Nov 9, 2016
Gil Bonwitt is the CEO of Gazelles Social Initiatives. It is projected that Gazelles Social Initiative will impact over 500 social sector organizations by the year 2020, through the use of best practices from the Scaling Up book. Gil and I will be discussing the various ways you can scale up in the social sector, on this week’s episode.
Let’s begin this topic by talking about cash flow in the social sectors. As many of these social companies are not for-profit companies, money is often not their main focus.
Since social companies are so mission-based, they often forget the importance of cash flow. The way social sectors increase their cash flow is very different compared to a for-profit organization.
When social companies begin to scale up, that’s when they begin to see the constraints of their insufficient cash flow. By this point, it is often too late to make enough capital for their mission and their operations start to break.
Gil and his team try to remind social entrepreneurs that it’s really about cash flow and sustainability. You can’t call up a donor and ask them for $10,000 on the spot or else you will not meet payroll. It simply doesn’t work that way!
So, how does Gil help social sectors with their cash flow? Gazelles has multiple tools that Gil and his team use to determine gross margins, cash balance, receivables, and more. Gil shares an example of when he really used these tools to their full potential at his children’s school, who were having serious cash flow problems during the financial crisis of 2007-2008.
How did the school take to the use of these new tools? Despite a financial crisis happening, the school board was resistant at first. When you first begin to use these new tools, it’s not only a learning process, but it becomes a change in culture, too. You’re bound to get some resistance, even when everyone is calling for a change in the system.
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Scaling Up is the best-selling book, by Verne Harnish and the team at Gazelles, on how the fastest growing companies succeed where so many others fail. My name is Bill Gallagher and I'm a certified Gazelles business coach. We help leadership teams to get the 4 Decisions around People, Strategy, Execution, and Cash right so that they can Scale Up successfully and beat the odds of business growth success. Our 4 Decisions are all part of the Rockefeller Habits 2.0 (from the original best-selling business book, Mastering the Rockefeller Habits).