Social Enterprise Town Hall Meeting

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Are you feeling overwhelmed with the number of grant proposals that you are writing or the hours that you are logging planning yet another special event? Have you ever wondered about a better way? Non-profits outside the US have relied on “social enterprise” or earned income for years. In fact, very little of their funding comes from grants, special events, or traditional philanthropy.

The concept of earning your own income provides non-profits with three advantages – a solid strategic business plan for operations, a sustainable source of revenue, and unrestricted funds. This presentation covers the basics of social enterprise.

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Social Enterprise Town Hall Meeting

  1. 1. Charity? or Mission-Driven Business? Getting Started on Social Enterprise Presented by Jean Block and Randy Gleason Social Enterprise Ventures, LLC Social Enterprise Ventures LLC socialenterpriseventures.com
  2. 2. What is Social Enterprise? <ul><li>It is unrestricted renewable income that creates the path toward sustainability and enhances your mission. </li></ul><ul><li>It is generated through sales, payment for services or other business opportunities. </li></ul><ul><li>It is yours to use as your organization sees fit. </li></ul><ul><li>It builds upon itself and earns more. </li></ul><ul><li>It should not replace fundraising – it is a new tool in your organizational tool kit. </li></ul><ul><li>More money = more mission! </li></ul><ul><li>  </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  3. 3. Traditional Funding <ul><li>Grants, special events, donations, sponsorships, underwriting, etc. </li></ul><ul><li>You work hard to get it, use it up and have to go back for more. </li></ul><ul><li>There are strings attached: grantors require reports to ensure you have met their funding requirements, donors at a special event want to have a good time, enjoy the food, etc. </li></ul><ul><li>Traditional funding is usually restricted in some way. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  4. 4. Myths about Social Enterprise <ul><li>Nonprofits can’t make a profit. Y ou do now – you just aren’t paying taxes on it! </li></ul><ul><li>It’s a quick fix – We can do this tomorrow. </li></ul><ul><li>If we earn money, we will lose our nonprofit status – Nope. Not likely. </li></ul><ul><li>What if we have to pay tax? Well, what if? </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  5. 5. Why Consider Social Enterprise? <ul><li>The funding marketplace is changing: </li></ul><ul><li>Corporate giving is now directed toward investing for the long term rather than buying tables for one night! </li></ul><ul><li>Government funding is diminishing and being redirected. </li></ul><ul><li>Donors are tired of giving to organizations that operate with a poverty mentality. </li></ul><ul><li>What does this change mean for your organization? </li></ul><ul><li>It means a shift to earned income instead of relying on a 'hand out.&quot; </li></ul><ul><li>Nonprofit is a tax designation, not a business plan! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  6. 6. And…. <ul><li>Remember the definition of insanity… </li></ul><ul><li>If you want things to change in your organization, you will have to invest in a change process! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  7. 7. Assessing Organizational Readiness <ul><li>Board and Staff are willing to invest in change from charity-think to sustainability! </li></ul><ul><li>Board and Staff are open-minded. </li></ul><ul><li>Board and Staff create a dedicated team to learn social enterprise. </li></ul><ul><li>Ensure that every member of the team is committed to the journey. </li></ul><ul><li>Board and Staff are willing to invest the time and dollar resources into learning social enterprise. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  8. 8. Typical Outcomes <ul><li>Fundamental and systemic changes in the way you manage your nonprofit business. </li></ul><ul><li>A business plan for an earned income social enterprise venture. </li></ul><ul><li>Enhancement of current programs and services by providing value added benefits that create new income sources from new payer markets and customers. </li></ul><ul><li>A new objective method by which to evaluate current and future programs, services and income opportunities.   </li></ul><ul><li>A new language. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  9. 9. <ul><li>Burning Questions? Ask Randy now! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  10. 10. What is Involved? <ul><li>We have learned that seven basic skills are involved in the journey to become a successful social entrepreneur. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  11. 11. Start With a Common Understanding of the Basics <ul><li>Organizational Focus </li></ul><ul><li>Mission, Vision and Core Values - The groundwork for social enterprise. </li></ul><ul><li>Internal and External Forces - What motivates your organization to develop earned income? </li></ul><ul><li>Mission and Dollar Goals - How will you measure success? </li></ul><ul><li>Stakeholder Communication - Who are they? What are their concerns? How will you communicate with them? </li></ul><ul><li>This is the beginning of market research. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  12. 12. Build an Inventory of Assets <ul><li>Core Competencies – What you do extremely well (e.g. your products and services). </li></ul><ul><li>Physical Assets – What you have that is underutilized. </li></ul><ul><li>Technical and Knowledge Assets – What you know (e.g. training). </li></ul><ul><li>Relationship Assets - Who you know that can help with social enterprise (e.g. people with influence). </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  13. 13. Set Objective Evaluation Criteria <ul><li>Set parameters to evaluate potential earned income opportunities. </li></ul><ul><li>Narrows the field to serious potential opportunities. </li></ul><ul><li>Prevents WHO HOO! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  14. 14. Brainstorm Opportunities <ul><li>Leverage your assets into earned income. </li></ul><ul><li>Service Opportunity - Delivers a service to a market that you currently serve or a new market: A human service agency bundles current and new programs for seniors, marketing to their adult children and caregivers. </li></ul><ul><li>Knowledge Opportunity – Delivers your knowledge to a current or new population (nonprofit or for-profit): A nonprofit training agency develops training programs for small businesses, increasing training revenues by 50% in the first year. </li></ul><ul><li>Product Opportunity - Produces or delivers a tangible product: A food bank expands its product line to include non-food items. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  15. 15. Brainstorming… <ul><li>Employment Opportunity - Provides direct employment to current or future customers or clients: An agency serving persons with disabilities expands its greenhouse program into the organic market. </li></ul><ul><li>Unrelated Venture Opportunity - Takes advantage of underutilized assets or develops an opportunity unrelated to your asset inventory: An agency holds an on line auction in partnership with a for profit business. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  16. 16. Evaluate Opportunities <ul><li>Rank and score the opportunities. </li></ul><ul><li>Use objective criteria. </li></ul><ul><li>Select those with highest initial potential to reach mission and dollar goals. </li></ul><ul><li>Begin Market Research & Feasibility . </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  17. 17. Market Research & Feasibility <ul><li>Venture Market Research Part 1 : </li></ul><ul><li>The Customer(s) </li></ul><ul><li>Introduction to Market Research </li></ul><ul><li>Market Push vs. Market Pull </li></ul><ul><li>Market Trends </li></ul><ul><li>Target Market Planning </li></ul><ul><li>Target Markets: </li></ul><ul><ul><li>market size </li></ul></ul><ul><ul><li>buyers vs. users </li></ul></ul><ul><ul><li>buyer motivation </li></ul></ul><ul><ul><li>buyer profiles </li></ul></ul><ul><ul><li>features and benefits </li></ul></ul><ul><li>  </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  18. 18. … a quote about research… <ul><li>“ You were right regarding the idea versus the results of the research. We found that the market we thought was interested really was not or already had the need taken care of. It's teaching us the value of research and continuing to dig deeper on our ideas. Most of all, it's showing us to follow where the research leads.” </li></ul><ul><li>Zack Wilson, PR/Development </li></ul><ul><li>High Plains Food Bank, Amarillo Texas </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  19. 19. <ul><li>Burning Questions? Ask Randy now! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  20. 20. Competitive Analysis <ul><li>Venture Market Research Part 2: </li></ul><ul><li>The Competition </li></ul><ul><li>Direct Competition </li></ul><ul><li>Indirect Competition </li></ul><ul><li>Competition’s strengths and weaknesses </li></ul><ul><li>Market Differentiation – How will you compete? </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  21. 21. Costing Analysis <ul><li>Costing, Financing and UBIT </li></ul><ul><li>Defining costs - direct, indirect, variable, fixed, start up and recurring. </li></ul><ul><li>Break Even Point - Profit Margin. </li></ul><ul><li>Explore financing options from banks, nonprofit lenders, foundations. </li></ul><ul><li>Definition of UBIT – IRS Publication 598 </li></ul><ul><ul><li>It is a trade or business, </li></ul></ul><ul><ul><li>It is regularly carried on, and </li></ul></ul><ul><ul><li>It is not substantially related to furthering the exempt purpose of your organization. </li></ul></ul><ul><ul><li>Get professional advice at this stage in the planning process . </li></ul></ul><ul><li>  </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  22. 22. Sales Planning <ul><li>Elements in a Sales Plan </li></ul><ul><li>Customer Profiles – Buyers and End Users. </li></ul><ul><li>Market Positioning – Jaguars or Chevrolets? </li></ul><ul><li>Distribution Methods – How will you reach customers and end users? </li></ul><ul><li>Pricing – High Price vs. Budget Price – sales volume issues. </li></ul><ul><li>Promotion – How will you tell potential customers and end users about your social enterprise? </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  23. 23. Write a Business Plan <ul><li>Pull everything you’ve learned into one document: </li></ul><ul><li>How does the venture support your mission? </li></ul><ul><li>What are mission and dollar goals for the venture? </li></ul><ul><li>Describe the target customers and end users. </li></ul><ul><li>What customer needs are addressed? </li></ul><ul><li>What will motivate customers to buy your venture? </li></ul><ul><li>Define your competition and your competitive advantage. </li></ul><ul><li>Pricing strategy. </li></ul><ul><li>Promotional strategy. </li></ul><ul><li>Start up costs. </li></ul><ul><li>Ongoing venture costs. </li></ul><ul><li>Annual financial projections. </li></ul><ul><li>Financing required. </li></ul><ul><li>Plan to repay financing. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  24. 24. <ul><li>Burning Questions? Ask Randy now! </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  25. 25. Examples of Social Enterprise <ul><li>New Uses/Markets for Existing Physical Assets </li></ul><ul><li>An agency serving persons with disabilities opens their evening/weekend respite home to drop in day care. </li></ul><ul><li>A residential program takes over management of its homes from HUD, reducing overhead and transferring the financial gains to its own programs. </li></ul><ul><li>An agency serving persons with disabilities expands its greenhouse program into the organic market. </li></ul><ul><li>An agency revamps its thrift store to attract a higher-end market, adds special programs and services for that market. </li></ul><ul><li>An agency remodels ineffective space, adds general support services and rents space to small businesses and other nonprofits. </li></ul><ul><li>An agency opens its camp to corporate and private users. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  26. 26. Examples of Social Enterprise <ul><li>New Uses/Markets for Technical/Knowledge Assets </li></ul><ul><li>An agency opens its training classes to other agencies whose staff need required training. </li></ul><ul><li>A human service agency bundles current and new programs for seniors, marketing to their adult children and caregivers. </li></ul><ul><li>A food bank expands its product line to include non-food items. </li></ul><ul><li>A counseling agency develops continuing education credit programs for psychologists and counselors. </li></ul><ul><li>A nonprofit training agency develops training programs for small businesses, increasing training revenues by 50% in the first year. </li></ul><ul><li>An advocacy agency expands its annual awards banquet to include a statewide conference.   </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  27. 27. Examples of Social Enterprise <ul><li>New Ventures </li></ul><ul><li>An agency takes over management of its car donation program, previously operated through an out-of-state for profit company. </li></ul><ul><li>An agency holds an on line auction in partnership with a for profit business. </li></ul><ul><li>An agency providing services for persons with disabilities opens a coffee kiosk, employing clients. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  28. 28. … and a quote… <ul><li>&quot; During these challenging economic times Casa Esperanza has had to face the hard truth that our faithful regular funders are unable to fund at past levels - sometimes not at any level.  If it were not for our Give Hope a Ride vehicle donation program, Casa Esperanza could not continue the excellent programs and services for our guest families.  </li></ul><ul><li>The time and money our social enterprise team invested in training four years ago has certainly proved to be well worth it!&quot; </li></ul><ul><li>Eileen Casey Cook, CEO </li></ul><ul><li>Casa Esperanza, Inc. & Casa Esperanza Foundation, Inc. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  29. 29. … another quote <ul><li>“ The Social Enterprise Workshop helped the Amarillo Family YMCA focus more on building a solid business plan for our existing enterprise (membership) based on the wants and needs of our clientele.  The stakeholder, member and community surveys were true eye openers as to what our clientele really wanted.  We used those suggestions to build an enhanced membership program called Fitquest which we implemented and began marketing in December 2008.  Our membership numbers have begun steadily growing and the response from the new participants has been very positive.” </li></ul><ul><li>Debbie Wright </li></ul><ul><li>President, CEO, Amarillo YMCA </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  30. 30. Expedition © Training Program Social Enterprise Ventures LLC socialenterpriseventures.com
  31. 31. What Does Training Involve? <ul><li>A team of agency Staff and Board (5-12 is best) </li></ul><ul><li>Several agency teams trained at the same time. </li></ul><ul><li>Seven basic modules of classroom training with consultation and guided homework over about 6-9 months, usually in 4-7 sessions. </li></ul><ul><li>A comprehensive workbook. </li></ul><ul><li>Consulting for up to one year. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  32. 32. What Does Training Cost? <ul><li>Our Expedition training costs $12,000 per agency, regardless of the size of your team. It includes the seven classroom modules, guided homework and consultation up to one year. </li></ul><ul><li>That's only $1,000 per month to invest in sustainability ! </li></ul><ul><li>Here’s an Idea: Learn it and Earn it! </li></ul><ul><li>Use Expedition as an earned income venture for your organization. Become a trainer and pay SEV a licensing fee per group trained. </li></ul><ul><li>Visit www.socialenterpriseventures.com for more information. </li></ul>Social Enterprise Ventures LLC socialenterpriseventures.com
  33. 33. Let’s Talk! <ul><li>For a copy of this presentation, email [email_address] </li></ul><ul><li>Want to Learn More? </li></ul><ul><ul><li>www.socialenterpriseventures.com </li></ul></ul><ul><ul><li>1.888.647.2392 </li></ul></ul><ul><ul><li>Announcing our newest training! </li></ul></ul><ul><ul><li>Exploration – Management by Assessment. </li></ul></ul><ul><ul><li>Benchmark your organization against best practices in 7 core areas. </li></ul></ul>Social Enterprise Ventures LLC socialenterpriseventures.com

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