Oftentimes, business planning is about picking a path.

The Give-As-You-Grow Sales Model

My business partner and I just went through an in-depth business planning retreat a few weeks ago, and while the session was grueling at times, it was a process that I am grateful for.  We needed to get clear about the direction of our company. We needed to make some big decisions. So we spent a week putting together financial projections.  We looked at our SWOTs (strengths, weaknesses, opportunities, and threats.) We acknowledged that we both tend to be perfectionists and overly optimistic at times. The retreat was a huge break-through for us.  We hashed out our differences of opinions and we gained a lot of insight about each other and our business model. However, the biggest “take-away” we came up with was our revenue based charitable-giving model. For most of our adult lives, we have always contributed our time, money and resources to charitable causes that we were passionate about. However, we also felt that we were limited in our capacity to give in that manner.  There is obviously a finite amount of  time, money and resources from two people.  As we continued to discuss our business model, we both agreed on how important it is to us to build into our business model what I call a “GIVE-as-we-GROW” sales model. Here is an example of how our charity-giving model works and why we decided to go down this path.

How Charity-Giving Is A Cost Of Doing Business

For most small businesses, their charity giving usually comes from their profits. The problem with that model is that those numbers can easily be skewed, especially if it is a privately-owned business. For example, the owner of a small business can pay herself a large salary (expense), and still not show a profit on the company profit and loss statement.  On the other hand, a public company has an incentive to show huge profits for their stock holders and their charity giving is great for their public image. There are also hybrid charitable-giving models as well from large companies such as Salesforce. However, we decided to make our charity-giving model a revenue based model. It’s a lot harder to skew sales numbers. For example, let’s say we sell 100 widgets at $10.00 each and we give 1% of revenue to charity. 100 x 10 = 1,000 x 0.01 = $10.00.  Now let’s say we sale 1,000 widgets where we give $100.00 to our favorite charity. As we grow our sales to 10,000 widgets we can now give $1,000 to our favorite charity. Do you see how this charity-giving model is built into the the revenue model versus a profit charity-giving model? I look at it as a cost of doing business. Being a good business citizen is a lot like being a good individual citizen. Individuals make contributions to their communities all the time.  They volunteer, donate, get involved in Little League, PTA, Boy Scouts. However, have you ever thought about how your business is making a contribution to the community just by its mere existence?  The fact that your business exist should have a positive impact on society and your community just like an individual’s existence. Now let’s say we want to increase our charity-giving by increasing the revenue sales percentage from 1% to 3% or 5%.  You can see that as sales continue to increase we may also want to increase the percent amount as well and give even more to our favorite charities!

Doing Good By Doing Business

We are passionate about our VISION for Hware and how we can use our business to make a positive difference in the world and we hope to inspire other small business owners to do the same. We want to encourage you to think about how you can “Do Good By Doing Business.” As small business owners, we can be consumed with our business and not have much time for the charitable causes that we love. Over the years, I have enjoyed how meaningful my life has been from my involvement in causes that I deeply cared about. And, by deciding to go down this path, I feel like I can now make a greater contribution to causes that are near and dear to my heart. If we all participated by giving back in a way that we can feel proud and bring meaning to our lives, I believe we will find additional joy from our businesses…profound joy!  That is why Hware is  launching our “Doing Good By Doing Business” program on our Facebook Fan page. Hware wants to acknowledge small businesses that are making this world a better place.  If you are a small business owner that gives back to your local community, we want to hear from you! You don’t necessarily need to contribute the way we decided to go about it, we just want to encourage other small business owners to give back as you grow your business versus waiting to accumulate your wealth before you do so.  We invite you to post a link to your business on the comments section below and tell us how your business is giving back to your community. We also invite you to join our Facebook Fan Page where a few times a month we will recognize and highlight a small business who is making a difference in their community.

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