Lessons Learned in Social Entrepreneurship
By Marcie Barnes
This post was originally published on www.crowdbackers.com.
Why am I a social entrepreneur? I see a possible future based on our current system, a future that encompasses happiness, sustainable business practices, and environmental responsibility. I see many non-profits struggling, while at the same time I see many non-profits with ties to big business, in the form of corporate sponsorship and partnerships who are thriving. I am happy to have the opportunity to share with you my experiences and thoughts on how it can be possible to make the world a better place within the framework of the current system – along with some other tips and advice on creating a sustainable, and profitable social venture.
Things to consider when organizing your social venture, compared to a traditional business venture:
I spent many months researching and pondering how to establish my own company and eventually decided to go with a traditional C-corp (with plans to convert to a B-corp later). In short, the B-Corporation structure gives legal protection to traditionally structured corporations such that they are not solely held accountable for making profits for their shareholders, and makes room for environmental and social considerations. In addition, the B-Corp certification helps consumers identify companies that have a vested interest in social/environmental concerns, which is something that more and more people are looking for in the products and services they buy or support.
In my case, the nature and scope of my business (and personal status as a non-millionaire) required that I seek investors to fund my idea. So, forming a non-profit was not a viable option for me. 501(c)(3) structures also come along with a lot of extra paperwork. However, if the type of business you are starting is more conducive to being funded mostly via donations, then the non-profit status will be what your customers are looking for.
There are many similarities between social ventures and traditional business. Here is a list of some of the common things you’ll need:
- A core group of people who are willing to live the vision and be passionate about the cause, to include support from your friends and family.
- A solid business plan/model that outlines how you will make money in order to make your business sustainable.
- A real market need – it can even be a non-social need. For example, iContact is an e-mail marketing service and also a certified B-Corp that gives back to its community and other charities.
- Time and sweat equity investment before you get started in order to test and prove your business model. This is critical before you decide to make any personal or monetary investment yourself.
- Some form of start-up capital – you’ll need have money in the bank in order to make a few purchases to start your business and pay people…even if you are planning to bootstrap.
All ventures have pitfalls to look out for, some of the ones specific to social ventures are:
- Some people won’t care about your social mission – most people are looking for the cheapest price (if you’re selling an actual product) and/or some kind of personal connection (if you’re soliciting donations). Always consider how you can make your customer feel good about breaking out their wallet by offering a product or service that gives them the proverbial warm-fuzzies. Also consider dividing up your marketing efforts into two camps: one for the more philanthropic-minded customer and one for the more, you know, self-minded customer.
- Some people will be more judgmental about your product/service because of your social mission (yes, really) – especially if you are championing a cause that is controversial or politically charged. You can’t please everyone all of the time, so my advice in this case is to stay strong and use humor as much as possible (as opposed to taking jabs or being defensive towards other people’s stances or beliefs). For example, one of my favorite non-profits, grist.org, does a great job using humor and/or satire when writing about environmental issues. In addition, consider focusing on the core customers that truly do get and enjoy your cause/product/service and don’t focus on or worry about the rest.
- Do not lose sight of the business side. Again – you must have a viable business in order to accomplish your charitable goals. Until something changes, making money must be priority #1 in order to stay afloat.
- Be very aware of risks and liabilities. For non-traditional structures, like the B-Corp, remember that this is a new type of organization that has not been fully vetted through our legal system. There’s always a risk in terms of liability in any venture, and it would be best to consult with an experienced business attorney regarding the best way to proceed with yours. In fact, there are many out there who have plans in place for working for business ventures on a deferred-compensation and/or equity stake basis.
And finally, some of the wonderful benefits of running a social venture:
- You’ll have more freedom in how you use funds to achieve the benefit of others as opposed to a typical 501(c)(3). Most investors, should you seek investment, tend to be more “hands-off” these days (and apparently are more interested than ever in social ventures) so you should not feel like you will eventually lose control by choosing this path.
- You’ll build a company with happy employees who love going to work every day. Their jobs helps make a difference in the world. These kinds of jobs are also far more attractive for obvious reasons.
- You may enjoy a competitive advantage over other products/services since many people are choosing to support socially responsible companies over others.
- You will sleep well at night. Although it’s always stressful being an entrepreneur, you can take a break now and then and pat yourself on the back for creating something that helps others, sustains you, and again, makes the world a better place.
In conclusion, I would like to note that I am by all accounts a creative person and do not have an MBA or much formal business training. I came up with my idea when my son was three years old and made a decision to educate myself and surround myself with people who could help guide me and support me along the way. If I can do it, so can you. If you see a need in the world, in your state, or in your community, and you have the passion, spirit and resources to help fill the need, go for it. It’s a great time to be a social entrepreneur!
Marcie Barnes – Marcie is the Founder and Site Architect of Spherre, Inc. – an early stage social venture based out of Raleigh, North Carolina. You can also get more information by reading What the Heck is Spherre or, by checking out their fundraiser on www.crowdbackers.com.
Laura Kallus – Laura is the Executive Director and Founder of PanZOu Project Inc., a nationally recognized and award-winning gang prevention and intervention agency in Miami Dade County, Florida. She also runs PanZOu Productions, a screen printing and custom transfer business.
Chris Plough – A seasoned software application architect and startup veteran, Chris recently filmed a 10,000 mile journey to Mongolia in an ambulance – all to raise funds and awareness for children’s charities.