ENTR4800 Class 3 - Business Modelling for Social Enterprise


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Theory: What models exist for social enterprises? How do these models inform the structure and operations of the social venture? What are the key issues, tensions and considerations that make these models applicable to specific contexts?

Practice: How can business model development be applied to the development of a social enterprise?

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ENTR4800 Class 3 - Business Modelling for Social Enterprise

  1. 1. ENTR 4800: Social Entrepreneurship Class 3: Business Modelling for Social Enterprise Monday, September 24, 2012Instructors:Elisha Muskat (elisha@socialentrepreneurship.ca)Norm Tasevski (norm@socialentrepreneurship.ca) 1
  2. 2. © Norm Tasevski & Elisha MuskatUpcoming Assignments•  Video Assignment (5%/video x2) –  3 Minutes! (evenly split between reading review and critical analysis/opinion) –  Videos will be uploaded to socialentrepreneurship.ca the Friday before class. –  Due date: the Thursday prior to that week’s class!•  Live Case Write Up (15%) –  Guest speaker next week –  Documentation on their social enterprise to be emailed to students by mid-week –  Write-up due before start of class 4 2
  3. 3. © Norm Tasevski & Elisha Muskat
  4. 4. © Norm Tasevski & Elisha Muskat
  5. 5. © Norm Tasevski & Elisha MuskatAgenda•  Upcoming assignments•  Centre for Social Innovation•  What are the components of a business model for social enterprise?•  Term Assignment•  What did we learn?•  Next week 5
  6. 6. Business Modelling for SocialEnterprise… 6
  7. 7. © Norm Tasevski & Elisha MuskatA Caveat… We will walk you through the business modeling process… But… We will discuss how to infuse “social”… 7
  8. 8. © Norm Tasevski & Elisha MuskatA Second Caveat… “Business   “Business Form/Legal   Model” Structure”   8
  9. 9. © Norm Tasevski & Elisha MuskatA Third Caveat… “Business “Business   Model” Plan”   Business  Model  1st!!!   (Business  Plan  2nd)   9
  10. 10. Why business model 1st and plan 2nd? 10
  11. 11. © Norm Tasevski & Elisha MuskatBecause…It is a cure for “We Need a Plan-itis” 11
  12. 12. © Norm Tasevski & Elisha MuskatAnd…It is a Quick way to assess Profitability/Sustainability –  Why spend months building a plan if you don’t have a real sense of profitability/sustainability? –  If your model doesn’t make money, even with the most ideal conditions… …STOP! (…and rethink your business model) 12
  13. 13. © Norm Tasevski & Elisha MuskatOne More…It breaks down highly complex business ideas intoeasily digestible (and visual) chunks –  Gets to the heart of what you need to know to: Make a Go No- Go Decision Set Strategy Make Potential Investors/funders (and business partners) Happy :) 13
  14. 14. Business Plans Business ModelsAre big and complex Are small and visual (often 50-100+ pages) (1 page with about 10 supporting pages)Cover many topics Focus on a few topics(business description, financials,marketing strategy, HR strategy, (Will you make $$? How do theOperations Strategy management team, pieces fit together?)etc, etc, etc)Take weeks/months to Take a few days (possiblycreate hours) to create Are necessary for Feed the business plan!! investors, funders, business partners, etc 14
  15. 15. © Norm Tasevski & Elisha Muskat user networks! franchising! freemium! ! web ads! etc…etc…etc…! licensing! retail! micro-finance!subscription! loyalty! open-source! nonprofit (donation)! solution shops! 15!
  16. 16. © Norm Tasevski & Elisha MuskatSome Definitions•  “A business model describes the rationale of how an organization creates, delivers and captures value – economic, social, or other forms of value” Wikipedia•  “A description of the means and methods a firm employs to earn the revenue projected in its plans. It views the business as a system and answers the question, “How are we going to make money to survive and grow?” BusinessDictionary.com•  “A business model describes the specific way the business expects to make money. While a business plan is on paper (lots of paper!) a business model should be small enough to stay in the heads of the owner and staff. If a business model is on paper, it should be one page, and it would be more clearly shown as a diagram than as words.” AudienceDialogue.net 16
  17. 17. © Norm Tasevski & Elisha Muskat 17
  18. 18. © Norm Tasevski & Elisha Muskat Customer SegmentsThe “business” Side: Infusing Social:!–  Customer “Pain” –  Are you selling something a–  Difference between a disadvantaged person/ “customer” and a “client” community? ! 18
  19. 19. © Norm Tasevski & Elisha MuskatEmpathy Mapping
  20. 20. © Norm Tasevski & Elisha Muskat Value Proposition (the “Offer”)The “Business” Side: Infusing Social:!–  The “value” created for –  Are you constructing your customers (in terms of products/ offer in a socially responsible services), and the “pain” you way?! are alleviating–  An exchange of value 20
  21. 21. © Norm Tasevski & Elisha MuskatQuick… What is the last thing you bought? 21
  22. 22. © Norm Tasevski & Elisha MuskatCustomer Utility 22
  23. 23. © Norm Tasevski & Elisha Muskat ChannelsThe “Business” Side: Infusing Social:!–  How the customer receives –  Are you delivering your offer in the offer/value prop a socially responsible way?!–  The physical “movement” of –  Are your channel partners the offer into the hands of the socially responsible?! customer 23
  24. 24. © Norm Tasevski & Elisha Muskat RelationshipsThe “Business” Side: Infusing Social:!–  Personal and impersonal –  Are you marketing your service interaction with the customer in a socially responsible way?!–  The “movement” of –  Do you have a marketing partner information (e.g. marketing, that is socially responsible?! communication) 24
  25. 25. © Norm Tasevski & Elisha Muskat Revenue StreamsThe “Business” Side: Infusing Social:!–  Cash!!! (specifically, how cash –  How does being “social” impact flows into the enterprise) – your revenue streams?! “Money In” –  Do you allocate a portion of–  What is the pricing model? your revenues to a charitable purpose?! 25
  26. 26. © Norm Tasevski & Elisha Muskat Key ResourcesThe “Business” Side: Infusing Social:!–  Assets…and how these assets –  Do you hire from a create value disadvantaged community?!–  Includes human, physical, –  Do you acquire certain assets intellectual, and financial in a socially responsible resources manner?! 26
  27. 27. © Norm Tasevski & Elisha Muskat Key ActivitiesThe “Business” Side: Infusing Social:!–  Actions (specifically, the –  Do you undertake “charitable” actions you plan to take to activities?! generate value)–  Both “direct” and “indirect” 27
  28. 28. © Norm Tasevski & Elisha Muskat Key PartnersThe “Business” Side: Infusing Social:!–  People/organizations that are –  Do you partner with integral to enabling you to do companies/organizations that business align with your core values?!–  How you partner, and what you partner on 28
  29. 29. What makes a good partnership? 29
  30. 30. © Norm Tasevski & Elisha Muskat A Common Commitment Vision! to Invest in the Partnership!Same CoreValues! Discreet Missions! 30
  31. 31. © Norm Tasevski & Elisha Muskat Cost StructureThe “Business” Side: Infusing Social:!–  Fixed costs, variable costs, –  Is there a “social premium” economies of scale…“money you are paying to deliver on out” your offer?!–  At this stage, focus on your cost assumptions! (don’t worry 31 about actual $$)
  32. 32. © Norm Tasevski & Elisha Muskat 32
  33. 33. So…whatdoes acompletedbiz modellooklike??? 33
  34. 34. © Norm Tasevski & Elisha Muskat Lending and Personal collecting $$ s $$ MicroloanGovernment BOP rs Entrepreneu Branches -Branches -Brand -Capital -People Interest rates ts-Capital Cos 34
  35. 35. © Norm Tasevski & Elisha MuskatTip…•  Be a Business Model “Alchemist” – You need to go through the business model process many times in order to figure out which model best fits 35
  36. 36. Break 36
  37. 37. © Norm Tasevski & Elisha Muskat“Sticky Ideation”… What we know! What we Don’t Know! Bridging the Gap! ! (turning what we don’t know into what we know)! 37
  38. 38. © Norm Tasevski & Elisha MuskatWhat did we learn? 38