April 26, 2011

Manonamission.biz - @plamb - facebook.com/pauljlamb

Agenda

Overview of Social Enterprise Sector Readiness ExerciseQ&AVenture Ideas Brainstorming &

Troubleshooting

Thinking outside of the Escalator

What is a Social Enterprise“An organization or venture that

achieves its primary social or environmental mission using business methods”

-Social Enterprise Alliance

Social Enterprise is not…

Why Launch A Social Enterprise?

• Sustainability• Increase social return on investment

(SROI)• Cultural transformation• Diversify & Leverage new funding sources• Honoring your social mission

Legal Structures

• For profit• Nonprofit• Hybrid (i.e., L3C)• Benefit Corp• Flexible Purpose Corp

See: Effective Social Enterprise — A Menu of Legal Structures

Sample nonprofit Social Enterprises

Social Enterprise Quiz (T or F)

Nonprofits can’t make a profit Nonprofits can’t (or shouldn’t) pay taxes It’s a quick financial fix If we earn money, we will lose our

nonprofit status Our staff already has all the skills needed

to run a social enterprise

A new era for Social Enterprise

Increased Federal investments-Office of Social Innovation-Office of Entrepreneurship &

Innovation Greater foundation interest New models (L3C, B Corp, etc.) Economic motivators

Profit-motivationMission-motivation

•Primary purpose is mission advancement

•Integration between social programs and business activities

Mission-Centric Social Enterprise

Social Program

s +

Enterprise

Activities

Mission-Related Social Enterprise

•Provides revenue for nonprofit operations and mission-related activities

•Often expands mission to achieve greater social impact

Social Program

s Enterprise

Activities

Non-MissionRelated

Social Enterprise•Not related or intended to advance mission

•Profit/funding potential is primary purpose

Social Program

s Enterpris

e Activities

$

Social enterprises vary depending on Enterprise Strategies

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

© REDF – Please do not distribute without prior permission from REDF

Planning for a social enterprise versus a small business

Business PlanBusiness Plan

Set up BusinessSet up Business

$ Returns$ Returns

$ Returns$ ReturnsSet social and financial goals

Set social and financial goals

Social impactSocial impact

Select business idea based on goals

Select business idea based on goals

Business PlanBusiness Plan

Set up BusinessSet up Business

The desired outcome of for-profit business is already known: to make a profit

The desired outcomes of a social enterprise are not obvious and so the goals need to be established first

© REDF – Please do not distribute without prior permission from REDF

Development Timeline

Why is it important to set goals? Ensure agreement between stakeholders

◦ Gain agreement from staff with different roles, the board and any other stakeholders on the objectives of the enterprise

Select a business idea and guide the business planning◦ Business ideas can be evaluated objectively

using the enterprise criteria Guide business operations

◦ Clear social and financial goals help the enterprise manager make operational decisions

Evaluate whether the enterprise is successful◦ Tracking financial and social metrics against

initial goals shows whether the enterprise is fulfilling stakeholders’ expectations© REDF – Please do not distribute without prior permission from REDF

Sample Social Enterprise Metrics Dashboard

Operational Metrics Benchmark Baseline Projected Actual Variance New clients New contracts Average size of contracts Customer Satisfaction Rankings

Financial Metrics Benchmark Baseline Projected Actual Variance Gross Revenue Expenses/COGS

Operating Profit or (Loss)

Operating Margin New Grants for Business

Social Metrics Benchmark Baseline Projected Actual Variance Homeless clients put to work Youth trained Average increase in client wages Community participation numbers

Used with prmission from ZeroDivide

Advanced Measurement Tools

Stride Center/ReliaTech

Founded in 2004 through $100K grant 3 Stores around Bay Area $400K in gross income 2011 (expected) 62% Earned income, 38% Grant income Covers 15% of nonprofit budget Currently profitable

If factor in grant funding…and/or SROI

Used with permission from ZeroDivide

Used with permission from ZeroDivide

Used with permission from ZeroDivide

Start With Some Basics

What are your core values? Are your values compatible with a venture

approach? What are your motivators for exploring a

venture? Who are your stakeholders (internally &

externally)? What are your long term social & financial

goals?

21

Key Steps

Assess readiness Build an inventory of assets Brainstorm ideas Conduct market research Business planning Piloting Launch

The Readiness ChallengeReadiness Questions PointsIs your Executive Team & Board able to get fully behind an earned income strategy?

10

Is your organization open to a totally new way of doing business, both culturally AND operationally?

10

Are you willing to invest 6-9 months doing feasibility work, market research, business planning before going operational?

10

Do you have or are you able to raise startup and operational capital?

10

Is your staff and other stakeholders open to an earned income venture in house?

5

Are you prepared to organize an outside advisory team of experts?

5

Are you willing to hire outside operational staffing? 5Will your venture align fully with your social mission?

5

Are you open to revising your business model, if needed?

5

Are you in it for the long haul? 5Total

Do’s…Identify clear goals & planGet full stakeholder buy-inSet up an advisory group of expertsConduct market researchWrite a business planLet the venture type determine the legal

structureBe clear on your business model, but open to

revisionsAlign your business model with your

capabilitiesHire the right people

Don’ts…

Expect immediate results Just target nonprofit clients Give short shrift to marketing Neglect financial planning for

VENTURE Forget to track & measure results Ignore long term & growth planning

Resources Social Enterprise Alliance Rootcause Business Planning Guide for SEs Business Plan Pro Social Enterprise Edition Social Return on Investment (SROI) from REDF Effective Social Enterprise — A Menu of Legal

Structures ZeroDivide Community Investment Resources Social Enterprise Books

Don’t wait for the escalator to get fixed – it may never happen!

Social Enterprise Concept Brainstorming

What ideas do you have for starting a venture(s)? What relevant physical, financial capital, and social capital to you

have available(s)? What kind of investment would you need to launch this

venture(s)? Where would you get the seed money to start your venture? Do you know of anyone else who is doing a similar venture in the

nonprofit space? Any idea who your competitors are? What might your unique value proposition or differentiator be? Who would your main customers be? How would you market the venture (both offline and online)? What would be your process to get the venture off the ground?

Thanks from…

Paul Lambpaul@manonamission.biz www.manonamission.biz @plamb (on Twitter)

NOW GO OUT AND CHANGE THE FACE OF NONPROFITS AND HOW THEY IMPACT THE WORLD!!!