Venture Concept #2

Original

Opportunity

It is often the case that nonprofit firms fall behind in technological and infrastructure needs.  This is due to the fact that these firms do not reinvest income in the same manner as for profit and government sector counterparts.  One issue that arises from this lack of investment is that nonprofit firms tend to fall behind technologically.  When these firms fall behind they fail to stay on the same competitive level as other nonprofits, for profits and governmental firms.  Currently nonprofit firms must use existing funding or grants to upgrade their technology.  Because these firms are designed to put as much funding as possible towards their missions they often times go without competitive technology.  I believe this will be a continuous opportunity as new technology is continuously emerging.  There currently are few firms that offer the services this idea wishes to execute.  Most of the few firms that do exist are for profit distributors.  As a nonprofit we would qualify to compete for government and private grants that may be able to drop our fees below market value.

Innovation

The service that this firm would provide would be vending computer science technology to nonprofits at, or below, wholesale pricing.  The first few steps to this would include solidifying relationships with wholesale distributors and securing 401(c)3 (nonprofit) status.  As with most nonprofits our income will be a researched mix of service fees, grants, and donations.  We will work with wholesale distributors to ensure the lowest pricing possible.  Our income that does not go to operating costs and salary will then be applied to the products we purchased, thus, lowering the pricing by that much to our clients.  Because our pricing is somewhat determined by competing for government grants our pricing model will be continuously fluctuating.  Service fees will be charged for consultation on technology purchases, however, this will vary firm to firm. 

Venture Concept

Because there are few similar services it may not be difficult to attract clientele.  This service will be new to these firms, which, may make them eager to participate.  The major source of direct competition will come from for profit firms that sell electronic goods wholesale.  A major weakness will be that once the organization is up and running, assuming success, there are few barriers to entry from competitors.  Another vulnerability may exist in that the few competitors that exist are major wholesale distributors.  If they have access to large amounts of capital they may be able to install barriers to entry of our firm. 

Packaging may not be an issue as we will be purchasing technology directly from manufacturing sources.  In the primary stages, our firms marketing does not need to appear on the packaging.  Theoretically, price points will be below market cost.  This is something this firm will rely on to attract clientele.  Depending on the size of order distribution will vary.  If the order is small, we will need to couple it with orders from other clients.  This will entail breaking up the shipment as it arrives and reshipping to multiple firms.  This may be an opportunity to brand packaging with our firm’s logo.  If the order from the client is sufficient to warrant a full wholesale order, then may be able to ship the order direct from the manufacture to the client.  Distribution will be in the form of shipping using an appropriate shipping company for each order.  It may be the case that the size of the order will determine who will receive the shipping contract on case by case basis.  Ideally customer support for products purchased will be handled by the manufacturer.  Because most orders will consist of computer related goods this is probably the most appropriate method.  These systems will likely come with limited, or extended warranties.  This firm would also like to be able to build shipping insurance into cost.  Thus, shipping firms would be the firms to address issues that arise from that.  The customer experience will include limited interaction with this firm’s staff. 

The firm would need to include at least one staff member to cultivate, and maintain, wholesale distribution network contacts.  It would also need at least one individual with tech experience who would be able to research, and recommend, appropriate purchases to clients.  The firm would also need someone, probably part time, who would handle accounting activities.  This individual would ideally be knowledgeable in nonprofit accounting.  Also, because this is a nonprofit venture legally a board of directors must be established.  This usually consists of local specialists strategically picked to offer advisory advice on business practices and mission statements.

The firms major advantage may be lack of completion.  With few firms, nonprofit or for profit, performing this specific service the barriers to entry dealing with completion will be few.  Also, because this is nonprofit startup costs will mainly be covered by grants and donations.  This makes the risk of entering the market much easier to handle.

In the future this firm may be able to offer other services to clients.  For example, social media marketing consultation.  This service may be a staff member who will spend x amount of hours helping a nonprofit firm establish, and maintain, social media as a marketing tool.  Other services that may be offered in the future may be software training, minor coding training, online accounting training, etc.

Beyond the initial launch of this venture, and following a few years as director, I would like to sit on the board of directors.  This would give me professional time to establish new ventures in the nonprofit sector.  My specialty lies in non-government organizations and their relationship to government organizations in post disaster scenarios.  So maybe something in that arena.

Reflection

I only received one piece of constructive criticism on my post.  I believe this was more of a misunderstanding than a critique.  The statement from one comment was wondering why non profit firms are restricted in their tech purchasing.  It is not that there are prohibitions on upgrading technology it is that nonprofits are reluctant to do so.  This is because legitimate nonprofits tend to put as much funding towards their causes as possible,often times sacrificing competitive advantages in the process.  For this I did not feel the need to amend my concept.