Social Enterprise B aims to promote ethical cotton supply chains in the UK textile and fashion industry. Now that we've introduced the basics of business modeling in a social enterprise context, it's time to take the initial steps in developing your own business model for your idea.
SOCIAL
ENTREPRENEURSHIP AWARDS TOOLKIT
Project Concept and Design
WHAT ARE THE
IMPLICATIONS ON MY LIFE?
You may find yourself thinking about the business and its challenges all the time. Although you are focused on your business, make sure that you do not cut yourself off from the new developments happening around you.
DEFINING THE PROBLEM AND YOUR SOLUTION
Theory of the problem: The problem (social, environmental) you are aiming to solve / alleviate. Now that you have clearly defined the problem you intend to address (theory of the problem), the next stage is to develop your strategy for addressing this problem (theory of change).
SETTING YOUR VISION, MISSION AND VALUES
Your initial vision statements may be too narrowly focused on the actual project you have in mind, and may be much closer to mission statements. Unlike your vision and mission statements, your initial values are unlikely to change much as you progress; but as you develop your project and learn more about the environment in which you operate, you may be able to expand it with additional values.
STRATEGIES FOR OPERATING ON A SHOESTRING
Set Up and Start Up
THE FINANCIAL AND PERSONAL
COMMITMENTS OF SOCIAL ENTREPRENEURSHIP
This means that you expose yourself to further potential liabilities should anything adverse happen to the business. Often this focus means you have little time or emotional commitment to devote to loved ones, friends, family and interests.
DEVELOPING YOUR SOCIAL MODEL
Once you have defined your theory of action, your organization's social model will be complete. For example; your 'theory of the problem' will be closely related to your analysis of the market in which you operate, and your 'theory of operation' will provide you with many foundations for your business model, operational and organizational plan and marketing strategy. and the plan.
START UP BUSINESS PLANNING
Why it will address the needs of your audience - Why you are in the best position. As well as the parameters of your pilot, think about the objectives you want to achieve during this period.
MAPPING OUT YOUR OPERATIONAL NEEDS
Operational design will require you to begin to understand the details of the activities you will need to carry out (on a day-to-day basis) to deliver the interventions, outputs and outcomes you have defined as part of your Social Model and Strategy. One area that social entrepreneurs often shy away from is the financial management of the organization.
UNDERSTANDING YOUR TARGET AUDIENCE AND
The structure of the target group (this will often involve attempts to segment the target group into a number of core groups). As mentioned earlier, your value proposition is the way you articulate your offer to the target audience(s) - 'the solution to their need'.
DETERMINING THE RIGHT LEGAL STRUCTURE FOR
- Personal liability
- Ownership
- Funding
- Governance
- Profit distribution
Not as well recognized as some other legal structures such as Company Limited by Guarantee or Registered Charity. If the structure you choose is a limited liability company, you will have shared or full ownership of the company.
MAKING GOVERNANCE WORK FOR YOU
The name of the group performing the management function depends on the structure of the company. A shareholder is a shareholder or guarantor of the company, shareholders can also be called owners of the company.
GETTING STARTED WITH FINANCIAL MANAGEMENT
The opening balance sheet sets out the financial position at the beginning of the year. All transactions of the organization will affect the income statement and/or the cash flow statement.
SECURING START UP FUNDING
The exception is UnLtd (www.unltd.org.uk), which supports individuals involved in social entrepreneurship. OrganizationTypical InvestmentInvestment TypeSectorPhase OrganizationLoanSharesQuasiEducationEnvironmentHealthSocialOtherStart-upPilot UnLtd www.unltd.org.uk£0.5k-£20k Big Lottery Fund www.biglotteryfund.org.uk£0.3k-£500k+ Eismee Fairburn Foundation www.esmeefairbairn.org.uk£1k-£ 250k+ Comic Relief www.comicrelief.com£25k-£40k Social Investment Business www.socialinvestmentbusiness.org£3k-£10m Big Issue Invest www.bigissueinvest.com£50k-£500k Entrepreneurial www.cafonline.org£20k-£350k Triodos www.Triodos.co.uk£250k-£750k Charity Bank www.charitybank.orgUp to £1m Bridges Ventures Ltd www.bridgesventures.comUp to £1.5m.
STAGE #4: PILOTING
KEY TRAITS OF A SUCCESSFUL
Piloting
DEFINING SOCIAL IMPACT INDICATORS, SETTING
TARGETS AND REFINING YOUR SOCIAL MODEL
The best way to define your organization's social impact indicators is to refer back to your social model's theory of change and theory of action. The purpose of your social impact indicators is to measure the outputs and results that your organization has achieved and create a clear evidence base for your social model.
PROVING YOUR SOCIAL
MODEL: COLLECTING YOUR EVIDENCE BASE
Once you have defined your social impact indicators, the next step is to set specific social impact goals for the pilot period. Look at what others are doing: it's worth spending some time looking at how some organizations approach social impact measurement and define indicators. http://www.homelessoutcomes.org.uk/) - SOUL Record.
REFINING YOUR BUSINESS MODEL
By modifying these aspects of your business (and operating) model, you may be able to grow faster. Although these are marketing-related issues, they can sometimes lead to a broader refinement of your business model.
RECRUITMENT, LEADERSHIP AND MANAGEMENT
Secondly, it is important that you are more broadly aware of the law regarding discrimination in the workplace (including recruitment). Depending on the nature of the work, you will need to consider regular appraisal processes to assess performance.
DEVELOPING YOUR
MARKETING STRATEGY AND MARKETING PLAN
Routes to market' are the different routes or channels your organization will need to use to access the defined target audience with your value proposition. Your marketing plan (discussed later) will require you to consider how you will prioritize the various routes to market.
APPOINTING INITIAL BOARD MEMBERS
As your social enterprise grows and changes, you may need to adjust the talent mix on your board. Once you've identified the gaps you want to fill, you can start looking for board members who can fill them.
KEY FINANCIAL
MANAGEMENT OPERATIONS
You must also keep records of payments to and from your organization's bank account. Your company's breakeven point is the level of activity at which your income (ie the revenue generated by your activities) will equal your total cost base.
STAKEHOLDER
ENGAGEMENT AND BUILDING NETWORKS
Your Communications You need to be proactive in informing your stakeholders and your growing network about what you are doing and why it is important to keep doing it. Attending workshops, seminars and conferences requires you to speak and inform the people you meet – perhaps even handing out printed materials.
FINDING A MENTOR
It is not necessary, especially in the early stages, to have a mentor with specific social enterprise expertise. Having a mentor you can never get in touch with is not sustainable, nor will a mentee last long if they call their mentor every fifteen minutes with a crisis.
BEING AN ENTREPRENEUR VERSUS MANAGING A
BUSINESS
Operational Stability and Social Impact
REFINING THE MONITORING AND EVALUATION OF YOUR
Expansion of your activities into new geographic markets- e.g. change from the 'services provided in city X' to 'services provided in city X and Y'. Growth and expansion of your organization will likely increase the amount of social impact data/information that needs to be captured by your organization.
OPERATIONAL
PROCESSES, SYSTEMS AND INFRASTRUCTURE
While at start up it was probably a burden on simple, cheap, stand-alone systems (eg e-mail, website hosting, spreadsheet-based inventory control, spreadsheet-based invoicing, etc.), once you start thinking about long-term performance it might be worth it invest in more functional systems. Finally, a few words about operating assets such as office equipment, vehicles, machinery, etc.: when you start thinking about the long-term business, it is likely that an investment in equity will be attractive or even necessary (compared to the short-term forward options that are common during a start-up, such as informally borrowing funds from friends and supporters, sharing funds with other organizations or renting/leasing).
BRINGING ON NEW BOARD MEMBERS
Therefore, ensure that technical skills and experience on the board are balanced with soft skills such as social and communication skills. When the time is right, you can approach the individual for a board position.
FINANCIAL ANALYSIS
- Operating Profit Margin = Operating Profit / Revenue
- Return on Assets = Revenue / Fixed Assets
- Stock management = Stock Value / Cost of Goods Sold
- Current Ratio = Current Assets / Current Liabilities
- Acid Test Ratio = (Debtors+Cash) / Current Liabilities
- Debt Ratio = Total Debt / (Total Debt + Equity Invested + Retained
- Interest Cover = Operating Profit / Interest Payable on Debt
The previous section was about performance; the other major branch of financial analysis considers your organization's overall financial position, i.e. the interest coverage ratio takes into account how many times the organization's operating profit can repay your interest expenses.
USING BUSINESS ADVISORS
Business support organizations such as Business Link may be able to direct you to panels you can approach. Good advisors bring with them an ecosystem—their networks and contacts—that you can tap into.
STAGE #6: SUSTAINABILITY
Sustainability
MAXIMISING INCOME GENERATION
Before you change anything, try to make sure you have a good sense of what the likely cost-benefit outcome will be for your social enterprise. Let's take an example of a social enterprise that provides social inclusion and community engagement services, commissioned by local authorities, for older people.
OPTIMISING OPERATIONAL EFFICIENCY AND
EFFECTIVENESS
This has already been covered earlier in this theme of the toolkit and is perhaps the most critical aspect of human resource management. Introducing processes and systems in your organization was introduced earlier in this toolkit theme.
REFINING YOUR MARKETING PLAN
This may require different promotional techniques to effectively communicate the features and benefits of your value proposition to the relevant target group. This process may require you to make changes to your original offering (product/service) to make it more attractive to your target audience.
STAGE #7: LONG TERM GROWTH / REPLICATION
Long Term Growth/Replication
EXTENDING/REPLICATING YOUR SOCIAL MODEL
During the early stages of growth, the mission of a social enterprise is often self-regulated, driven by the passion and commitment of the founding entrepreneur(s) to deliver social impact. Defining and agreeing on social impact indicators will also play an important role in successful replication of your social model.
SOCIAL RETURN ON INVESTMENT
- Involve stakeholders
- Understand what changes
- Value the things that matter: use financial proxies in order that the
- Only include what is material
- Do not over claim: organisations should only claim the value that
- Be transparent: demonstrate the basis on which the analysis
- Verify the result: ensure appropriate independent
- Establishing scope and identifying key stakeholders
- Mapping outcomes. Through engaging with your stakeholders
- Evidencing outcomes and giving them a value. This stage involves
- Establishing impact. Those aspects of change that would
- Calculating the SROI. This stage involves adding up all
- Reporting, using and
Value the things that matter: Use financial proxies so that the financial proxies can be recognized, so that the value of the outcomes can be recognized. If well documented, your social change model should therefore allow you to move to phase 3 of the SROI process: demonstrating results and delivering value.