The difference between for-profit businesses and nonprofit institutions is pretty straightforward. The former aims to earn revenue exceeding its operating costs, while the latter is simply looking to break even. For-profits sell desired goods and services, while nonprofits serve the interests of others.
Given these key differences, many people assume for-profit companies and nonprofit organizations have nothing in common. That’s an inaccurate assumption. The truth is they’re more similar than most people think. In fact, there are many aspects of running a successful nonprofit that directly translate to running a profitable enterprise.
With this in mind, let’s take a look at six things for-profit businesses can learn from nonprofit organizations:
Have a mission
Every successful nonprofit exists to serve a specific purpose. That purpose is outlined in their mission statement. For instance, according to the Habitat for Humanity website, the organization’s mission is to bring people together to build homes, communities, and hope. Successful businesses often have their own mission, one that defines their goals and objectives as for-profit organizations. With this in mind, those in the process of starting their own business should include a mission statement in their business plan. Doing so will provide the organization with a guiding light with which they can confidently pursue business success.
Successful nonprofits have an outstanding communications apparatus designed for effective and efficient outreach. These systems also serve to streamline communications within the organization itself. For instance, church texting services help faith-based organizations stay on top of volunteer commitments, fundraising projects, charitable donations, and scheduling updates. For-profits have every incentive to follow suit. Doing so helps them stay on top of market trends, economic shifts, and internal management solutions.
Know how to network
It’s often said “It’s not what you know but who you know.” That saying is especially true in the world of nonprofits, where the patronage of a single wealthy donor could be the difference between success and failure. While nobody is lining up to donate to your for-profit business, the concept of networking and its benefits remain relevant. Simply exchange “donor” for “client.” Winning the right clients could swing a struggling company from red to black overnight, and the best way to do so is to get out there and meet new people within your industry.
Develop strong partnerships
Many nonprofits choose to pool their resources in pursuit of the greater good. The same concept carries over to for-profits. For example, the partnership between Spotify and Starbucks serves both companies well since Starbucks prides itself on providing customers with a curated music ecosystem; meanwhile, Spotify is content with its catalog being exposed to millions of coffee shop customers every day. With this in mind, small businesses are encouraged to pursue meaningful business partnerships whenever possible. Doing so not only helps grow your business but adds a level of credibility to your brand.
Do the right thing
Nonprofits aren’t the only entities driven by a belief that doing the right thing is a supreme objective. During its first 20 years of existence, Google famously enforced a company-wide code of conduct boiled down to three simple words: Don’t be evil. While the multinational technology company has since dropped the motto, the philosophy remains a potent reminder that companies should do the right thing as often as possible. Any effort to lie or deceive in pursuit of profit is a recipe for disaster. With this in mind, business owners should resist the urge to choose profit over principles.
Hire the right people
Non-profits depend on the expertise and insights of their staff, most of whom aren’t paid as well as they would if they worked for a for-profit business. It’s a testament to the integrity of the talent they secure. Imagine what for-profit businesses can achieve if they find similarly superb individuals to manage their day-to-day operations. Rather than hiring friends and family who may or may not have what it takes to help your business reach success, focus your hiring efforts on seeking out highly skilled men and women with an insatiable drive to achieve greatness.
While for-profit businesses and nonprofit organizations are inherently different, they’re essentially two sides of the same coin. Both entities are tasked with taking skills and resources and converting them into meaningful solutions. With this in mind, those running for-profit businesses should consider studying the way successful nonprofits are managed. Doing so gives them a well-rounded outlook on what it takes to run a successful enterprise.
Julie Steinbeck is a freelance writer from Ohio. She enjoys writing about business, finance, health, and travel.