#TBT: One Great Way to Grow Your Business

Happy #TBT. To celebrate, we’re sharing an oldie-but-goodie post from Jim: The Power of Earning Your Way.

Before I go further, I want to say that I don’t mean to be bashing anyone who feels differently about this issue than I do, and certainly anybody who has run an organization differently than I am about to suggest has my respect. It’s tough making things work. Just ask any bank, car manufacturer, record company. Heck, just about anybody these days. Getting a big donor can be a dream come true under the circumstances.

And hey, free money is free money. How can you argue with that?

OK, I’ll tell you how: TANSTAAFL. There’s no such thing as a free lunch.

Here’s a piece from the WaPo that describes the price of free money, and here’s a key tidbit:

“These two traits are now clashing head-on. The company is in talks with the Kennedy Center about renegotiating its contract; one option is that WNO and the Kennedy Center may merge. But there’s a hitch.

Most of WNO’s endowment derives from the sale of a building donated by Betty Brown Casey, the widow of Eugene B. Casey, one of the company’s major donors. And she has stipulated, several sources confirm, that if WNO ceases to be independent or if it merges with the Kennedy Center, those funds will automatically go to the Metropolitan Opera in New York.”

"Money Plant," © 2012 TaxCredits.net, used under a Creative Commons Attribution license.

“Money Plant,” © 2012 TaxCredits.net, used under a Creative Commons Attribution license.

Bummer, eh? You want the money you need to survive or you want the freedom to do the right thing? There’s only one way to have both, and that’s to earn your own way.

To be precise, I believe that all organizations should make funding their operations from sales and small donations their first business priority. People talk about the business model for the arts, but here’s what I think: Every organization should do whatever it takes to balance the books without major donors.

Don’t tell me it’s impossible. It may be difficult. It is difficult, but it’s only impossible if you’re committed to staying the same. Radical changes may be just enough to keep some businesses and organizations alive, but what’s the alternative? Oblivion or servitude.

I get this from personal experience. In the internet business, lots of people take big money from venture capitalists, and that makes some things easier. But it also means you’ve got a business partner, and this partner has some weird proclivities. He (or she, but probably he) wants to make 10 dollars for every one he gives you, and to do that, you’re going to have to take some crazy chances. You’re also going to feel some pressure to help his other investments, whether it really makes sense or not. He doesn’t have bad intentions; he just doesn’t know.

We [at Goldstar] never took any of that money, not that we had that option, starting a ticket-selling business in the shadow of 9/11 and in the middle of a pretty serious recession. It also meant no one got paid (and by no one, I really mean the founders, who were pretty much the only people working in the business for a long time). It was nerve-wracking, and it was tough, but in a couple of years, we built a business that worked, and grew it gradually. We learned what it took to deliver a formula that delivered something special to customers and paid its own bills, including giving us enough to pay some salaries and keep us focused full time.

And that’s really the magic point for an organization. When you can pay your own way, you can grow. You can take smart chances. And you can also breathe a little more easily, because that’s how people do their best work. When they’re proud of what they’re doing, but not just struggling to survive.

A constellation of small donors? Great. That’s akin to sales for a nonprofit.

Big donors, though, aren’t donors. They’re co-owners, and unless you’re sure you’ll always see eye to eye, be prepared to do what it takes to please your business partner.

Or patiently fix your business model and always have the ability to do the right thing.

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