Mission Based Business Planning - Central Oregon Partnership


Published on

Presentation made to the Central Oregon Partnership 2005 on Mission Based Business Planning

Published in: Business
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Mission Based Business Planning - Central Oregon Partnership

  1. 1. Diversifying Your Funding through Social Entrepreneurship Mission Based Business Planning Cultivating Communities Conference May 20, 2005 Presented by Social Profits Mark Pomerantz, Principal Consultant mark@socialprofits.com www.socialprofits.com
  2. 2. Objectives for Today’s Session <ul><li>Gain a framework understanding of mission based social entrepreneurship </li></ul><ul><li>Think about your organization’s readiness to pursue entrepreneurial options </li></ul><ul><li>Explore some of your organization’s entrepreneurial options </li></ul>
  3. 3. Mission Based Business and Social Entrepreneurs <ul><li>“ Unlike a not-for- profit that thinks of itself as a charity, the successful not-for-profit is really a mission-based business… It is, in short, the era of the social entrepreneur.” </li></ul><ul><li>Peter Brinckerhoff </li></ul>
  4. 4. 8 Tenets of Social Entrepreneurship Getting the most mission out of the resources at hand: <ul><ul><li>Focus on community needs </li></ul></ul><ul><ul><li>Match those with your core competencies </li></ul></ul><ul><ul><li>Assess risk and gauge opportunity </li></ul></ul><ul><ul><li>Develop new project ideas and test their feasibility </li></ul></ul><ul><ul><li>Write a business plan and project finances in the plan </li></ul></ul><ul><ul><li>Tap into new sources of funding </li></ul></ul><ul><ul><li>Develop the idea of social entrepreneurship throughout the organization </li></ul></ul><ul><ul><li>Make sure that mission, not money, is the ultimate bottom line </li></ul></ul>
  5. 5. 8 Attributes of Successful Social Entrepreneurs <ul><li>Telling your organizations’ story with impact to touch hearts and raise money. </li></ul><ul><li>Finding a corporate sponsor(s) attracted to your mission and your life changing outcomes. </li></ul><ul><li>Using “cause related marketing and purchasing” effectively. </li></ul><ul><li>Generating significant earned income from core program capacities. </li></ul><ul><li>Delivering your message effectively with targeted email. </li></ul><ul><li>Making your web site come alive to deliver your mission and sales message. </li></ul><ul><li>Generating individual donations </li></ul><ul><li>Taking intelligent risks. </li></ul>
  6. 6. 8 Tips for Maximizing Social Entrepreneurship Success (Rosabeth Moss Kanter & William Bygraves) <ul><li>Founders ----- Have a Core Group with Entrepreneurial Skills </li></ul><ul><li>Focus ---- Find a Niche Market to Focus Your Efforts On </li></ul><ul><li>Fast ----- When an Opportunity Presents Itself be Ready to Act and Seize Upon It </li></ul><ul><li>Flexible — Build into Your Organization an Ability To Respond to Rapidly Changing Market Conditions </li></ul><ul><li>Forever Innovating - -- Be Ready and Willing to Change your Product or Service When Warranted </li></ul><ul><li>Flat/Fair —Reduce Those Layers of Pyramidal Hierarchy to a Flat Linear Chain of Command and Encourage a Fair, Caring, Workplace </li></ul><ul><li>Frugal — Keep Overhead Low and Productivity High </li></ul><ul><li>Friendly/Fun — Entrepreneurial Companies are Friendly to Their Customers, Partners, and Workers and Reward Enthusiasm, Passion, and Good Work </li></ul>
  7. 7. 8 Step Preparation for Mission Based Business <ul><li>Research real-world case studies </li></ul><ul><li>Study sample business plans </li></ul><ul><li>Research funders </li></ul><ul><li>Conduct self-assessment process to determine if organization is ready for mission-based entrepreneurship </li></ul><ul><li>Feasibility Studies </li></ul><ul><li>Market Studies </li></ul><ul><li>Business Plan </li></ul><ul><li>Financing Presentation </li></ul>
  8. 8. St. Vincent de Paul Staffing Services <ul><li>PARENT ORGANIZATION: </li></ul><ul><li>St. Vincent de Paul Rehab Services (founded 1971) </li></ul><ul><li>Mission: To provide employment opportunities for individuals with disabilities </li></ul><ul><li>Programs: Provides vocational training and employment for more than 900 individuals in Oregon & Washington. Provides staffing services in six cities, electronics assembly plant, document imaging, assembly and packaging, security services, computer training schools and etc. </li></ul><ul><li>Annual operating budget: $21 million </li></ul><ul><li>Number of employees: 70 </li></ul><ul><li>Number of people served each year: 2600 </li></ul>
  9. 9. St. Vincent de Paul Staffing Services (cont.) <ul><li>TYPE OF BUSINESS : Staffing Services-Temporary Employment </li></ul><ul><li>Short and long term assignments, banking, clerical, light industrial, call centers, </li></ul><ul><li>Mission: Job creation for individuals with disabilities. </li></ul><ul><li>Year founded: 1989 </li></ul><ul><li>Structure: A program operated internally by a nonprofit </li></ul><ul><li>Headquarters city: Portland, Oregon (4 branches in OR, 1 in WA) </li></ul><ul><li>Geographic market: Oregon and Washington </li></ul><ul><li>CURRENT FINANCIAL PERFORMANCE </li></ul><ul><li>(fiscal year ending September 30, 2000) </li></ul><ul><li>Annual sales: $9,800,000 </li></ul><ul><li>Net profit: - $38,000 (- 0.4 per cent) </li></ul>
  10. 10. St. Vincent de Paul Staffing Services (cont.) <ul><li>SOCIAL RETURN ON INVESTMENT </li></ul><ul><li>Number of employees: 450 </li></ul><ul><li>Number of employees who are disabled: 400 </li></ul><ul><li>Number of “different” employees: 2500 </li></ul><ul><li>Number graduating to full time work: 120 (4.8%) </li></ul><ul><li>Average hourly salary for employees: $9.20-9.50 </li></ul><ul><li>Annual Payroll: $7,000,000 </li></ul>
  11. 11. St. Vincent de Paul Staffing Services (cont.) <ul><li>INITIAL INVESTMENT </li></ul><ul><li>Planning time required before operations began: six months </li></ul><ul><li>Dollars required before operations began: $35,000 </li></ul><ul><li>Source of planning dollars: Cash flow from manufacturing operations </li></ul><ul><li>Time until the business generated positive cash flow: three years </li></ul><ul><li>Additional working capital required before generating positive cash flow: $900,000 </li></ul><ul><li>Source of working capital: Gift of cash from the organization’s founder </li></ul><ul><li>Time required to recover planning dollars and working capital: six years </li></ul>
  12. 12. 8 Tenets of Mission Based Business Development <ul><li>Asset Based—uses core capacities of organization and staff </li></ul><ul><li>Fills Community Market Niche </li></ul><ul><li>Integrated Workforce: Core Population and Higher Skilled Population </li></ul><ul><li>Hi-Labor Intensive and Low-Capital Intensive </li></ul><ul><li>Cause Related Marketing and Purchasing Links </li></ul><ul><li>Low Start-Up Costs </li></ul><ul><li>Cultivation of Major Clients with Cause Marketing/Purchasing Ties </li></ul><ul><li>Development of Community Ties and Ties with Local Business Initiatives </li></ul>
  13. 13. 8 Step Business Plan <ul><li>1 . Organizational Mission </li></ul><ul><li>2. Problem Statement & Relation to Organizational Mission </li></ul><ul><li>    Individual Stories of Clients </li></ul><ul><li>3. Organizational Background and Identification of Core Strengths </li></ul><ul><li>    Existing Businesses </li></ul><ul><li>    Services to Disabled Persons </li></ul><ul><li>Identification of Community Assets </li></ul><ul><li>    Development Team </li></ul><ul><li>4. Problem Solution and Identification of Market Opportunity  </li></ul><ul><li>    Idea Generation </li></ul><ul><li>Market Analysis-Risks, Competition </li></ul><ul><li>    Analysis of Organization’s Strengths/Weaknesses </li></ul><ul><li>    Analysis of Competition' s Strengths and Weaknesses </li></ul><ul><li>    Partnerships </li></ul><ul><li>5. Projected Outcomes (Social Return on Investment) </li></ul><ul><li>6. Financial Plan </li></ul><ul><li>    Cash Flows </li></ul><ul><li>    Unrelated Business Income Tax and Corporate Structuring. </li></ul><ul><ul><ul><li>Strategy for Sustainability </li></ul></ul></ul><ul><li>    Investment Opportunities  </li></ul><ul><li>7. Marketing Plan </li></ul><ul><li>Customers </li></ul><ul><li>Outlets </li></ul><ul><li>Partnerships </li></ul><ul><li>Media and Advertising Plan </li></ul><ul><li>8. Implementation and Phasing Plan </li></ul>
  14. 14. 8 Step Brainstorming To Find Partners & Supporters (Adapted from and with thanks to Terry Axelrod ) <ul><li>1. Get a team of people. The more diverse your team members, the more diverse the “Asset Map”. At some point, you will want to do this exercise with your board as well. </li></ul><ul><li>2. Hi Tech version—use The Brain or Mind Mapping programs. Lo-Tech version-Get out a large piece of paper and colored markers. Lead your team through the process by first drawi ng a circle in the center of the page. Put the name of your organization in the circle. </li></ul><ul><li>3. Then surround your organization, like the spokes on a wheel, with all the other groups you come in contact with on a regular basis . Start with groups like your board, staff, volunteers, donors and funders, vendors, and other groups in the community that you interact with regularly. You may be able to subdivide groups like your board or staff further into former board, former board presidents, founding board members, etc. Go onto to existing customers, users, etc. Ask your team to rack their brains about who in their personal or business networks could be helpful. </li></ul><ul><li>4. Now, with a differently colored pen or marker, list the resources each of these groups has . For example, your board members in general might have an abundance of passion, commitment, expertise, contacts, and money. Your former board presidents may have additional resources. List potential donors, potential partners and potential customers for a new venture. </li></ul>
  15. 15. 8 Step Brainstorming Plan (con’t) <ul><li>5. Next, go back over each group and ask what their self-interest would be in learning about your organization and your potential new ventures. Ask yourself what is the value or benefit for them? </li></ul><ul><li>6. Now, add in some fantasy categories. Who is not yet on your map that you would love to have associated with your organization? Whose involvement would leverage a whole world of support and credibility? Does anyone on the team have any possible connections with these fantasy folks? </li></ul><ul><li>7. Finally, draw connecting lines between those groups on your Asset Map who already interact or talk to each other . If some of people come to your session, who else will they tell? If your board and vendors talk only occasionally, you might draw a dotted line. For those groups who don’t talk to each other at all, draw no connecting lines. Be sure to include your fantasy groups. Again, who on your organization’s Asset Map already might be talking with them? </li></ul><ul><li>8. Now, stand back from your Asset Map and notice which groups have the most lines connecting them to other groups. These groups are key to leveraging others. The bottom line is that discovering your entrepreneurial network doesn’t take a lot of financial resources; it’s all about using existing resources. </li></ul>
  16. 16. Mission Based Business Funding Sources <ul><li>Intermediary funding organizations can provide start-up capital at below market rates </li></ul><ul><li>There are three main sources of below market rate financing </li></ul><ul><ul><li>Foundations </li></ul></ul><ul><ul><li>Business Plan Competitions </li></ul></ul><ul><ul><li>Community Development Funders </li></ul></ul>
  17. 17. Foundations <ul><li>Foundations such as the Ford and Rockefeller Foundations have made Program Related Investments to entrepreneurial nonprofits for business start-ups </li></ul><ul><li>The Roberts Foundation has made multi-year venture development grants to San Francisco Bay area social enterprises </li></ul>
  18. 18. Business Plan Competitions <ul><ul><li>Partnership for Nonprofit Ventures </li></ul></ul><ul><ul><li>The Yale School of Management, The Goldman Sachs Foundation, and The Pew Charitable Trusts have joined together to form The Partnership on Nonprofit Ventures. The Partnership runs the National Business Plan Competition for Nonprofit Organizations, open to nonprofits seeking to start or expand successful profit-making ventures with substantial cash prizes and technical assistance offered to the winners. The four grand-prize winners each receive $100,000, the four runners-up receive $25,000 each www.ventures.yale.edu/ </li></ul></ul>
  19. 19. Business Plan Competitions <ul><li>Global Social Venture Competition </li></ul><ul><li>The Global Social Venture Competition  began in 1999 as a student-led initiative at the Haas School of Business. In May 2001, Columbia Business School and The Goldman Sachs Foundation partnered with Haas to extend the reach of the competition and help grow a national platform for social ventures.  In June 2003, the London Business School joined the competition partnership. This unprecedented partnership brings together the academic and financial worlds to support the creation of social ventures. </li></ul><ul><li>Each year, entrant teams from around the world compete for over $45,000 in cash and travel prizes.  This year, the Grand Prize of $25,000 will be awarded to the plan that achieves the best blended value (high economic and social returns). </li></ul>
  20. 20. Community Development Funders <ul><li>Calvert Foundation </li></ul><ul><li>Calvert Foundation makes loans to community development organizations that focus on affordable housing, small business, microcredit and other community development. Calvert Foundation lends to community development financial institutions (CDFI), and other organizations, including community development corporations, community loan funds, community banks and credit unions, social enterprises and micro finance institutions. </li></ul><ul><ul><li>Use of Funds: Loan Capital, guarantees, pre-development funding </li></ul></ul><ul><ul><li>Principal: $50,000 to $750,000 Investments are limited to 10% of the applicant’s total assets. </li></ul></ul><ul><ul><li>Term: Range from one year to five years. With sound financial condition, investments are often recommended for renewal at maturity. </li></ul></ul><ul><ul><li>Interest rate: 4.25% </li></ul></ul><ul><ul><li>Interest rates are based upon rates that are paid to investors in the Calvert Foundation. The Foundation operates on a 150 basis point spread between the interest earned on investments and the average interest paid to individual investors. </li></ul></ul><ul><ul><li>Payments: Interest-only, semi-annual payments with a balloon payment at maturity. </li></ul></ul><ul><ul><li>Collateral: None required. Investments are structured as general recourse obligations. </li></ul></ul>
  21. 21. Community Development Funders <ul><li>Partners for the Common Good has a mission to provide employment for as many workers as possible … make accessible the goods and services for a better life to as many persons as possible … ensure a more humane way of existence for future generations as well. </li></ul><ul><li>PCG accomplishes its mission by providing access to capital to community based organizations that build strong and healthy communities. </li></ul><ul><li>PCG requires that all of its applicants: (1) have a primary mission of promoting community development and/or serving low-income people or communities; (2) demonstrate that the use of the loan is consistent with PCG’s mission; (3) have been in operation for at least two years; (4) demonstrate the ability to use PCG’s capital productively; and (5) demonstrate the capacity to repay PCG. </li></ul><ul><ul><li>Loan Amount: $50,000 to $250,000 (PCG's historic average loan principal amount is $170,000) </li></ul></ul><ul><ul><li>Term: Short-term loans are available for terms ranging from one to five years. A limited pool of capital is available to support loans for terms of more than 5 years and up to 10 years. In providing long-term loans, priority will be given to borrowers engaged in innovative activities requiring &quot;patient&quot; capital or those that can use PCG's resources to leverage support from other financing sources. </li></ul></ul><ul><ul><li>Interest Rate: Prevailing market rate tied to the Wall Street Journal Prime Rate for short term loans (one year or less) and the U.S. Treasury five year note for loans greater than one year up to five years . Pricing will vary depending on term, risk, market conditions and PCG's cost of funds. Call (202) 289- 2637 for more information. </li></ul></ul><ul><ul><li>Payments: Loans typically structured as full balloons with quarterly interest-only payments and principal due at maturity. </li></ul></ul><ul><ul><li>Collatera l: Required, but flexible. </li></ul></ul><ul><ul><li>Commitment Fee : 1.0% of total loan amount. </li></ul></ul>
  22. 22. Publications <ul><li>Social Entrepreneurship: The Art of Mission-Based Venture Development, Brinckerhoff Jossey-Bass, 2000 </li></ul><ul><li>The Social Enterprise Sourcebook : Profiles of Social Purpose Business Operated by Nonprofit Organizations, Boschee, Northland Institute, 2001 </li></ul><ul><li>Social Purpose Enterprises and Venture Philanthropy in the New Millennium , Ed. Roberts Enterprise Development Fund, et al, 2000 </li></ul><ul><li>Enterprising Nonprofits: A Toolkit for Social Entrepreneurs , Dees, Emerson, Economy, et al Wiley, 2001 </li></ul><ul><li>Venture Forth: The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization, Larson, Amherst H. Wilder Foundation, 2002 </li></ul><ul><li>The Nature of Returns: A Social Capital Markets Inquiry into Elements of Investment and The Blended Value Proposition, Emerson, Harvard Business School, Boston, MA, 2000 </li></ul><ul><li>Blurring Sector Boundaries: Serving Social Purposes Through For-Profit Structures, Dees, Anderson, The Fuqua School of Business, Duke University, June 2002 </li></ul><ul><li>The Emerging Power of Social Entrepreneurship, Emerson, Roberts Enterprise Development Fund, 2000 </li></ul>
  23. 23. Websites <ul><li>Social Enterprise Magazine-Online www.socialenterprisemagazine.org / </li></ul><ul><li>Roberts Enterprise Development Fund www.redf.org / </li></ul><ul><li>Institute for Social Entrepreneurs www.socialent.org / </li></ul><ul><li>Social Enterprise Alliance www.se-alliance.org </li></ul>