Bet You Never Thought of Yourself as a Small Business Owner
by Beverly Hacker, Executive Director KDHX Community Media — Saint Louis, Missouri
This post appeared first on the National Federation of Community Broadcasters’ blog. Beverly presented the LPRC/NFCB Free Webinar: Finanzas con Confianza: Financial Management Made Easy. You can view a recording here.
As managers of community broadcast operations, we are effectively operating as small business owners. The same things that the mom and pop store down the street deals with — receivables, payables, inventory, payroll, licenses and permits, etc. are part of our day-to-day work. And this is on top of running a radio station or, in some cases, both radio and tv stations. Many of us came to our positions through journalism, community activism, the arts or the nonprofit world. Few of us started in accounting and finance. I did. I chose a career in accounting — pursuing a degree and then a CPA certification in large part because I found my high school bookkeeping course to be pretty much of a no-brainer. OK, so that probably gives you an idea of how my brain works, but I digress.
After stints in public accounting, computer consulting, sales, engineering, property management and construction, I landed in community radio 20 years ago. One of the things that I’ve seen over that time is a real lack of background, training and support for station managers who want to learn more about financial management for their stations, so I over the years I’ve been asked to do a number of panels and webinars about best practices in financial management in small to mid-sized stations.
In fact — I’ll be doing a webinar for NFCB on this very topic on October 23. As I was preparing that webinar, I thought it might be helpful to look at how a lot of stations approach financial management and what can be done about that.
Several years ago I found a great book called “How Effective Nonprofits Work.” It really struck a chord because it talked about the four phases of a nonprofit – beginning with the Start-up Phase, then moving through Scale-up, then Prune and Focus and ending with Institutional Status. At the time, KDHX was pretty squarely between Start-up and Scale-up. Ten years later, we’re approaching the Institutional Phase. While the book looks at how an organization typically functions at each phase across all of the areas of operation, from mission and focus to leadership and staffing, I was particularly intrigued by how organizations evolve in the areas of resource development, financial management and operations.
A couple of things stood out. First, in the area of staffing, Start-up Phase organizations tend to have staffs that are energetic, all purpose players. They are often pushed into positions out of necessity rather than because of any aptitude or interest in the work. Since accounting and finance are often seen as unglamorous necessary evils, they far too often don’t get enough attention until there is a crisis, or the station lucks out and finds someone who really likes finance and accounting. So, in many cases, things like charts of account, internal and external financial reporting, audit preparation, internal controls, accountability and transparency get shuffled down the road for a time when the station can afford to hire someone to do that work. Unfortunately, as with most small businesses, management often has so little knowledge about the work of a bookkeeper, an accountant or a business manager, so they have a very hard time managing that part of the business. I think that it’s important for station managers, like small business owners to learn more about financial management so that they can effectively manage this part of the business, no matter what phase the organization is in.
Another thing that stood out in looking at how less effective and more effective nonprofits approach financial management. Here’s an excerpt of the section that talks about resource development, financial management and operations:
In Less Effective Nonprofits . . .
- Budgeting often begins with what the organization thinks it can or should spend
- The organization regularly spends outside its budget (or there is no budget)
- Fundraising is scattershot, whimsical, or an afterthought; the organization may rely heavily on a few core donors
- The organization is hesitant to invest in fundraising, infrastructure or communications – it fears spending on anything but programming
- The organization sees fundraising only as a means to a budget goal
- There is too much reliance on government and foundation grants
- Few board members make financial contributions
- There are frequent cash flow crises
- No one reads or understands (or does) the budget or the audit
- The organization lives within the inadequacies of existing space, often tailoring programs to the space
If you see the operations of your organization in this list, it’s probably time to look at what you can do to be a more effective nonprofit.
You can also register for the next webinar on Music Licensing.