Most companies struggle to find a vision that fits their social impact business. It’s like trying to build a bed you can dream on when all you’ve got are cement slabs that hold up the framework of your business.
For social entrepreneurship, you are handed your vision on a golden platter. Your company generally starts with the specific impact you want to make in the world. It’s who you are. It’s like you’ve been given the most comfortable bed in the world, complete with a canopy and pillows fit for a princess.
Dreaming is not a problem for you. But then, you need to find the cement slabs that you can use to build the framework of your business, which is tricky.
After speaking to many social enterprises, it’s clear that social entrepreneurship is difficult to greenwash (and by greenwash, I’m referring to the habit of marketing your company as organic, good for the planet, and wholesome, when really you’re not). Social entrepreneurship is loosely defined, but if you don’t exist for the sole purpose of making your impact, then people know. Instantly.
Running a business to make an impact isn’t this dream where you just shout out to the world, “Hey! Look at the good I’m doing!” and then customers flock to you. It’s more like a handicap. You’re competing against traditional businesses that can change and morph in any way that they need to in order to be profitable, whereas your social enterprise is tasked with prioritizing your social impact ahead of profits while needing to also remain profitable.
The point here is that, although developing a vision for your social enterprise doesn’t face the same challenge as a regular business, it often faces a flipped version of the same challenge. You need a business model which will fit with your vision.
And to find that, your vision needs to be crystal clear. You have to be totally committed to impacting or eradicating or radically changing something in the world. It needs to grab you by your soul and have you jumping out of bed in the morning with enthusiasm – because you’re going to need that drive in order to take your handicap and run with it.
Where do you spend your time when starting a social impact business?
When a group of people including myself were trying to get our business, Wild Tiger Tees, off the ground, we attended a social enterprise accelerator called SEA Change that helped us answer that exact question. When we went through the SEA Change, they gave us a specific framework, which included:
- Defining our goals
- Developing our vision, mission & strategy
- Building a logic model
- Defining & interviewing (talking to) our target customer
- Understanding our market and business model
- Building our MVP: minimal viable product
- Forecasting our finances & expenses
- Evaluating our financial metrics and key performance indicators (KPI)
- Measuring & communicating our venture’s impact
- Refining our story and pitch
- Communicating our brand
- Raising funds for our venture
Without following the above list too closely, let me take you through some of the steps I found most helpful.
9 Practical Steps in Building a Successful Social Impact Business
1. Goal, Vision, Mission and Strategy
The first part of the answer centers on having crystal clarity about who you are, and what you’re trying to achieve in the world. That will lead you to your vision. As mentioned, this is often the easy part for social entrepreneurs. After you have a clear vision, defining your mission is much more practical. It sets out the particular objectives that are going to help you fulfill your vision. Your mission is much more your game plan, the meat of your story. If your vision is world peace, then your mission is the plan for how to get there.
Now we move on to the steps that often come more naturally to regular business-people, steps which social entrepreneurs need to learn too.
2. Logic Model
Most people will have heard something about the importance of having a business plan. Before you get there, however, you want to build a logic model.
What’s that you ask?
A logic model is a simple way of thinking about what goes in and comes out of your venture.
I find it really helps to work backward when building a logic model.
Building your Logic Model
- Start with the broader impact you’re trying to make. This is your vision for your company. Typically, social entrepreneurs understand this vision well, because it’s what brought them to the table. However, it’s important to refine it to make sure it’s concise, compelling, and easy to share.
- Next, bring it a step closer to your business. What problem will your product or service solve? If you’re tackling homelessness, your impact is the reduction of homelessness. The specific outcomes you achieve as a contribution towards this goal might be that more people are getting jobs that are sustainable, and that awareness is raised in the community of how to work more effectively with someone who has experienced homelessness to get them the support that they need. Outputs are the products or services that you’re going to deliver. Whatever people are purchasing from you, whether product or service, that’s the output that you’re generating.
- Stepping back further, what are the activities that you’re engaging in to create the outputs. This is the core of your business. I find it helps to think of this and the inputs & requirements because if the inputs and other requirements are satisfied, it will enable these activities to commence. The inputs and requirements could be initial funding or equipment you require, but it’s also your partnerships and supply chain, and most importantly, your paying customer or clients. If you don’t get sales, then your activities are hard to engage in.
Logic Model vs. Business Model
A logic model is not a business model. Its purpose is to understand your vision and your method for doing business. It is not a financial model or a detailed plan of how you’re going to accomplish your goals. Rather, it is a simple framework to give you the clarity to fulfill your vision, and what you need to develop, and why you’re developing it. If the outputs and outcomes aren’t in line with the impact, then you know something is off. If you’re making decisions about the inputs and activities, you can ask whether they support the outputs and outcomes. A logic model brings cohesiveness to all the activities you undertake and makes sure they are serving your impact.
3. Business Model
Next up, you start thinking about your actual business model. How are you going to generate revenue? What transactions, interactions, services are you providing? As you dive into your business model, a whole host of questions start arising. Who is your competition? What are your strengths, weaknesses, opportunities and threats? Your business model starts to flesh out how you’re actually going to operate.
4. Financial Plan
Alongside your business model sits your financial plan. How does the money actually flow? How do you project your revenue? What are your fixed costs and variable costs? After all of your expenses and tax, what sort of income do you think you’ll be able to make?
5. Cash Flow
Beyond your profit and loss, you look at your cash flow. When does the cash come in and when does it go out. How much initial capital do you need to ensure that the balance is always positive? Who is funding this business and what sort of unseen investments required to get it off the ground. Here you’re looking for financial stability. It’s a great exercise to do to get a grasp on what needs to happen to have a sustainable business.
Following on from these steps, you should create metrics that are SMART – Specific, Measurable, Attainable, Relevant, and Timely. These metrics should tie into your vision and let you see whether you’re achieving your vision or not. Getting good metrics is critical. They paint a picture of the facts that build up your story.
Finally, it’s great to loop back to your social impact objectives. Ask the tough questions – does this make the best impact for the use of my time and effort? Is it sustainable?
By this point, you need to be engaging in validation. Go out and talk to people. Do they like your idea? Will they buy it? What do they really need? What would make them more likely to buy it? Quite often we get stuck in our heads, when really what will drive a business forward is understanding the needs of your customers and clients.
9. Minimum Viable Product (MVP)
Finally, get started by thinking about your MVP. What’s the smallest, quickest, dumbest version of your product that you can take to market. The quicker you get something in the hands of your users, even a rough prototype, the quicker you can refine your idea. Developing something super complex? Perhaps there is a simple alternative that can solve 40% or 60% of the problem and build an initial customer base that will help feed the final design so that you’re not wasting your money. It will also clue you in to whether or not you’ve got a market for your idea.
Start with a vision. If you’re a social enterprise serving a specific purpose, that’s a great place to start. Make sure you are crystal clear on your vision and that it fits your organization. You’ll need this clarity to develop a business plan that will enable you to succeed. But then you need to get on to looking at the nuts and bolts of how your business is going to work practically.
Entrepreneurship is largely about learning and adapting and producing results quickly. It’s about responding to what people want and need, listening deeply and then delivering something of value. Developing a solid business is key for building a successful social enterprise, and doing so will ensure that your social impact will magnify and continue to grow.