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The 7 Steps to a Successful Not-For-Profit. Version 1.0. 7 common reasons for Business Success. 7 Steps to a Successful NFP. 7 Steps. Workbook: Page 4. Have a plan, not just a vision Monitor your financial position Manage cash Flow

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7 steps

7 common reasons for Business Success

7 Steps to a Successful NFP

7 Steps

Workbook: Page 4

  • 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
  • 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

2

version 1.0

7 steps to a successful nfp
Have a plan, not just a vision.7 Steps to a Successful NFP

Workbook: Page 5

“Fail to plan,

Plan to fail”.

version 1.0

3

7 ps of planning

The 7 P’s of Planning

7 Ps of planning

Workbook: Page 5

Purpose

Product

People

Place

Price

Promotion

Performance

mary friends soup kitchen
Mary & Friends Soup Kitchen

Workbook: Page 6

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.

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5

action plan
Action Plan

Workbook: Page 9

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7

7 steps to a successful nfp1
Have a plan, not just a vision.

Monitor financial position.

7 Steps to a Successful NFP

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8

financial operating cycle

The Financial Operating Cycle

Financial operating cycle

Workbook: Page 10

Purpose

=

+

Revenue

Assets

Liabilities

Equity

Expenses

2 uses of Surplus

1. Reinvest in Assets

2. Reduce debt

Surplus

case study mary friends soup kitchen
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.

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case study mary friends soup kitchen1
Case Study – Mary & Friends Soup Kitchen

Workbook: Page 12

Income Statement for the 3 x 12 months ending

30 June YYYY

case study mary friends soup kitchen2
Case Study – Mary & Friends Soup Kitchen

Workbook: Page 13

Balance Sheet as at 30 June YYYY

7 steps to a successful nfp2
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

7 Steps to a Successful NFP

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case study mary friends soup kitchen4
Case Study – Mary & Friends Soup Kitchen

Workbook: Page 18

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.

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7 steps to a successful nfp3
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

Manage cash flow.

7 Steps to a Successful NFP

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17

cash versus accrual

Cash versus Accrual

Cash versus accrual

Workbook: Page 20

  • Cash v accrual

Purpose

seasonality

Seasonality

Seasonality

Workbook: Page 22

Purpose

seasonality continued

Seasonality

Seasonality continued

Workbook: Page 23

Purpose

7 steps to a successful nfp4
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

Manage cash flow.

Manage growth.

7 Steps to a Successful NFP

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22

plan and manage for growth

Plan and Manage for Growth

Plan and manage for growth

Cash

Clients

Stock

Debtors

Staff

Equipment

Space

cash gaps
Cash gaps

Cash Gaps

Workbook: Page 24

Additional Clients / Revenue

  • Cash Gap

1. How much will it cost?

  • . Where will I get it from?
  • . Do I like the picture I’m painting?

Cash

impact of growth
Impact of growth

Impact of Growth

Workbook: Page 25

7 steps to a successful nfp5
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

Manage cash flow.

Manage growth.

Borrow properly.

7 Steps to a Successful NFP

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26

the cardinal rule
The cardinal rule

The Cardinal Rule

  • Match the life of the loan to the life of the asset.
asset funding model

The Asset Funding Model

Asset funding model

Workbook: Page 26

Asset type:

Funding source:

Repay from:

INCREASING DEMAND FOR SERVICES

Short Term Debt/ Cash

Cash Flow

Fluctuating Current Assets

Creditors / Equity

Cash Flow / Net Surplus

Permanent Current Assets

Long Term Debt / Equity

Net Surplus

Fixed Assets

7 steps to a successful nfp6
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

Manage cash flow.

Manage growth.

Borrow properly.

Plan for transition and succession.

7 Steps to a Successful NFP

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transition issues

Transition Issues

Transition issues

Workbook: Page 27

  • Individual leaves.
  • Outcomes achieved.
  • Merging organisations / partnerships.

Purpose

7 steps to a successful nfp7
Have a plan, not just a vision.

Monitor financial position.

Understand the relationship between price, volume and cost.

Manage cash flow.

Manage growth.

Borrow properly.

Plan for transition and succession.

7 Steps to a Successful NFP

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31

next steps
Next steps

Next Steps

  • <Contact Name>
  • <Contact Details>

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disclaimer
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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