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Lemons or Lemonade?

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Most of us have heard the saying, "If life gives you lemons, then make lemonade." Let's suppose you have a friend who runs a lemonade stand. This friend is asking you to invest in his/her business. Because you want to help your friend and make a little money for yourself, you ask some pretty standard questions such as:

  • How much money do you need?
  • How many cups do you usually sale during a month?
  • How much money do you make minus your expenses?
  • Are there other people selling lemonade too? If so, what makes yours better?
  • How much of a percentage return will I get on my money?
  • When will I get my money returned to me?

In response to your questions, let's suppose your friend says the following: "Well, I need about $10,000. I'm not sure about how many cups we sale. It really depends on the month. People always tell us how much they love our lemonade so we'll give away cups sometimes when people can't afford to pay, ESPECIALLY when the weather is really hot.  Because of that, I'd say we clear about $500 per month but sometimes we break even. Like I said, It really depends on the month. There are a couple of other local lemonade stands but we know ours taste best because so many people tell us so. I'll be able to give between 5 to 10 percent back to you but it'll depend on whether we have a few consistent months of finishing in the black. I should be able to give it back to you as early as one year but definitely no later than two years."

Given those factors, would you give money to your friend? Probably not! There are too many unknown variables and uncertainty. As ridiculous as that scenario may appear to you, that hypothetical situation happens all too often in the nonprofit world. I've come across far too many nonprofits that can't clearly articulate its value and effectiveness. If they do so, often it is done haphazardly. If you can't clearly state why your nonprofit has value and is effective, then it's far more difficult to convince institutions to invest in your "business" (yes, I used the ugly "b" word). 

Saying that your lemonade tastes great and a lot of people appreciate your product doesn't necessarily equate to value and effectiveness. Otherwise, you're just selling lemons. Conversely, let’s look at this potential investment scenario: "I need $10,000. We’ve sold at least 500 cups of lemonade per month for the last two years. We’ve cleared $1,000 per month during that time. We sale the cups for $2.00 each. I’ve learned from analyzing our financials and looking at the revenues of another local lemonade vendor that people tend to consume more lemonade during the early evening and on weekends. I’ve concluded if we could extend our store hours by two hours per day (five days per week), we could make $1,500 per month. A $10,000 investment would allow me to pay wages to my employees for the additional time they’d work. We would make up for it with the additional sales. I can give you back 15% on your investment and pay it to you every quarter for the next two years. Will you help me?”

Given this alternative scenario, you probably WOULD give money to your friend. NEX-Impact can help turn your lemons into lemonade.   

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