Long Term Debt / Equity Net Surplus Creditors / Equity Cash Flow / Net Surplus Short Term Debt/ Cash Cash Flow Permanent Current Assets Funding source:Repay from:Asset type: Workbook: Page 26

29 version 1.0 29 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 4.Manage cash flow. 5.Manage growth. 6.Borrow properly. 7.Plan for transition and succession. 7 Steps to a Successful NFP

30 Individual leaves. Outcomes achieved. Merging organisations / partnerships. Purpose Transition Issues Workbook: Page 27

31 version 1.0 31 1.Have a plan, not just a vision. 2.Monitor financial position. 3.Understand the relationship between price, volume and cost. 4.Manage cash flow. 5.Manage growth. 6.Borrow properly. 7.Plan for transition and succession. 7 Steps to a Successful NFP

32 version 1.0 32 Next Steps

33 version 1.0 33 DISCLAIMER Unless otherwise stated, the material discussed in this publication has been prepared by Westpac Banking Corporation ABN 33 007 457 14 (“Westpac”) AFS Licence 233714 in conjunction with external sources. Although it is believed to be accurate, to the extent permitted by law, no liability is accepted for errors or omissions suffered as a result of inaccuracies. Information in this publication that has been provided by third parties has not been independently verified and Westpac (or any member of the Westpac group of companies) is not in any way responsible for such information, or for the accuracy, currency, completeness of or endorses any such material. Material contained in this presentation is an overview and summary only and should not be considered a comprehensive statement on any matter nor relied upon as such. The information in this document is general only and does not take into account anyone’s personal objectives, financial situation or needs. You should therefore consider its appropriateness having regard to these factors before acting on it and obtain a copy of the product disclosure statement for a financial product available from any Westpac branch before acquiring the product. The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Westpac Financial Planners may only give tax advice as part of the investment advice service. You should consult with a registered tax agent for advice about your tax return and obligations. Past performance is not a reliable indicator of future performance. The hardcopy handout of this presentation does not contain important information contained within the presentation. You should not rely on any statement in the handout and no guarantee, representation or warranty is is given that the handout is complete, accurate or up to date or fit for any purpose. If you are considering taking out a margin loan you might be exposed to greater risk including risk of margin calls and losses in a falling market. You should consult a Westpac Financial Planner to ensure margin lending is appropriate for you.


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