Tuesday, June 12, 2007

[Opinion] "Stick to the thing that you know." "Business is hard." - Sure. And?

In the Giving Back column of the Wall Street Journal, Ben Casselman wrote Why 'Social Enterprise' Rarely Works, and he seems to have caused a stir. Good for Ben! If you have a bone to pick with Ben ... here's one way to reach out ...

The item closes with the following:
Ms. Beinhacker [President of New Capital Consulting] says there's a lesson in such failures: "Stick to the thing that you know," she says. "Business is hard."

Ben isn't particularly insightful. After all most enterprises fail. Wander the Cambie corridor for some current business examples and CRA Charities Directorate for examples in the nonprofit world.

That being said, Ben's source document, SeedCo's report The Limits of Social Enterprise is worth a read.

From the Introduction:
In many respects, the social enterprise revolution has been a great success: It has fostered an emphasis among nonprofits on achieving measurable results for clients; it has encouraged sound financial planning and fiscal responsibility. It has made many organizations more dynamic, more innovative, more efficient, and more effective.

But the field has been prone to extremes. In a zest to take social enterprise to the limit, some have emphasized starting businesses as vehicles by which to both earn money to support mission-driven work and as new tools with which to address social problems, and even as magic bullets with which to achieve both aims at once.

This report embraces the broad notion of social enterprise as flexible and entrepreneurial entities, but it raises cautions about the more specific notion of nonprofits operating businesses.

The document offers seven questions that are worth exploring if you're starting a social purpose enterprise.
Before you start a social purpose business:

What is your primary reason for starting a business—to generate income, or to fill a social need? Choose one, and then follow the relevant steps below.

1. Identify a genuine need or desire in an area where your organization’s primary work or infrastructure gives you an advantage over for-profit competitors in the marketplace.

2. Assess as specifically as possible what your target customers want in a product or service of this type—and how much they would be willing to pay for it.

3. Determine whether your organization is equipped to profitably provide what your potential customers want.

4. Decide whether your organization is willing to provide the product or service in the way the market desires it, and whether doing so falls within the organization’s mission and mandate.

5. Explore how your organization would fund and sustain such a venture during its start-up phase.

6. Evaluate whether starting the business you have envisioned is truly the best use of your organization’s financial and human resources.

7. Consider whether an equal amount of income could be generated with less investment of time and/or money. Consider how starting and running a business would change your organization’s culture and community, and what impact it might have on your mission.

Take a look at the other set of seven questions for starting a business to fill a "social need" on page 15.

And one "take away" ...
LESSON: Nonprofit programs may be hope-oriented, rather than goal-oriented. Businesses, even those with a social purpose, must be realistic, rather than idealistic, in order to succeed.


Interested in learning more about social enterprise? Take a browse through the Vancouver Social Enterprise Book Store (Vancouver United Kingdom United States) and see what other social entrepreneurs recommend reading. Tags for information about: for:vsef, Social Economy, Nonprofit, TechSoup


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