Social entrepreneurship represents a paradigm shift in the way individuals, communities and entire societies interact with one another and the planet we share. It’s big, it’s bold and it represents a powerful weapon in the fight against disease, illiteracy, famine, dehydration, pollution and a hundred other societal ills. That said, it is also far from simple, and it presents unique opportunities and challenges, which demand a clear, well-thought out response.
For every entrepreneur and concerned global citizen thinking about dipping a toe into social enterprise, here are the 8 questions you must be able to answer before, during and after you build and launch your company.
1. What problem am I trying to solve?
This is the first question most entrepreneurs are told they must answer. It is common knowledge that unless a product or service fulfills a need or solves a problem for the target customer, the chance for success is greatly diminished.
The difference for social entrepreneurs is that we must answer it twice. First, ask what problem you can solve for consumers. Then, ask what social problem you want to help solve. The two answers may be inextricably linked, or they may be loosely related. This question won’t make or break you… unless you can’t give a good answer.
This one should be pretty self-explanatory. If you have a clear Why, you will not only be more likely to face failure and keep fighting, but you will also be a better leader to your team.
Be honest with yourself. If you’re really starting the enterprise to make money, call a spade a spade. You may still be founding a social enterprise, but if your aims are selfish it won’t last long. The greater purpose of the company will very likely fall prey to the “need” for higher margins or faster growth. Wait and see how your Why evolves before claiming to be in the social enterprise ecosystem. If your personal Why and the social mission of the enterprise differ, always strive to put the collective Why ahead of your own.
3. Is social enterprise the best way I can help?
Anyone who knows me well may be surprised to see this question on the list, because I believe that social enterprise is a useful and important tool for solving any and all of the problems facing our world today. But it’s not for everyone, and there are other ways for an individual to get involved and be a part of the solution. We can all do great things by volunteering our time, donating our money, advocating for or against important issues and speaking up for those without a voice. Social enterprise is one tool in the shed, and although it may be a futuristic lawnmower, it’s probably not going to water the lawn.
4. Why this industry, and why now?
Many social entrepreneurs start companies because of something they witnessed or experienced. They cannot stand by and do nothing, so they start companies. This is wonderful, and although their companies may have experienced varied degrees of success, most have changed lives. Starting with a cause is great if you know exactly what local population or problem you want to serve. Otherwise, start by asking what industry you can enter or disrupt and why this is the time to do so, and then build in the impact model.
5. How can I build a self-sustaining enterprise while generating impact?
As social entrepreneurs, we must make sure that our hearts do not always rule our heads. The business concept and financial model must be solid. As we say a lot at Formata, you don’t help anyone by going out of business.
Luckily, the way to answer this question for your company is fairly simple: start by building a self-sustaining enterprise, and then add in as much impact as makes sense. If the impact needs to be adjusted or even transformed, fine—but the model has to work over the long term. As a social enterprise, your social mission is the essence of all that you do. There is a far greater risk of giving too much and losing financial viability than of sacrificing that mission. If you doubt that, please re-read #3.
6. How can I find the optimal balance between income and impact?
Your answer to this question will determine the lifespan of your enterprise. No pressure. This is all about figuring out what you need for current expenses and future growth, and making sure that the impact model is properly calibrated. The successful social entrepreneur will ask and answer this question every year.
7. How can I continuously improve all the ways my enterprise impacts the world?
A social mission does not protect your enterprise from scrutiny in other areas; in fact, it attracts more attention. It is important for a social entrepreneur never to rest on his/her laurels. For example, if you produce clothing and donate 50% of all profits to provide clean water for families in Haiti, you will probably get nothing but good press—for a while. If your company is using underpaid labor or has suppliers that dump waste in rivers, it’s up to you to fix that. No enterprise is perfect, but solving one problem while contributing to another is far from ideal. So keep an eye on the holistic impacts of your enterprise, and always strive to be better.
8. Where do I go from here?
If your social enterprise has experienced some hiccups, or if you overlooked one or more of the elements outlined in the first 7 questions, you may have some reassessment to do. Pivoting or switching tracks may yield better results than barreling forward. However, contrary to popular belief, jumping right into something new is not always the best option. Take some time. Figure yourself out, and then go back to question #1 for a fresh start.
If you have answered the first 7 questions well, you will have options for growth. Do you expand your social mission or deepen the impact? How long will it be before you need to access outside finance? Does your strategy need fine-tuning? Keeping your social mission at the core of the enterprise during periods of growth is challenging, but vital. That said, dream big here—you’ve done well!
About the Author
Anthony Allen is Founding Partner and Chief Impact Officer at Formata. He is a social entrepreneur, soulful leader, globetrotter for good and outdoorsman dedicated to finding real solutions to real problems around the world.
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