got unrestricted revenue? the social enterprise process

Sponsored by: A Service

Of:

Got Unrestricted Revenue?

The Social Enterprise Process

Jean Block

February 27, 2013


Of:

Advising nonprofits in:

• Strategy

• Planning

• Organizational Development

www.synthesispartnership.com

(617) 969-1881

[email protected]

INTEGRATED PLANNING


Of:

Affordable collaborative data

management in the cloud.


Of:

Today’s Speaker

Jean Block President and Owner

Social Enterprise Ventures, LLC

Assisting with chat questions: Jamie Maloney, Nonprofit Webinars

Hosting:

Sam Frank, Synthesis Partnership

Charity?

or

Tax Exempt Business?

Getting Started on Social Enterprise Presented by Jean Block

Social Enterprise Ventures, LLC

Jean Block Consulting, Inc.

socialenterpriseventures.com 5

Why Consider Social

Enterprise?

The funding marketplace is changing: Corporate giving directed toward investing for the long term rather

than buying tables for one night.

Government funding diminishing and being redirected.

Donors tired of giving to organizations that operate with a poverty mentality.

What does this change mean for you? It means a shift to earned income instead of relying on a 'hand

out."

Nonprofit is a tax designation,

not a business plan!


What is Social Enterprise?

It is unrestricted renewable income that creates the path toward sustainability and enhances your mission.

It is generated through sales, payment for services or other business opportunities.

It should not replace fundraising – it is a new tool in your organizational tool kit.

More Money = More Mission!


Important Point

Social Enterprise is NOT about turning

your nonprofit into a business…

It’s about applying sound business

principles to your tax-exempt

business.


Traditional Funding

Grants, special events, donations, sponsorships, underwriting, etc.

You work hard to get it, use it up and have to go back for more…the funnel effect!

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.

Traditional funding is usually restricted in some way.


Myths about Social Enterprise

Nonprofits can’t make a profit. You do now – you just

aren’t paying taxes on it!

It’s a quick fix – We can do this tomorrow.

If we earn money, we will lose our nonprofit status –

Nope. Not likely.

What if we have to pay federal tax? Well, what if?


Is Your Organization Ready?

You are if you are ready to diversify your income or are anticipating funding reductions.

You are if board and staff leaders are willing to invest in change from charity-think to sustainability!

You are if board and staff create a dedicated team who are willing to invest the time and dollar resources into planning and launching a social enterprise.


Typical Outcomes

Fundamental and systemic changes in the way you manage your tax-exempt business.

A business plan for an earned income social enterprise venture and/or…

Enhancement of current programs and services by providing value added benefits that create new income sources from new payer markets and customers.


How to Become a Successful

Social Entrepreneur


The Seven Steps Required to

Launch a Successful Social

Enterprise are: Step 1 – Organizational Focus

Step 2 – Assets and Opportunities (Leveraging what

you do, what you have, what you know)

Step 3 – Market Research – The Customer(s)

Step 4 – Market Research – The Competition

Step 5 – Costing and Financing

Step 6 – Writing the Sales Plan

Step 7 – Writing the Business Plan


Start With the Basics

Step I - Organizational Focus

Review Mission, Vision and Core Values.

Identify Internal and External Forces.

Set Mission and Dollar Goals.

◦ These are your benchmarks and go/no go

assessments.

Develop a Stakeholder Communication plan.


Build an Inventory of Assets

Step 2 – Identify Assets and Brainstorm Ideas

for Earned Income

Core Competencies – What you do extremely well (e.g. your

products and services).

Physical Assets – What you have that is underutilized.

Technical and Knowledge Assets – What you know (e.g.

training).

Relationship Assets - Who you know that can help with social

enterprise (e.g. people with influence, potential funders for training,

etc.).


Remember This:

What you know and do everyday IS rocket

science to someone who doesn’t know it

or do it!

You have valuable, underutilized assets.


Brainstorm Opportunities

Leverage Your Assets into Earned Income

Service Opportunity-Delivers a service to a current or new market. ◦ A human service agency bundles current and new

programs for seniors, selling to their adult children and caregivers.

Knowledge Opportunity- Delivers your knowledge to a current or new market. ◦ An agency delivers financial literacy training to small

businesses.


Brainstorming…

Product Opportunity - Produces or delivers a tangible product. ◦ A food bank expands its product line to include non-food

items.

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.


Brainstorming…

Unrelated Venture Opportunity - Takes

advantage of underutilized assets or develops an

opportunity unrelated to your asset inventory.

◦ An agency brings its vehicle donation program in house.


Evaluate Opportunities

Rank and score the opportunities.

Use objective criteria.

Select those with highest initial potential to reach

mission and dollar goals set in Step 1.

Begin Market Research & Feasibility.

There is no short-cutting this process from here on!


Market Research & Feasibility

Step 3 - Market Research Part 1 : Know Your Customer(s)

Introduction to Market Research Market Push vs. Market Pull – What’s This??? Market Trends – Current, future, what will impact us? Target Market Planning – What’s the best market for our idea? ◦ target markets – Who? ◦ market size – How many? Enough? ◦ buyers vs. users – Are they the same? Different? ◦ buyer and user motivation – Same? Different? ◦ buyer and user profiles – Who are they? ◦ features and benefits – What’s the difference?


Question:

Wouldn’t knowing all this help you plan

and work better and smarter even if

you didn’t start a new venture?


…a quote about research…

“You were right regarding the idea vs. the results of

the research. The market we thought was

interested 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.”

Zack Wilson, PR/Development

High Plains Food Bank, Amarillo Texas


Competitive Analysis

Step 4 - Market Research Part 2: Know Your

Competition

Who is Your Direct Competition?

Who is Your Indirect Competition?

What are Their Strengths and Weaknesses?

Market Differentiation – How will you compete?


Sales Planning

Step 5 – Develop Your Sales Plan

Roll Everything You Have Learned in Customer and Competition Research

Target Your Customer.

Promote Your Competitive Advantage.

Identify Your Market Position.

Promote Your Distribution Methods.

Set Your Price.

Sell Your Social Enterprise. (PR)


Costing Analysis

Step 6 – Identify all Costs

Define Costs - direct, indirect, variable, fixed, start up and recurring.

Identify Your Break Even Point - Profit Margin.

Definition of UBIT – IRS Publication 598 ◦ It is a trade or business, ◦ It is regularly carried on, and ◦ It is not substantially related to furthering the exempt purpose

of your organization. ◦ Get professional advice at this stage in the planning process.


Write a Business Plan

Step 7 – Write Your Business Plan

How does the venture support your mission?

What are mission and dollar goals for the venture?

Describe the target customers and end users.

What customer needs are addressed? What will motivate customers to buy your venture?

Define your competition and your competitive advantage.

Pricing strategy.

Promotional strategy.

Start up costs. Ongoing venture costs.

Annual financial projections.

Financing required.

Plan to repay financing.


Warning!

Starting a business with current staff may

not work…

Without strong staff and board leadership,

this may not work…


Examples of Social Enterprise

Leveraging Existing Physical Assets

Rental program for the agency’s party supplies.

An agency serving persons with disabilities becomes a certified organic greenhouse business.

Remodel ineffective space, add general support services and rent space to small businesses and other nonprofits.

Revamp thrift store to attract a higher-end market with special programs and services.

Commercial kitchen provides hospital meals.

Open camp to corporate and private users.



Leveraging Technical/Knowledge Assets

Opens training classes to other agencies and for profits.

Lead abatement training for contractors.

Food bank expands its product line to include non-food items.

Counseling agency develops continuing education credit programs for psychologists and counselors.

Offer training programs for small businesses.

Catering services using commercial kitchen.



Unrelated/New Ventures

An agency takes over management of its car donation program, previously operated through an out-of-state for profit company.

An agency holds an on line auction in partnership with a for profit business.


…and a quote…

“During these challenging times [we] had to face the hard truth that our 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, [we] could not continue the excellent programs and services for our guest families.

Eileen Casey Cook, CEO

Casa Esperanza, Inc. & Casa Esperanza Foundation, Inc.


Thank You!

Want to Learn More?

www.socialenterpriseventures.com

505.899.1520

[email protected]

Visit the Web Site to Review the Learn It & Earn It

Opportunity to Become a Certified SEV

Trainer/Senior Consultant.


http://www.socialenterpriseventures.com/

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got unrestricted revenue? the social enterprise process

Business

social enterprise nonprofits

income service opportunity

business plan

knowledge assets

underutilized assets

organizational focus

competition step

financing step