In the beginning: Things to consider before starting your nonprofit venture

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When David Jenkins started his nonprofit venture, Montrealite, in 2002, he thought he had it all figured out. With a social mission of employing and training at-risk youth, the company hired troubled kids to sell t-shirts creatively embossed with symbols of Montreal, at various kiosks across the city. On the surface, business success seemed inevitable. After all, Jenkins had a popular product, eager employees, and received financial and strategic support from such organizations as Scotia Capital Partners. Yet, despite his optimism, in just over a year the social enterprise came to an untimely end. Its surprising and quick demise brings up a number of questions: how could a venture seemingly destined for success fall so hard and so fast? Could the failure have been averted? And how can those looking to start their own nonprofit avoid a similar fate?

Do Your Research and Plan Effectively

"I would have done the nonprofit [aspect] differently if I knew then what I know now," says Jenkins. As far as what went wrong, "I think there was a basic error made when we designed the business plan," explains Jenkins, who now sells the t-shirts as a for-profit business, donating a percentage of profits to local charities. "And looking back, the major problem was that we didn't do enough research." In fact, had Montrealite invested more time conducting research, they would have learned about a law in Montreal that prohibits street kiosks. They would also know that no amount of pleading would convince the government to soften the rule - even for charity groups. Furthermore, research would have revealed that their alternative plan of placing kiosks in shopping malls, would turn their simple venture into a very costly one.

Nicole Rycroft founded her venture, Markets Initiative, in 1999. Dedicated to developing practical and economic ways for Canadian companies to shift their wood and paper use away from ancient and endangered forest products to ecologically sound alternatives, her success in just over six years is nothing short of remarkable. In her opinion, an intense dedication to research was one of the most important keys to her achievements. "Very early on I looked at other models in the social change movement," says this resident of Tofino, BC. In doing so, she voraciously studied groups in the environmental community who were implementing similar initiatives in the US, Canada, and internationally. "I'm not into reinventing the wheel," states Rycroft. The valuable lessons she gleaned from her research gave her "a real clear sense of what my options were and allowed me to anticipate some of the challenges I was going to encounter, enabling me to navigate around them early on."

Establish Realistic Goals

Joanne Norris, director of social returns at Scotia Capital Partners, would appreciate Rycroft's exhaustive legwork. "You need to be really thoughtful in the business planning process before you launch your business," she states. Providing financial and supervisory support over the years to social entrepreneurs like David Jenkins, Norris is impressed with the incredible effort and passion of those starting ventures. But, she cautions, while it's great to have a charitable mission and to want to help others, maintaining a realistic vision of your business objectives and potential is vital to an entrepreneur's success. David Jenkins, she explains, had a great product but lacked a retail strategy to make the business work. Norris points out that if proper research and planning are executed, social entrepreneurs may end up determining that the business they had in mind isn't actually feasible. Jenkins, for his part, would agree. "We believed we would be able to sweep the obstacles out of the way, but we were wrong," he says. "And that was a big mistake."

Alternatively, Second Harvest, had a very realistic and modest goal when it started out 20 years ago. A nonprofit charitable organization with a commonsense approach to picking up leftover food and giving it to people in need, its goal has remained realistic over the years, but modest it is no longer. At its inception, the organization was working with seven social agencies and collected more than 500,000 pounds of food a year. As of last year, they established relationships with 230 social agencies and delivered 5 million pounds of food.

Have a Funding Strategy

To what does Second Harvest owe its remarkable achievements? According to Abby Robins, communications manager, success can be attributed to many things, from a vibrant volunteer base and pragmatic objectives, to a strong funding strategy made up of individuals, corporations, foundations, and fundraising events such as Lunch Money Day and Toronto Taste. While government support may work well for other organizations, Robins says, "we don't rely on them because our feeling is that if government changes then you lose your funding."

For her part, Rycroft wishes she had some more money in place before establishing Markets Initiative. After the initial stages, she was fortunate to have the support and backing of organizations like Ashoka Canada and advises others to know their funding options well. However, even with outside funding, Rycroft stresses the importance of saving some of your own money before getting started. "Luckily I came into it with some personal buffer. If you can do that, it's a bonus; it helps you get up and running and helps you breathe."

Carve Out Your Niche in the Competitive Marketplace

Sticking out in the crowd is another key to nonprofit success. "I think the first step is to make sure there's nobody else out there who's doing what you're doing," Robins advises. After all, considering how many nonprofits currently compete for the same space, when an organization is dealing with the public and potential funders, it's imperative, she says, "that you explain why you're different and why you're a necessity." Second Harvest's stronger focus on advertising this past year is a good example of their attempt at differentiation within the competitive marketplace. Up until recently, Second Harvest relied a lot more on word of mouth, but Robins no longer feels that's enough. And the ability for advertising to raise awareness can have great payoffs. "I think you have to be a little more proactive. To get the dollars people have to know about you," she says.

Find Value in Partners, Support Networks, and Contacts

For Carlo Jensen, director of consulting with the Calgary Centre for Non-Profit Management, sometimes the answer to a highly competitive marketplace is partnerships. "Chances are, someone is doing something very similar," states Jensen, whose organization helps promote the viability of nonprofits through services such as consulting, mentoring, training, and knowledge sharing. "Think about partnering with an existing agency instead of setting up duplicate services and administration. Otherwise, you will be asking for funding from the same pie, making all the pieces smaller for other agencies."

Rycroft couldn't agree more. Making sure you're fulfilling a need in the community is extremely significant. "If you're not doing something unique, it's going to be difficult to generate results and attract financial support and the resources you need," she says. And attracting support and resources - both externally and internally - is key to Rycroft's success. In fact, when she first started out, Rycroft chose three other organizations with whom she created a coalition. The infrastructure support the group provided was immeasurable, from free rent and desk space, to the use of photocopiers and other equipment. Though perhaps not a common practice, she lauds its benefits. "When you're a small startup, just having to pay the rent or buy my own fax machine could have potentially led to a very different outcome." However, she does caution others to "choose partners wisely so you don't spend a lot of time maintaining internal dynamics."

Rycroft also made a point to surround herself with generous advisors, culling valuable support, connections, and advice. Her contacts in the publishing industry, for example, made it possible for Markets Initiative to produce advertising campaigns with the likes of Margaret Atwood, Alice Munro and Timothy Findlay. "Just the right little black book is all you need sometimes," she says. Of course, a skilled and supportive network of advisors, employees and volunteers, a realistic mission, along with viable funding and marketing strategies don't hurt either. According to Jensen, "when you combine all these with the passion and drive of the causes we represent, it can be an extremely powerful force."

Elisa Birnbaum is a freelance print and broadcast journalist living in Toronto.

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