Similarities Between Start-Ups & Nonprofits
From the outside looking in, start-ups and nonprofits may seem like they couldn’t have less in common. Start-ups are on a mission to find product-market fit and positive cash flow, while non-profits are on a mission to create a measurable benefit in the world.
However, if you look closely, you will begin to see some similarities. For instance, both start-ups and nonprofits are mission based. In both scenarios, there is usually a “let’s roll up our sleeves and get ‘er done” mentality. The esprit de corps, excitement, and thrill of seeing customers or beneficiaries have success is just about the most fun part of any business.
We have worked in both start-ups and non-profits over the past 20-plus years and have compiled a list of three of the key similarities between the two kinds of organization.
Product/Market Fit Urgency - The energy to get to the market in both situations is palpable. Most people would not think of non-profits as needing to hit product/market fit, but in some ways nonprofits need more focus than start-ups on this. Start-ups need product/market fit to gain financial momentum, establish a brand, hit growth targets, and attract future investors. Nonprofits need the same things and aim to find the people or situations that would most benefit from their efforts. Both start-ups and non-profits tend to start with a wide lens, looking to help or sell to anyone who fits their ideal target even slightly. While this approach may work in the early days, after an organization has found a wellspring of targets, achieved some measurable product-market fit, and found some financial footing in the form of capital, revenue, or donations outpacing expenses, many orgs stumble by not niching down quickly enough.
Resource Constraints - Niching down quickly is critical because both environments tend to be resource constrained. In the early days, startups and nonprofits both operate with minimal funding, fewer built out systems, fewer people to do the work, and more eyes on how the money is being spent, whether by early stage investors or donors. Niching down makes it easier to determine your ideal target, the value you are delivering, your messaging, how you reach customers, and how you sell to them much easier, ultimately saving precious resources.
Processes and systems - All organizations want to grow, both start-ups and nonprofits alike, and the basis of scaling lies in processes and systems. With so much fast-paced revenue or delivery-focused activity, it can become very easy to forget to prioritize and invest in processes and systems. It is essential to architect, document, and support the core processes and systems you need to get from one level to the next. The output of processes and systems work does not need to look like a grand cathedral! It can and should match where you are going next with an eye on one step beyond that. This is an ongoing practice and at some point, you will outgrow the current version of what works. Even the biggest companies in the world are constantly refining and reimplementing processes and scale as the world changes.
If you’re the Founder or CEO of a start-up or nonprofit, click here to set up a discovery call to learn more about how a Chief of Staff can help your organization.