Business Advice from experienced business owners - moving from not-for-profit to commercially minded
whatever7991 · 31/05/2018 11:10
Looking for business advice from any experienced business owners out there. I have run a not-for-profit (NFP) company for 8 years, delivering free business and start-up training for vulnerable adults / prison leavers. In brief, the funding situation has become harder under this gov and we are bringing in about 50% less than we did in the early days and we need to diversify our funding streams.
As we have a team of amazing experienced business trainers and there is demand for our services, we are planning to start a commercial trading strand to sell our business training services. (All our staff are high profile / experienced business people and their advice and expertise is sought after). This new commercial strand would not be targeting vulnerable adults but set up as a completely different brand selling training to individuals, business start-ups and teams. The profits would be able to support our NFP work and provide another income stream.
My question is about the structure of this. At present our not-for-profit (let's call it "Free Training R Us") is a company (LBG) so we are allowed to trade, take out contracts etc but we have to plough profits back into the main business and cannot take dividends. I am the founder and director and take a salary and we have employees. I myself have had a precarious time of it and my salary has not been regular, as I have given my all to the non-profit and to the detriment of my own needs at times when gov funding has been cut. I have kept the thing afloat and made sure everyone else has been paid and found ways to keep going on less funding.
My mentor has suggested we set up the commercial trading as a completely separate company limited by shares (let's call it "Buy Our Training Ltd"), and that I can then take salary / dividends from that, as well as donating profits to the NFP (Free Training R Us) once it gets established. In this example, we could potentially also turn Free Training R Us into a registered charity and I become and unpaid trustee of that. (We have already looked into charitable status and know that we would be eligible).
Alternatively we keep Buy Our Training as a project within the existing structure and delivery of Free Training R Us (albeit branded as if it is a separate thing). Individuals and companies who pay for Buy Our Training services would be told that their fees go towards our sister project Free Training R Us and support a good cause. I would continue to take a salary from Free Training R Us, and it remains a company LBG. Any profits from Buy Our Training programmes are put back onto Free Training R Us delivery.
As a non-profit founder I am charitably minded, but I am being encouraged by my using mentor to be more business minded and to look after my own needs more as the non-profit work has caused stress. His argument is that if I am well paid and able to take profits from Buy Our Training as a separate profit making company, then it will leave me free and supported to manage the non-profit work better among a team of trustees. It would be great to hear from business people, particularly commercial / profit-making business owners who advise on this set up objectively.
Any quick thoughts? Thank you :-)
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