In our previous series, we wrestled with the question of impact. What kind of impact will your social enterprise venture make in the community? How do you know? How will you know if you are being effective? These are essential, and first questions. Starting by naming the impact we want to make, and the ways we will begin to measure the effectiveness of the work is critically important to ensure that the enterprise project continues to prioritize the right things.
But a second set of questions becomes important very quickly after this. Social entrepreneurs will often talk about the ‘double bottom line’ of their work, meaning that beyond the obvious business bottom line, there is an impact bottom line as well. The fact that we are setting out to cultivate shalom along the way (the impact bottom line) means that the business bottom line will be more tenuous and will have more pressure points on it than a normal business. That’s not necessarily a bad thing, in fact, its inevitable! But it does create the possibility of future pain points that we are hoping to help folks avoid as much as possible.
What happens if, six months down the road, the business is losing money because the work force you are employing is still in the process of becoming reliable? Will you pivot from the work force even though the folks you are hiring are the group you are hoping to work alongside? These are real pain points for social enterprises and you should expect the double bottom line to put you in the midst of tensions like these more and more over time.
That’s why we talk about our 5 factors so often—capital, labor, distribution/market, facility and material. These 5 factors are not a fully fledged business plan, nor are they a silver bullet to business success. These 5 factors are ways to hone your business concept from the beginning to give your enterprise the best possible chance of success WITHOUT succumbing to mission drift. We tell people that, in the planning stages, it is important to look for natural advantages in at least 3 of these 5 areas. Without a natural advantage in 3 of the 5, a social enterprise with a serious mission bottom line, will struggle to find viability as a business.
Once you have defined the impact you want to be able to make, begin to think through the business plan and look for ways to limit your financial risk/exposure/responsibility in as many of these areas as you can. If you find that your business has a high financial exposure in 3 areas or more, it would be important to reimagine the concept. Imagine the sliders on a sound board, if all 5 factors are turned up to 11, it will be more than the system can bear. But pull a few of those sliders down as low as possible, the system will not only handle it, it will make for a more pleasant experience for everyone.
Over the next several week, we will look at each of these factors one by one; discussing the potential problems associated with getting over exposed in each area, and giving some examples of ways to limit unnecessary financial risks.
Its our belief that the impact we want to make will ultimately depend on a thoughtful approach to the business itself. This is essential work to help ensure our overall mission stays in focus. So as you think through your plan, begin to ask questions about your financial commitments in those 5 areas, and join us each week as we tease out more deeply each of the 5 factors.