The long-term cost of pinching pennies
How much time do you or others in the organization spend putting flyers up around town or stuffing envelopes?
Does your organization print on the blank side of an already used a piece of paper - not for environmental reasons, but to save money?
The culture of any organization changes when it operates under such strict spending for too long. Creativity dries up and attitudes turn from what can be done to what can’t be done.
I want you to also hear me say this – pulling back on expenses is sometimes necessary.
I’m not talking about temporary measures. I’m talking about incremental changes intended to be temporary becoming more long-term.
This is the slippery slope leaders need to avoid.
Early in my career, I was the CEO of a smaller orchestra facing difficult financial challenges.
After a few months on the job, the orchestra had a seventy-five-thousand-dollar unsecured loan called by the bank and there was not enough liquidity in the organization to cover the full amount due.
Suddenly, the orchestra was facing the kind of bankruptcy that could close the doors forever.
We had ninety days to pay the amount due.
Our board chair assembled a task force to craft what a sustainable organization could look like. We started with a blank piece of paper and began to create a new business model for the orchestra.
When we finished, the budget had been cut by sixty percent with significant reductions in staff and programming. The musicians, music director and I took a twenty percent pay cut. We moved to donated office space and bartered for other goods and services.
We also rallied our community around the new plan and, in just five weeks, raised enough money to repay all our debts and set us up for success under our new business model.
Today, I’d like to share a way to responsibly bring creativity and growth into your financial planning.
Let’s be honest. It's not easy to entertain new ideas when you’re just trying to survive. And that is exactly why leaders must learn to respectfully receive and consider ideas.
If you’ve worked in the arts and culture industry for very long, you well understand that some ideas brought forward are not doable or won't meet the intended goal.
But sometimes an idea that seems outrageous or pie-in-the-sky is actually a brilliant way to move your organization forward.
It had only been a few months since the orchestra I led escaped bankruptcy when a board member called me to share his vision of bringing a classical music superstar to perform with the orchestra the following season.
I’ll admit my mind immediately started thinking about all the reasons why this wasn’t a realistic idea, starting with how could we manage a concert like this with a staff of just three people?
Having gone through such a dramatic, and traumatic, experience just a few months earlier made a remarkable impression on me and everyone else at the orchestra. It would have been easiest to maintain a bare bones operation and keep our heads down for as long as possible.
Fortunately, the board member understood the status quo wasn’t a healthy long-term plan.
He also understood that the organization was very risk-averse and would likely reject his idea before it had much chance to be considered. To his credit, he identified someone not already connected to the orchestra to fully sponsor a major guest artist. He also pitched his idea as a fundraiser, not just a regular concert.
With the financial risk to the orchestra mitigated, we got to work. And the results were stunning.
Just one year after nearly shutting our doors, the orchestra welcomed Itzhak Perlman to a sold-out house.
This was exciting for the musicians, for our board and staff, and especially our community. This was THE event of the year. We made a considerable profit on the event and reinvested the initial guest artist sponsorship as a financial guarantee for a similar event the following year.
It also changed our narrative in the community from a struggling orchestra to one full of excitement and potential.
Leaders need to remain growth-minded enough to not reflexively ward off opportunities no matter how big or small they may be. I know from my own experience how easy it is to reactively reject an idea when times are tough.
However, when a leader does that for too long, people stop suggesting ideas altogether.
The practical impact is it trains your team that it’s much easier to stay silent than share their idea only to get shot down.
Growth and fiscal responsibility don’t have to be a zero-sum game. In fact, pinching pennies for too long has the effect of paralyzing your organization to the point of being unable to adapt to a changing environment.
Shifting your mindset from what can’t be done to what can be done is sometimes difficult to do on your own. I would be happy to help your organization through these discussions and make a plan to be both vibrant and fiscally responsible.
There are three ways we can connect.
Make sure to follow me and Nave Strategies on LinkedIn
If you prefer to get tips and advice through email, sign up to receive my updates at NaveStrategies.com. Scroll to the bottom of the homepage and submit the form.
If you have a question about your unique circumstance, direct message me through LinkedIn with that question. I’ll make sure to get back to you.
One final thought – being both vibrant and fiscally responsible is the difference between your organization surviving and your organization thriving.
Let me know if I can help your team get there.