Burn rate (4): black beans and rice (or: cutting costs for a longer runway)

Of course, efficiency is a virtue. Waste is… wasteful, makes everyone worse at their jobs, and reduces the number of possibilities open to you and your team. Knowing where it goes Good financial management is essential for this, of course: you need to know what’s being spent, on what and who by before you can make savings. Get help! The…

Burn rate (3): revenue first (better before cheaper)

Given the formula [available cash / (income – expenditure), there are two obvious ways to extend your organisation’s life: you can increase income (revenue) or reduce expenditure. Revenue First You need to think about revenue first because without income it doesn’t matter how efficient you are. In fact, in terms of staying alive efficiency doesn’t matter at all. As long…

Burn rate (2): stayin’ alive

Startups with huge burn rates – building leases, staff, PR and advertising – ran out of money. Most startups born in the bubble died in the bubble. Steve Blank – Is the Lean Startup Dead? If you can get your burn rate low enough you can stay in the game longer with a given amount of cash in the bank……

Burn rate (1): the formula

Your organisation’s burn rate is the amount of money you “burn” each month to do what you do. It’s a simple sum, but few organisations seem to keep a close eye on it. Expenses How much are you spending each month? Make sure you count everything – especially big annual expenses you need to be saving towards, or reserves you…

Who pays? (client / user edition)

It means all kinds of things if the client or user of a non-profit organisation’s services pays. The organisation will be focused on the client, and their needs – “She who pays the piper calls the tune.” The non-profit will be able to charge only in proportion to the usefulness of the service they provide (and in proportion to the…

Who pays? (Donor edition)

“Who pays?” is an important question for all sorts of reasons. In the world of non-profits, donors often pay. This can mean: That the charity is free to act in the best interests of the people it seeks to serve, unburdened by the demands of the market and client’s ability to pay That the charity is beholden to the whim…

Resources about setting prices

A high enough price If you want to help a lot of people, you’ll need to do your job well and for a long time – something that won’t be possible if you don’t have any money. Charging a reasonable price is a key part of this – but how do you know what’s reasonable? Here a some resources I’ve…

No shortage of money

There is no money shortage. It might not be where you’d like it, and there might not be people lining up to give it to you for whatever you think it would be well used for… but there’s plenty of money. Whose money? It’s usually best if the money comes directly from the people you’re serving – call them customers,…

Money: cause or symptom?

We often focus on the money, but it’s not a cause or an end in itself. It helps to think of your financial position as a symptom of faithful partnership development. Darren Wall

Trust

Make your systems strong. Have a clear process: where does the money come from, where does it go? Account for it transparently: how are movements of money planned, approved, recorded, tracked and evidenced? Have checks and controls: Who sets things up? Who approves payments? Who checks? Who checks the checker? Minimise temptation and opportunity. But at the end of the…