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Archive for March 2011

Non-profit organizations, an added value for the society.

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In our society where economy is an important component creating wealth, I often heard critics about the non-profit organizations and associations. People are wondering if the subsides these organizations are receiving are correctly used. In other words, people are wondering if the institutions which do not create economical wealth, are not a charge for the society, and if there are useful. It is of course a pertinent question and people have the right to know how the taxes there are paying are used. People have the feeling that the taxes they are paying are not correctly used, but does it mean that non-profit activities are useless for the society? It should be a quick and wrong conclusion.

Non-profit organizations and associations, in different sectors, cultural or social are playing an important role in the society. We can see different interesting aspects of this sector of activity, but there are also conditions that need to be filled and which are filled in a lot of cases, making that people can have the feeling that their money is correctly used. What are these conditions?

  • Selection of project and the benefit they will produce: there are several needs to be covered in the society, needs that the private sector is not covering because there is no link with their activity and because the final goal is not the profitability. A detailed presentation and activity plan, and determined goals need to be presented in order to see what are the positive effects on economical, social and local level. The allocation of subsides need to be voted by a committee including independent members.
  • Project management and competences: non-profit organizations and associations are non-profit enterprises. It means that they have to face several challenges and issues on financial, legal and organizational level. In order to reach the goals on an efficient way with the allocated funds, some skills and competences are needed. As investing time myself in non-profit associations, I often see some lacks in term of competences, which has a negative impact in term of sustainability.

  • Concrete results: The associations launching projects have to produce concrete results, to justify the allocated amounts. They have the obligation to show the return on invested amounts, not on an economical point of view, but on social, educational, environmental level, depending of the scope of the project.

  • Financial sustainability: The allocated funds have to be spent correctly and each association has to implement controlling process in order to maintain the finance in break even. By creating debts and not paying contractors or employees, you do not reach the social goal of such organization. This is in my mind the weakness of some associations. The goal of a non-profit organization is not to make profit, as the name is saying, but it does not mean that the financial management is useless. I often see projects failure due to lack of management, with negative consequences.

These are some conditions needed to ensure that subsides are usefully allocated to projects. The quality of a project can be measured by the provided benefits. These benefits can be found on different levels, and make that non-profit activities are complementary of the economy. What are the benefits?

  • A positive contribution for the society: the associations are covering a range of services to the society, services not ensured by the private sector. It goes from social or medical services for aged people, for people facing temporary difficulties, also services in the education giving an access to knowledge and culture for everybody.

  • Local employment: this sector is creating local employment. Employment is a important key of social integration.

  • Local economical benefits: these associations are using local services. There are in fact a vector of wealth redistribution, as the allocated subsides have to be spent. The money they are receiving do not remain blocked and sleeping on bank accounts. It has a positive impact on local economy.

  • Personal positive effects: Some non-profit organization and associations are working with volunteers. Some studies show that people having a volunteer activity are in a better psychological and physical health. As mentioned, age is a question of mind. It is not because you reach a certain age that you are unable to contribute to a project, that you are unable to have activities. The fact to contribute to the community, empower the feeling to be useful and the feeling of social integration. We can see also a positive effect and cost reduction for the social security. If people are going well, they need less medical services. Globally, and as already mentioned in other postings on this blog, people need to have a project, to face challenges. The gained successes are an important factor of self- trust and wellness. Such activities have to be recognized, and encouraged. People should be encouraged to do an activity with the rhythm it agreed to them.
  • Social and educational benefits for the community: some social activities, related to education, are contributing positively to a better social and public environment. For instance, structures taking care of the children during holidays or when they are coming back from school and when the parents are still at work. These structures where animators are helping them to do the schoolwork, or by organizing games or activities, avoid these children to stay in the street, abandoned to the boredom, and avoid them to go to delinquency.

By mentioning these points, I tried to show that non-profit organizations and associations have a positive function in the society, on social and economical level. They have to be seen as a complementary activity of the economical activity. Do not forget that the economy is providing taxable wealth and that of course, without a strong economical activity, the public and associative world can not work. It is a question of balance, where each actor has to play the game, by respecting rules and with transparency, where initiatives have to be encouraged and supported.

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Written by Eric Saint-Guillain

March 28, 2011 at 07:19

Bootstrapping, a way to make stronger businesses?

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IT entrepreneur

Some entrepreneurs unfortunately lost their business or project, because they made it with some investors who wanted to have a certain short-term return on investment level. As the expected return on investment was not reached, the founders of the project were sanctioned by the investors and pushed out of the company.

I read in the Belgian economical magazine Trends-Tendance, the story of three partners who had to face such adventure. These three engineers decided to start a new project, but following a totally different business model. They build a new business in the field of digital imaging, a technology having customers in the medical and aerospace sectors. The major concern of this business was to protect the intellectual property of such technology. The patent price for such technology is expensive, and the three partners have to allocate the major part of the profit of the activity to the deposit of such patent. To reach that goal, the challenge was to make the needed profit, and in this case to do business based on a low cost model. They have no offices. Each of the partners is working at home, having only meetings when necessary. They are using free open sources software, communicating thru free voices over IP systems, like Skype. They have no company cars, and are maximizing their travel with public transport, and eventually renting a car when really necessary. One of the partners explain that to work in such a way has of course an impact on their professional and personal life. It implies to have new habits, but the conclusion is that they keep the control on their business and they are very happy.

By thinking about this experience, we note that these entrepreneurs took the option of bootstrapping. Bootstrapping means that you start your activity or business with limited funds and without partnership with investors. It implies that you will have to contract only the necessary costs to develop your business. In each case, you will consider if there is an opportunity to spare money, or to contract a service or a good for a better price. You will also consider if you can do it yourself. The chance to succeed in such process is linked to the competence level of the partners. What you can do yourself is an opportunity for cutting costs. A partnership with members having different and complementary competences will be definitively an asset. In such process, we can maybe see an opportunity to build businesses with much more added value. As your margin are thin, more attention will be paid to the return on investment of the contracted expenses, and maybe the basis of the business could be stronger. You will probably invest money in tools providing more added values to your project and more return on investment after, instead of investing in a luxurious car, which can bring maybe more appearance but which will not contribute to increase the quality level of your product or your services. With the development of technologies, we can more easily see than before, the level of people competences and services performances. This is what the customer is looking for.

But do not forget that such approach is not always a guarantee of success. Each project needs a minimum of capital in order to be implemented. The lack of capital make that some projects are never concretised. Nevertheless, this way to operate will make that people will probably do business on another way, with long term views contributing to develop a sustainable economy where imagination and creativity will be the motivation and the profit the middle to make the dreams work.

Written by Eric Saint-Guillain

March 21, 2011 at 22:25

Perfection or excellence.

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Some of us, we try to reach perfection in our personal as our professional life. Each day, we are trying to make efforts, improvements to reach the perfection. But is perfection reachable, or should not we first define what is perfection?

Perfection is a statement where everything is perfect, up-to-date, where there are no defaults or weaknesses. Is such statement possible? Marc Buelens, Doctor in Industrial Psychology (Ghent University in Belgium) and professor at the Vlerick management school in Belgium said in an article in the Trends Magazine, that you cannot be perfect in each domain of your life at the same time. You cannot be a perfect father if you dedicated most of your time to your professional career. Does it mean that perfection is utopia?

Perfection has not to be seen as a reachable goal on itself, but as a trend we are following to do things. But is it always possible to do things on a perfect way? If it should be, we have to make choices. By wanting to do things on a perfect way, we have to dedicate the necessary time to do them perfectly. It is obvious that we cannot do everything at the same time. We need to set up priorities, which is a constant in our life. Everyday, we need to make choices, implying to take decisions.

But this is of course the ideal and theoretical situation. Everybody knows that things never happen as we wish. If, for instance, you have a job with high level of responsibilities, you are often facing the challenge to deal with different projects, tasks, and to deal with unexpected things. You can of course use the time management techniques to face these priorities and meet the deadlines, by setting priorities, by delegating. But if the available time is limited, will it be possible to reach a quality level closed to perfection?

The question remains how to define perfection. Does the perfection exist? Probably not, but by trying to improve what we are doing, our work, the education of our children, professional and personal achievements, we are trying to reach the excellence. Excellence could be seen as a process, a process of improvement, a process increasing the quality as good as we can. The fact that we have to deal with a range of priorities, will make that everything will not be perfect, as mention Marc Buelens, but if we have a look on what does not work properly and if we take the lesson of failure and weaknesses to improve the way to do things, then we are in a process of excellence. To learn from our mistakes, our failures, is an opportunity to anticipate, to find more appropriate solutions to reach our target on a better way.

Perfection is probably only not a goal, but a trend we can reach by excellence.

 

Infos about Marc Buelens: http://www.vlerick.com/research/db/search.cfm?menu1=93

Written by Eric Saint-Guillain

March 17, 2011 at 21:24

When and where do the change begin?

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I was reading recently, this quote from Jack Welch, “Change before you have to”. But most of the time, we notice that people are reluctant to change, and on the other hand, people are claiming when nothing change. How to explain such paradox?

Change is first a question of perception. How can we perceive some changes, some trends coming slowly? If you have a look to a tree in your garden every day, you will probably not see that this tree is growing, but if you are looking to it three months later, you will notice that he grew. The tree grew, but you noticed it suddenly. The perception of change is a shock, it happen suddenly.

Is it because the change is not perceived that people don’t want to change, or because they are scared about change? People only allow to change if they perceive the need to change or perceive the change as an opportunity. If they have no choice or other alternative to a situation, they will be motivated to change. For instance, the development of information technologies has a huge impact in our professional and personal life. Some people are more reluctant than others to use them, because they found this difficult. But at a certain time, they will be obliged to use them, and will probably find this marvelous. Just think how we can communicate over the world via Internet and e-mail, when before you have to send postal mail without to be sure that your correspondent will receive your letter.

Change implies also education. By education, we can understand more things, and perceive the needs of change. By understanding the needs of changes and the consequences of changes, we avoid fear. But by education, people can be concerned by changes and take appropriate actions to face changes. Let us take for example the problem of environment. Scientific studies show that if all the people around the world have to live following the same standards than people in the western countries, we would need three time the natural resources the heart is producing. Each people should contribute to reduce the consumption of resources by changing some habits. Could we obliged people to change their way of live without attempting to their freedom? It is difficult of course, but the people who does not change their habits cannot obliged other people to change their way of life.

Change implies that we have first to admit that we are the actors of our own life, and the actors of the world where we are living. We can not always expect the change from other people. We have to admit too that we have to share the environment where we are living with other people, and that we have to make choices, respectable for the community. It implies that we have to take decisions and responsibilities.

Change implies to break our habits, to break the routine. This change of habits requests some effort. But people are scared to make these efforts, because they are not self confident, things seem to hem impossible to realize. How can we take such conclusions, if we do not try something else, to do things on another way? As for many things, we have first to start with the beginning, to do simple things. Before to climb the Everest, try first to climb on a chair ! Before to have some bias about changes, let’s try first some small changes. Somebody who have a Phd in mathematics had first to study basics of arithmetics. He had to learn and to understand ranges of theorems, of mathematical demonstrations. Step by step, he acquired and expanded his knowledge in mathematics. Like a house you are building by putting stones one after the other.

Can we adapt ourselves to change? Yes, we can do it gradually. As I mentioned before, you can used to accept changes step by step. It requires always an effort to adopt changes, because we have to change our habits. Change is like every exercise; when you are used to it, when you have integrated it, then it is more easy to change, and small changes make place to bigger changes. By changing things in your life, you become more self confident, we are more flexible and adaptable, and we expand our chance to face new challenges and opportunities.

Written by Eric Saint-Guillain

March 2, 2011 at 21:07