Small Business/NFP Feasibility

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Dave
Posts: 294
Joined: Fri Dec 19, 2014 1:42 pm

Small Business/NFP Feasibility

Post by Dave » Mon Apr 29, 2019 10:41 am

Hi everyone,

I am giving some thought to a new venture and I want to tap the ERE hive-mind for feedback. I am early in the planning process, so some of this will be a little vague and not fully fleshed out, but I am looking for opinions.

Overview

The quick background is that every Sunday I have been doing independent litter clean-up near where I live, and when I am out and about hiking I do some clean-up, too. I started doing this as I saw litter is a pretty big problem here in Honolulu and around Oahu in general, and actually watching it run into the Ala Wai canal and then out to the ocean has been eye-opening.

While doing this, it occurred to me that I would not mind doing this with quite a bit more of my time. But, if I did this with more of my time, I would want to be compensated at least a little.

That brings us to my current position. I'm considering how I would approach this: do I want to setup a not-for-profit, or do I want to start a for-profit business? First, I'll start with an overview of the venture.

The overview of the financials is that I would consider paying myself a relatively small amount (please comment on whether this amount sounds too high), maybe $15 per hour. It's not at all my goal to make a lot of money doing this, just a return on my time since it will be a substantial use of my time. If this was a business, I would consider donating profits to some sort of charity, and just drawing a wage, but this is not likely as financially efficient. If I did this for 1,500 hours per year (which would be the upper bound, it may be more like 1,000 per year which would cut the budget materially), including payroll taxes and fees, maybe we're looking at around $25,000 per year. The entity would have some administrative costs, let's ballpark at $500 per year. The entity would have some materials and supplies, maybe $500 per year. Depending on the location (Honolulu with no vehicle, Midwest with a vehicle), I may need a vehicle...which could run at $5,000 per year. Throw in another few thousand for a website and assorted other costs, and we're talking about $30,000-35,000 per year operating budget. I'd try to keep it as lean as possible as I don't want this to be a wasteful operation...I'd want as much time as possible to go towards clean-ups and not administrative/unnecessary costs.

The primary activity would be picking up litter in especially dirty areas, either on a one-off basis or a recurring engagement depending on the situation. I am also considering working one-on-one with individuals who want to reduce their environmental impact, as a sort of financial coach focused specifically on reducing footprint via personal finance change. Finally, I'd write some articles on the topic which would be educational and motivational. I would be the only employee, although I would also organize volunteer days for larger-scale clean-ups and may donate my time for these engagements.

At this point I want to acknowledge that litter clean-up is generally not considered glamorous environmental work - it's low on the totem pole of things. I get the arguments, but it is something that I enjoy doing, and I still see a real problem with it right now. The coaching and articles would aim more towards the prevention side of the equation, but I do want to focus a lot on litter clean-up (meeting the world where it is). I just wanted to clarify I'm aware of what some people think of it as opposed to other types of work, but overall it fits into my web of goals better and I do still think it's a meaningful problem. I think even litter clean-up has spillover effects when done in high-visibility areas - I've observed this during my clean-ups.

Comparison

That brings me to the comparison of a NFP vs. for-profit operation. The primary difference, financially, is the source of the revenue. If I am for-profit, the revenue will be directly tied to the direct user/consumer of the service...i.e. the landowner/operator or the coaching client. And this is why I can see NFP being superior from the financial perspective, because in NFP it could be either of those two parties, OR more general funding from either individuals or organizations who do not actually own the property (individual donations/ fundraising, etc.), but still have an interest in clean-up. In other words, NFP broadens the revenue stream by allowing the income to be decoupled from the direct user for those who are interested in cleaning up their locality.

On the other hand, I have relatively little knowledge of NFPs, and whether a 1-person operation like this is realistic.

Feedback

So, the big questions I have are:

1) Is it realistic to achieve, over a period of time, a $30,000-$35,000 annual stream of revenue for a NFP entity, partially coming from donations/grants and partially funded by the user of the service? Maybe more accurately, assuming I would generate a fair amount of revenue from the services, would it be realistic to achieve $10,000-$20,000 of annual charitable funding for such a venture in a city of a moderate size (at least 100,000 population) or up to more Chicago-level (I'm not sure where I will settle post-Hawaii).

2) Would the general public/government/other NFP/corporate be willing to contribute general money to such a cause (if it is NFP), given the opportunity cost of other charitable organizations?

3) Would organizations or individuals be willing to pay or donate something specifically for the services (remembering that $15/hour would be my target rate of pay, so maybe closer to $20/hour charged to account for admin time)?

4) Are 1-person NFPs very common/feasible?

5) Which entity, taking everything into consideration would be better, keeping both the financials in mind and also other considerations (for-profit creates other incentives like warping my behavior towards those projects with higher pay, etc.)? In other words, the major pros and cons for each.

6) What would be the biggest challenges of such a venture?

7) I am going to do more research, but appreciate any reading suggestions on relevant topics.

8) Does this sound at all feasible, or is it simply a fool's errand? ;)

9) Other thoughts?

I appreciate any feedback you can provide. This is pretty early stage considerations and I'm not set on it...but it sounds like a nice way to spend my time that fits into my web-of-goals and provides some value to the broader world. I am looking for honest feedback and am not set on the idea if it doesn't make sense, so please lay into it and let me know what you think.

What I do not want to happen is to do this and realize that I am not providing sufficient value for the money I take in, or that the opportunity cost of donating to this cause is too high. I want this to be a win-win-win for the donor (if there is one), the organization/individual receiving the service, and myself. And if I don't think this venture can be those things, I will not pursue this.

User avatar
Lemur
Posts: 381
Joined: Sun Jun 12, 2016 1:40 am

Re: Small Business/NFP Feasibility

Post by Lemur » Tue Apr 30, 2019 9:54 am

My first thoughts was that this sounds like a non-profit venture and your best bet would be to set it up that way and apply for grants from your local government...

https://www.prattlibrary.org/research/t ... 07&id=5750

Where I live, the local government funds a group that goes around and picks up trash in our community. Some are volunteers (including disadvantaged youth and those who need community service hours for whatever purposes). Others are regulars I've seen so I'm assuming they make slightly more than minimum wage, possibly benefits.

Dave
Posts: 294
Joined: Fri Dec 19, 2014 1:42 pm

Re: Small Business/NFP Feasibility

Post by Dave » Thu May 02, 2019 1:48 pm

Lemur wrote:
Tue Apr 30, 2019 9:54 am
My first thoughts was that this sounds like a non-profit venture and your best bet would be to set it up that way and apply for grants from your local government...

https://www.prattlibrary.org/research/t ... 07&id=5750

Where I live, the local government funds a group that goes around and picks up trash in our community. Some are volunteers (including disadvantaged youth and those who need community service hours for whatever purposes). Others are regulars I've seen so I'm assuming they make slightly more than minimum wage, possibly benefits.
Thanks for the response and the link, Lemur.

Makes sense to me regarding local government grants, assuming no overlap in service/service area with other organizations.

Interesting to hear that it looks like there is an organization similar to what I'm considering in your locality. Would you mind sending me a private message with the name of this organization? It may be helpful for me to reach out to them with some questions.

Thanks!

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