Advantages of Starting a Non-Profit Business

In today’s job market it is becoming more and more popular to start your own business. After all the only way to true financial independence is to own your own business. When pondering the type to start and developing your Business Plan consider starting with a non- profit business.

The first advantage of starting with a NP organization is that a NP business can own a for-profit business, but it can not work the other way around. There is not any stock of ownership in a non-profit. If the for-profit business wants to have a collaborative non-profit, it would need to register the NP as a separate business entity.

As the NP business grows it can develop any number of programs. The non-profit can even develop what is called UBI, or unrelated business income. The UBI portion of the non-profit can in theory be almost any kind of business activity. For example, many youth non-profits sponsor car washes. The car wash is an activity designed to generate revenue yet is not related to the mission or purpose of the sponsoring organization. If the car wash or other UBI becomes profitable on its own merits it could develop into an independent for-profit business which can be owned in whole, or in part, by the noon-profit.

A NP business can charge the same rate for services and products as a similar for-profit business. A classic example is child day care centers. The weekly fee for child care can be the same for both types of business entities. In addition, staff can be paid at the same rate and receive the same benefits. The difference between a for-profit and non-profit business has to do more with the tax-structure than the amount of revenue earned or salaries paid.

A 501c3 tax-exempt organization is a business corporation, and should be operated like any other business corporation. It is important to have sufficient revenue to pay all the bills, the staff, and to expand into new markets. The non-profit can generate as much revenue as possible and can even carry-over a surplus at the end of the year.

A business model using both a non-profit and for-profit is very strong, especially when their purpose and services are closely related. Not all business consultants are familiar with the non-profit – for-profit business model. You should seek advice from consultants who have expertise in both for-profit and non-profit business models.

How to Start Profitable Business

Do to want to start a business from home? Thousands of people are doing just that, every day. But how do you ensure that your business is a profitable one? This article provides tips for making your business a success.

1. Pay attention to the market to you choose your business in. Many people focus on the product, or how much money they can make, when in reality they should be looking at the market first. You need to ensure that you select a market where people are spending money and then find a good way to capitalize on that.

Some markets do well all year round whereas other markets are seasonal. Anything where people are spending money can be profitable for you.

For example people will spend money on their pets almost before they will their own kids. Selling products to pet owners is just one way to make money. Other profitable markets include golf, work at home, weight loss, and so on.

2. You don’t have to have your own product as there are many affiliate marketing programs offering 50% commissions and sometimes even more. This is an excellent way to quickly become profitable because your product is provided for you and so is just about everything you need to succeed. You will be given your own website, marketing materials, company support, training, and so on.

Selling information products is a good idea because of the market for them. This allows you to be more profitable, plus information products are always in demand. If you focus directly on solving peoples’ problems you are more likely to become profitable quickly.

3. Start your own website or blog and differentiate yourself from other affiliate marketers. This is good advice today because there could be thousands of people promoting the same product as you using the exact same website.

Today people expect to learn about things before they pull their credit card out. This gives you the opportunity to create pages such as review pages that provide information and help pre-sell your potential customer. Blogging allows you to interact with your customers on a level that a website cannot, so that’s a good idea as well.

4. The final point we want to make is you must spend the majority of your time advertising your business online. There are many free or nearly free ways you can do this to help increase your profitability. However you should consider doing paid advertising by reinvesting some of your profits once your business is making sales.

These were four tips for helping you to start a profitable business. An Internet business is a good way to be profitable and a fast way to start too!

The Most Profitable Business Sectors in 2010

Entrepreneurs dream of and start businesses for a variety of reasons. Some hate the jobs they are in, while others dislike the politics of a big office environment. But most would agree that the lure of freedom and flexibility were huge motivating factors.

Regardless of the rationale behind their decision, one criterion is more critical than any other: They want to make money and support their families. While it is easy to get distracted by chasing customers, growing top line revenue and expanding premises, the simple business fundamentals – profit and cash flow – determine whether the entrepreneur’s dream will ultimately last or turn into a nightmare.

It is almost impossible to predict the success and financial health of a business by looking at the number of employees, the look/feel of the website, the size of the office or the resume of the owner. Most of us would assume that the only way to really know, is to get a copy of and read the financial statements. While this is a great idea and valuable exercise, there is also another, easy way to narrow down your choices. You could simply choose to start or buy one of the Top 10 Most Profitable businesses – i.e. a venture that statistically has the highest probability of being financially successful.

Sounds straightforward, doesn’t it? But how [exactly] do you find out which businesses are on the list?

It is not widely known in the marketplace, but there are in fact certain industry classifications which have a track record of high net profit margins and solid cash flow. There are also certain characteristics and financial metrics of these select businesses which exponentially enhance their profitability. So much so, that these particular businesses are 5 to 10 times more likely to survive and thrive.

1. Consultants, experts and speakers
This industry includes business advisors, authors, coaches, therapists, psychologists, authors and paid speakers. On average, these businesses enjoy high per hour rates, carry no debt or inventory and have very low fixed expenses. The number of professionals in this area is growing rapidly each year and they are consistently generating net profit margins of 25-35%. Not bad for a business that is borne out of one person’s expertise – the large majority of these businesses employ less than 3 people.

2. Accounting and financial services
While this industry may sound boring – bookkeeping, payroll, tax compliance, accounting advice and software, advisory services, financial/investment advice etc – these practitioners become a whole lot more interesting when they are standing on their wallets. These businesses tend to have the longest client relationships (as most people perceive a huge risk inherent with switching to a new provider) and thus the lowest churn rate and the lowest cost to acquire and retain clients. They enjoy profit of around 23-26%, have enormous pricing power and their services are seen as must-haves, not discretionary spends. By and large, they also tend to have low operating expenses per client and as a percentage of sales.

3. Legal specialists
Despite their reputation as sharks and bottom feeders, lawyers make excellent profit and cash flow (on average 20-24% net profit margin). Their success factors mirror those of their accounting and financial services colleagues. Most clients are attained through WOM and referrals (keeping marketing costs low) and they tend to stay with their advisor over the long term as there is a perceived risk/cost to switching attorneys. Lawyers are fantastic at generating repeat business and up sales. Some of the most profitable areas include DUI defence, criminal law, tax and estate planning and divorce law.

4. Dentists – general and specialists
Dentists have three key operating advantages – they are often able to treat multiple patients simultaneously, they enjoy high average dollar transactions (most of which is not covered by health care plans) and their operating costs are relatively low (when divided by the total number of patients serviced). Yearly maintenance services (cleaning and x-rays) produce high contribution margins and dentists do a great job of convincing us we need them regularly. On average, they spend more than any other health provider on follow ups and re-bookings. Fortunately, the cost of this direct marketing is much lower than the cost of acquiring new patients and produces returns of 18-22% for the practice.

5. Designers
No matter what they specialize in – structures, decor, your brand, high end clothing and accessories – these professionals have a flair for bringing in the money – in fact about 16-19% on the bottom line each year. These practitioners benefit greatly from high end pricing and relatively low variable product costs and operating margins. Their greatest assets are their customer lists and their time. The greatest risk for those who are not as successful in this area is productivity – either not understanding the time involved to complete a job or not charging market rates for their time.

6. Medical specialists and veterinary medicine
It pays to specialize. The medical profession is relatively recession -proof. No matter what, people and pets tend to get sick and we rarely opt to forgo seeking care and treatment. Surprisingly on the rise are highly discretionary services such as plastic surgery, Lasik eye surgery, lap band specialists, infertility treatment and hair restoration. These specialists are often able to charge outside of what is covered by public and private health care (earning profit of around 14-16%) and they earn much more than their general medicine counterparts.

7. Specialised health and alternative medicine
As with traditional medicine, it pays to specialize. Mental health, podiatry, chiropractic, naturopathy, acupuncture, physical therapists etc. enjoy profits of 13-15% due to high average dollar transactions, repeat visits, low cost of goods sold and low operating margins.

8. Eldercare and retirement services
As the average population continues to age, there is a growing strain on young families from both ends – the need to manage child care with a career AND the need to manage the transition of elderly parents into assisted living or full time care. As a result, placement services, retirement villages, aged care services etc. are growing and becoming more lucrative. Private services in particular can earn 12-14% before tax.

9. Insurance and mortgage brokers
These businesses often cost very little to start and operate and earn their money through 2 distinct streams – the upfront fee they earn for securing the deal and ongoing annual trailers (which can often grow to 80% of their total revenue). While recent changes in many jurisdictions have reduced or delayed their initial payments from banks and various institutions, the ongoing passive revenue streams make these profitable businesses at 11-14% on average. The perceived hassle of switching is high, thus most retain customers for long periods of time and promote/receive referrals regularly.

10. Online business, small deposit and lending institutions
The internet has made it possible for anyone to set up shop and sell goods or services online with little or no experience and low overheads. While there are many dud eBusinesses, the ones that are making money are doing it on a huge scale. The most profitable ones (selling services and membership continuity programs) are earning more than $0.20-0.30 cents on the dollar each year in net profit, but examples of these are few and far between. On average, the ones that sell products and/or services should enjoy 11-14% on the bottom line with no debtors, low inventory and a small investment in fixed assets. Specialised credit unions and private lenders are also enjoying profit margins of around 10-13% due to low overheads and a growing mistrust among consumers with the traditional banks.

From this list, we can draw several important conclusions. First professional services is a winner. Of the list above, 8 out of 10 business fall into the category of professional services. The core drivers of their profitability being steady demand for services(despite economic ups and downs), low overheads, high contribution margins and repeat business. Aside from law, specialized medicine, dentistry and accounting, many of these professions also enjoy relatively low barriers to entry.

More often than not, it pays to specialize. Businesses in niche areas are often able to set high prices, command high value sales with large contribution margins and generate both repeat and referral businesses. This lesson can also easily be extrapolated and applied out to traditionally difficult or low profit industries. Take for example, the restaurant business or general trades like welding or electrical services. By becoming highly specialized, these businesses can directly influence the success and viability of their enterprises.

And finally, size definitely matters. In the small to mid size sector, economies of scale in most industries kick in around $1m in revenue – and this is especially pronounced in industries that require an upfront investment in specialized fixed assets like medical equipment, manufacturing equipment and technology.