writing asocial enterprise business plan
TRANSCRIPT
-
8/3/2019 Writing Asocial Enterprise Business Plan
1/27
1
Social Enterprise
Writing a social enterprise business plan
Sally Little, ACSW, MBAEntrepreneurial Solutions, LLC
www.enterpreneurialsolutions.biz
-
8/3/2019 Writing Asocial Enterprise Business Plan
2/27
2
T ips for Writing a Business Plan
Judges are volunteers
Dont overwhelm the judges with rhetoric
Keep it simple
Clarify, clarify, clarify
Judges may not be experts in social enterprise
Have someone else proofread your business planfor clarity
-
8/3/2019 Writing Asocial Enterprise Business Plan
3/27
3
Social Enterprise Definition
S ocial enterprises are nonprofit or for-profit business ventures that strive toachieve a quantifiable double bottom
line of financial and social returns.
These ventures are financially self-sufficient.
-
8/3/2019 Writing Asocial Enterprise Business Plan
4/27
4
Double Bottom Line
M ission Driven social impact
Profitabilityfinancial impact
Balance
Quantified
-
8/3/2019 Writing Asocial Enterprise Business Plan
5/27
5
Business plan for a social enterprise
will not differ significantly
from a traditional business plan!
-
8/3/2019 Writing Asocial Enterprise Business Plan
6/27
6
Common elements with traditional plan
O verall appeal of the plan
O perational and technological viability
SE -Feasibility of business model = Trad-Attractiveness of the market opportunity
SE -M arketability = Trad-Value created by the new productor service, Competitive advantage of the proposed
venture
-
8/3/2019 Writing Asocial Enterprise Business Plan
7/27
7
Capability of the management team
Judging criteria is the same as the traditional category
With the addition of board of directors for a nonprofit
For a tax-exempt nonprofit corporation (nonprofit) boththe IR S and the S tate of Hawaii require at least threemembers on your board of directors
Highlight their specific management skills
-
8/3/2019 Writing Asocial Enterprise Business Plan
8/27
8
F inancial return on investment
Where will the investment capital come from?
What is the proposed ownership structure of the venture?
Will this venture become financially self-supporting?If applicable, what is your investment exit strategy?
What is your plan for the long-term financial sustainabilityof the venture?
How are the social and financial returns on investmentaligned?
-
8/3/2019 Writing Asocial Enterprise Business Plan
9/27
9
O wnership structure--Nonprofit
Definition: S tate of Hawaii nonprofit corporation that has received 50 1(c)( 3 )tax-exempt status from the Internal Revenue S ervice50 1(c)( 3 ) must be organized for one or more of the following purposes:
Religious S cientific Charitable E ducational Testing for public safety Literary To foster national or international amateur sports competition
For the prevention of cruelty to children or animals E conomic development?
To be viable a tax-exempt nonprofit corporation should and must make aprofit!
-
8/3/2019 Writing Asocial Enterprise Business Plan
10/27
10
H ow does a nonprofit differ from a for-profit?Nonprofit is--
O wned by the community rather than shareholders
Governed by a board of directors that generally servewithout compensation
Upon dissolution, all assets must revert to a 50 1(c)( 3 ) thatgenerally has a similar mission or the government
Profit in a nonprofit cannot inure for the benefit of theboard of directors
Compensation cannot be excessive
Donations to a 50 1(c)( 3 ) are tax deductible.
-
8/3/2019 Writing Asocial Enterprise Business Plan
11/27
11
Investment Capital
For-profittraditional methods of capitalization
Nonprofit
Philanthropist/angel
Grant
Interest from endowed funds Current reserves
-
8/3/2019 Writing Asocial Enterprise Business Plan
12/27
12
Long term financial sustainability
Financially self-supporting
Reliance on continued grants
Reliance on fundraising
M ust have a realistic plan
-
8/3/2019 Writing Asocial Enterprise Business Plan
13/27
13
Exit Strategy
For profittraditional exit strategies
Nonprofit
M erger with another nonprofit
Dissolutionmission accomplished?
No IP O
-
8/3/2019 Writing Asocial Enterprise Business Plan
14/27
14
Alignment with social and financialreturn on investment
Should be a balance!
-
8/3/2019 Writing Asocial Enterprise Business Plan
15/27
15
Social Return on InvestmentQuantified social impact of the
venture
Impactthe portion of thetotal outcome that happened
as a result of the activity of the
venture, above and beyondwhat would have happenedanyway
-
8/3/2019 Writing Asocial Enterprise Business Plan
16/27
16
H ow does this enterprise serve a social purpose?HealthDoes the venture improve the health of your target population? Doesit address a serious disease resulting from lack of nutrition, medical care, alow standard of living? Is your venture making the community safer?
E ducationalIs your venture helping improve the standard of living for children? Will participation in your venture open doors of opportunity andwhat are these doors? By participating in your venture how will someones lifechange?
E nvironmentAs a result of your actions, will a vital natural resource besaved? Why is this natural resource important to our community? How willyour venture improve the environment?O utcomesultimate changes one is trying to make in the world, cognitive,behavioral, gain in skills, knowledge, etc. These are not outputs whichmeasure the number of people served.
Rule of thumba social purpose makes an unhappy person happier, a poor person secure a better financial standard of living, an unhealthy personhealthier, etc.
-
8/3/2019 Writing Asocial Enterprise Business Plan
17/27
17
Are socially responsible core valuesexpressed throughout the venture?
ConsistencyIf your venture is saving the
environment, are your operational
practices environmentallyfriendly?
-
8/3/2019 Writing Asocial Enterprise Business Plan
18/27
18
What is the ventures potential to meet its social goals?
Feasibility!
E nvironmentDo you have enough suppliers or resources to develop your environmentally friendlyproduct or service? Will the community value your serviceenough to support it through donations?
E ducationDo you have buy-in from critical partners?
HealthDepth of appeal to the community?Does the community value the product or service as muchas you do?
-
8/3/2019 Writing Asocial Enterprise Business Plan
19/27
19
What is the social impact both monetized and non-monetized of this enterprise?
M onetized = Quantifiable
For reporting financial returns we have
established generally accepted accountingprinciples and an international legal infrastructure
A comparable standard for social impactaccounting does not yet exist
Assessment of a method is determined by howuseful it is for stakeholders
-
8/3/2019 Writing Asocial Enterprise Business Plan
20/27
20
In order to measure your
outcomes you must clearlydefine them!
-
8/3/2019 Writing Asocial Enterprise Business Plan
21/27
21
Impact Value Chain
Inputs(resources required to operate the venture)
O utputs(indicators can measure directly buns in seats)
O utcomes(Specific changes--attitudes, behaviors, knowledge, skills)
Impact(outcome sample exposed to activity outcome occurred anyway)
Goal Alignment(outcomes/impacts met desired goals)
(balance between social and financial return of investment)
-
8/3/2019 Writing Asocial Enterprise Business Plan
22/27
22
T wo possibilities for SR OI
Benefit- Cost Analysis
RED F -Social Return on Investment
Must express impact in monetary terms!
-
8/3/2019 Writing Asocial Enterprise Business Plan
23/27
23
Benefit/cost analysis aka cost-benefit analysis
Costs and social impacts of an investment are expressed in monetary terms and thenassessed according to one or more of three measures
Net present valuethe aggregate value of all costs, revenues, and social impactsdiscounted to reflect the same accounting period
Benefit-cost ratiothe discounted value of revenues and positive impacts divided bydiscounted value of costs and negative impacts
Internal rate of returnthe net value of revenues plus impacts expressed as anannual percentage return on the total costs of investment
Cannot be conducted until social impacts have been measured. These can be basedon informed assumptions about the expected social impacts
Used domestic gov. programs, foreign aid programs, other social investments
-
8/3/2019 Writing Asocial Enterprise Business Plan
24/27
24
RED F -social return on investment
Combines tools of benefit-cost analysis
Tools of financial analysis used in the private sector
Method economists use to assess nonprofit projects andprograms
Developed for use by ventures that produce market goodsand services and in the process employ disadvantagedindividuals
Review S ocial return on investment and the R E DFmethodology on business plan website
-
8/3/2019 Writing Asocial Enterprise Business Plan
25/27
25
Additional resources:
http://ventures.yale.edu/aboutcompetition.asp .Gives you samples of business plans for social
enterprises
Go to www.uhbusinessplancompetition.com ,click on resources
Social Return on Investment and the RED F Methodology
Double Bottom Line Methods
-
8/3/2019 Writing Asocial Enterprise Business Plan
26/27
26
Difficulty quantifying your impact?
M ay need to show impact anecdotally
S hould show the impact value chain
Do you have a social enterprise?
-
8/3/2019 Writing Asocial Enterprise Business Plan
27/27
27
T ips on social return on investment
M ake logical connections
Think through your assumptions
Review the resources on S RO I on the business plan website
Be creative-develop a system that works for your social enterprise
M ake sure there is balance in your social and financial double bottomlines
Be specific-how is your plan going to make a specific social impact
Keep it simple!
M ake sure the judges will understand your logic
Quantify