APS1015 Class 10: Scaling Social Entrepreneurship


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Social entrepreneurship generally aims to deliver solutions that can amplify social impact, across individuals, communities, and regions. Scaling social innovation is not always straightforward, and includes a different set of considerations than starting a social enterprise.

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APS1015 Class 10: Scaling Social Entrepreneurship

  1. 1. APS 1015: Social Entrepreneurship Class 10: Scaling Social Enterprise Wednesday, July 10, 2013 1 Instructor: Norm Tasevski (norm@socialentrepreneurship.ca) Karim Harji (karim@socialentrepreneurship.ca)
  2. 2. © Norm Tasevski & Karim Harji Agenda •  Seizing the Scale Opportunity •  Managing the Scale Opportunity •  Break •  Overview of Final Presentations 2
  3. 3. Seizing the Scale Opportunity 3
  4. 4. © Norm Tasevski & Karim Harji The “Scale Opportunity” The point in time when you have a critical choice: grow substantially larger, stay purposely small, or quit 4
  5. 5. © Norm Tasevski & Karim Harji The Entrepreneurial Life Cycle 55 IDEA DEVELOPMENT PROOF OF CONCEPT START-UP SCALE REPLICATION EXIT •  Few/no critical decisions made about business model •  Pre-revenue (no product, no customers) •  Timing – typically a few months •  Preliminary business model identified, but may change quickly/fundamentally •  Pre-revenue (product to be validated, customers to be validated) •  Timing – typically <1 year •  First business model decided upon (but could still change) •  First revenues (first product launched, first customers ID’d) •  Timing – 1-2 years (or more) •  Business model solidifies (& new business opportunities emerge) •  Stable revenues (product established, mature understanding of customers) •  Timing – ongoing •  Business model in flux (minor/ major changes made regularly) •  Revenues in flux (inconsistent) •  Timing - ??? (varies) The Scale Opportunity
  6. 6. © Norm Tasevski & Karim Harji How Do You Know You’ve Reached the Scale Opportunity Point? •  Short answer: –  You won’t know until you get there… •  Long answer: –  You’ve overcome bumps in the road (imperfect product, imperfect decision making, unstable cash flows) –  You have a track record behind you (satisfied customers, refined product offering, brand recognition in the market) –  Your strategy conversations change (from “how do we stabilize the business?” to “how do we grow the business?”) –  In some cases, an “outside force” emerges (a big funder/ investor looking to invest substantially, another company wanting to partner/merge, etc.) 6
  7. 7. Managing the Scale Opportunity 7
  8. 8. © Norm Tasevski & Karim Harji There are Risks to Scaling… •  Scaling too quickly without the “fundamentals” in place –  There is a desire to scale much sooner than the business is ready –  Fundamentals: 1.  Systems (decision making, cash management, product development, production, etc.) 2.  Financial resources (retained earnings, outside capital) 3.  Human resources (the “right” people deployed effectively) –  The risk: implosion (i.e. get too big too quickly that the systems can’t keep up) •  Scaling without a proper read of the market –  You have a superficial/imperfect understanding of the market –  The risk: financial ruin (i.e. the customers you were anticipating don’t materialize) 8
  9. 9. © Norm Tasevski & Karim Harji Planning Around These Risks •  Plan Ahead –  Conduct regular strategic planning –  Be deliberate, not opportunistic (i.e. know when to say “no” to business opportunities) •  Stay Tuned into the Market –  Do not assume you ever fully know who your customers are (constantly check in) –  Question whether you are targeting the right customers •  Build the “Right” Systems –  Construct a rigorous decision making system –  Establish core business standards (e.g. documentation, policies and procedures for making and following through on decisions) –  Hire the right people to manage the scale effort (experienced entrepreneurs) –  Construct a rigorous information system, and collect data (CRM, online info tracking tools, etc.) •  Stabilize your cash runway –  Begin investing profits into a reserve –  Seek outside capital for specific purposes (e.g. use of funds targeted to growth objectives) –  Create a rigorous budgeting and financial tracking system •  Welcome Change! –  Complacency = threat –  Be fully committed to your strategy, but flexible in your approach 9
  10. 10. Your Presentations… 10
  11. 11. © Norm Tasevski & Karim Harji Presentation guidelines •  Due Dates –  Investment Pitch: Midnight on Sunday, July 21st •  Format –  PowerPoint deck •  Time Allotment –  12 min presentation (strict) – will give you 5 and 2 minute warnings –  6 min Q&A •  Grading –  To be done by Karim and Norm –  Judges will inform me, but not assign your grades •  Feedback from Judges –  Norm will email his and judges’ feedback shortly after the class to integrate into angel investor pitch 11
  12. 12. © Norm Tasevski & Karim Harji Timing •  Arrive by 6:30pm!! •  Group order will be assigned on the Monday prior to the presentation •  At the end of the pitches, the judges will deliberate (for 10 minutes) •  Judges will then provide feedback to the entire class (and I will provide individual group feedback) 12
  13. 13. © Norm Tasevski & Karim Harji Advice for your presentations •  Focus on the key components of the business model, and highlight the key financial #s –  Can you clearly explain how your business works? How it makes money? How it generates social/environmental change? •  Comfortably stick to the time allotment –  In your practice, aim to deliver your presentation in 10-11 minutes •  Anticipate the investor questions –  If you were investing your own money into the business, what would you care to know about the business model? 13
  14. 14. © Norm Tasevski & Karim Harji Contents for the Presentation… 14 •  Overview and mission •  Management and Advisors •  Problem –  social issue being addressed •  Size of the problem –  how big is the social issue •  Solution –  Here’s how it works… •  Value proposition –  Inc. social benefit •  Business model •  Competitive advantage •  Collaboration/ partnerships •  Marketing and Sales •  Financial projections •  Financial requirements
  15. 15. © Norm Tasevski & Karim Harji PowerPoint tips 15
  16. 16. © Norm Tasevski & Karim Harji 16
  17. 17. © Norm Tasevski & Karim Harji An Example… 17