Individuals and businesses are becoming increasingly aware of their social, environmental, and ethical responsibilities, which is contributing to the recent surge in ‘social enterprises.’ Although the concept of a social enterprise is not new, the majority of social impact organizations were founded in the last decade. For instance, more than 57% of social enterprises in Canada were established in the past 6 years, while 89% of SEs in India are less than 10 years old. In addition to providing massive social change, these businesses employ millions of people around the world who are passionate about making a difference. In 2017, in the U.K., more than 1.44M people were employed by approximately 470,000 social impact organizations. This relatively new trend of social entrepreneurship means that there are plenty of opportunities to be creative and challenge the issues you feel most strongly about. If you are an ambitious person with the dream of changing the world, why not make that goal more achievable by preparing a business plan? Here, Gregory Casagrande, a serial social entrepreneur, discusses the key elements you should include in your business plan to increase your likelihood of success.
What is a social enterprise?
At surface level, many SEs look and operate like traditional businesses. However, “the fundamental difference between these two organizations is the underlying motivations of their founders,” says Casagrande. Generally, conventional entrepreneurs are driven by the desire for wealth and success, while social entrepreneurs are more interested in contributing to meaningful change. Although earning profits is not the primary incentive behind a social enterprise, it does play a critical role in the sustainability and growth of the venture. Instead of pocketing profits, these organizations prioritize reinvestment into the organization to promote the scaling of positive impact.
Different types of social enterprises
Social enterprises can employ one of many business model frameworks, such as the independent support model, market intermediary, or fee for service framework—to name a few. Organizations that follow the independent support model deliver a product or service to an external market and use the accrued profits to provide social programs to disadvantaged communities. Businesses that act as a ‘market intermediary’ advertise and distribute products to an expanded market. The beneficiaries are the individuals who supply the goods that are being sold internationally. In contrast, organizations utilizing a fee for service framework provide an important service directly to beneficiaries in exchange for a small fee. Consequently, there are several business models that entrepreneurs must consider when building their business plans.
1. Mission Statement
Every new company starts by developing a unique mission statement that encapsulates the organization’s objectives, strategy, and values. For charitable endeavours and social enterprises, a mission statement functions as an important reminder of the social goal the organization is committed to achieving. Developing a strong mission statement and corresponding guiding principles will serve as an important navigational tool to help guide owners and employees through their decision-making processes. As an organization grows, the business runs the risk of losing its core focus and unique culture. However, a good mission statement will protect the organization from losing sight of what’s important. Casagrande is the Executive Chairman of WaterHealth International (of New Jersey), an affordable and clean drinking water solution marketed in India, Nigeria, and Ghana. As stated on their website, WaterHealth’s mission is “to serve over 100 million consumers globally by the year 2022,” by providing scalable and safe drinking water.
2. Management and Operations
An effective business plan will highlight the organization’s founders and how they intend to implement their idea. Owners must emphasize their personal connection to the mission, relevant experience, education, and access to resources. In the event your team has a cutting-edge idea but lack the expertise or funds needed to execute your plan, you must identify methods for obtaining those key resources. The group must also define each member’s roles and responsibilities, as well as consider how the board composition may change over time. “Ultimately, a good business plan will outline key individuals and the skills each of them bring to the table,” says Casagrande.
In terms of day-to-day operations, some social enterprises hire employees that belong to marginalized groups or vulnerable communities. For example, there are several restaurant businesses across the United States whose mission is to build employment skills for underemployed groups, including at-risk youth, former drug-addicts, or ex-offenders. In many cases, the profit from food sales is put towards staff wages, training, and social betterment programs for employees. Depending on the business model in place, beneficiaries of social enterprises may be the organization’s workforce or other members of the community.
3. Products and Services
The products and services section of your business plan will outline what you intend to sell, the demand for your goods or services, and how you plan on competing with other businesses in the same product category. If you are going to use your business plan to procure funding or find partners, you need to emphasize the quality, value, and benefits of your offerings. “Most successful SEs have a good ‘product-cause’ fit that aligns their mission and their products,” says Casagrande. For example, millions of women in developing nations suffer from cardiopulmonary diseases as a direct result of inhaling wood smoke regularly. A company called BioLite sells stoves at or above market prices to well-off consumers and uses the profits to provide safe cooking and lighting to families throughout sub-Saharan Africa. As with many other social initiatives, this brand does an excellent job of tying a sense of purpose to their products while employing traditional business strategies to execute their mission.
4. Marketing & Sales
Most social enterprises rely on emotional appeals to push sales. While this may be an effective short-term strategy, it is seldom sustainable long-term. “Be a business first and then use your social impact story to strengthen your marketing message,” says Casagrande. Ideally, entrepreneurs should create a high-quality good or service and justify the product’s value with more than just their social mission. By developing a standalone product that is different from competitor’s offerings, businesses can market themselves as a frontrunner in their industry and build brand loyalty.
A marketing and sales plan should describe the channels you will use to reach your intended audience. To succeed at this, organizations must consider the characteristics of their target market. For example, where do they spend their time and what social media platforms do they prefer? In general, businesses can choose one or a combination of these channels: pay-per-click, email marketing, social media, content marketing, word-of-mouth, text messaging, podcasts, press releases, and more. With over a billion users, most companies operating in a first world setting will find their customers on Facebook. A major advantage of Facebook ads is the ability to target specific consumers using precise locations, demographics, and interests. Finally, organizations should create a schedule for each of their marketing efforts, indicating the timing of each advertisement.
5. Financial Plan
The financial section of a business plan will address the amount of start-up capital needed, the allocation of funds, and how owners expect to scale the business. At the same time, founders must indicate the organization’s projected revenue and expenses for a minimum of three years to determine if the plan is feasible or not. Hence, a strong financial plan is imperative to secure financing. Since social enterprises are structured differently from non-profits and traditional companies, they may secure funding through grants, investments—or a combination of both.
Social entrepreneurs can apply for grants through government bodies. These institutions are motivated by positive social outcomes but do not require any financial returns on their investment. In contrast, angel investors and venture capitalists are generally interested in hefty financial returns in exchange for a healthy injection of funds into the company. “A growing number of investors are participating in impact investing,” explains Casagrande. Impact investing refers to business investments that generate measurable social and/or environmental impact alongside a financial return. Consequently, social enterprises may be in an especially good position to receive funding due to the social benefits they provide to society.
“Consider your business plan a roadmap to success,” says Casagrande. An in-depth plan will help provide greater clarity on all aspects of your business, from defining your mission to creating an effective marketing strategy and securing funding. While some founders may be tempted to jump right into start-up mode without having done the proper research, adequate preparation will increase a team’s chance of success. Thus, by following Casagrande’s above advice, you and your partners will be much closer to bringing your social mission to life.
Find a Home-Based Business to Start-Up >>> Hundreds of Business Listings.
