Top Questions on Social Enterprise

I am thrilled to share that I was just appointed as Faculty Director of Duke University’s Continuing Studies Program. In this role, I will be leading Duke’s Executive Certificate in Nonprofit Leadership for working professionals. I have taught for the certificate program for 10 years and have big shoes to fill, following one of my mentors, Matt Nash, and the father of social entrepreneurship, Greg Dees. The certificate program is offered each October, and in 2023 it will be offered virtually. Check it out!

Each year, this program brings together leaders from around the world to learn and grow together in community. And the thing I like most – they ask the best questions! For this blog, I thought I’d share some of the top questions I have heard about how to start, seek help, fund and sustain social enterprise.

How do I start?

Social enterprise has risen in popularity this year. More social entrepreneurs – whether they are nonprofits or for-profits – are pursuing the model and a double bottom line. But, just like traditional for-profit businesses, they are not assured success. When only 20 percent of business ideas are viable, what can increase your chances of success?

Many individuals and organizations start with an idea for a company, but the absolute best place to start is by taking an inventory of all your assets – what you have, do and know. Greyston Bakery may not be familiar to you, but I bet their product has been in your freezer. They make the brownies that go into Ben & Jerry’s top-selling ice cream, Chocolate Fudge Brownie. You can also find their brownies at retailers, such as Whole Foods. The late Bernie Glassman created the Greyston Foundation with a desire to start a culinary business that hired “hard-to-employ” individuals. Given this raw material, he could have gone a number of directions with these assets – catering, cooking classes or a restaurant. Instead, he chose a bakery focused on open hiring – without job interviews, resumes or applications. Start first with all the possibilities, and then choose the best among them. Check out our past blog post for how-to tools on social enterprise ideation.

How do I get help?

There are three ways to go – do-it-yourself with internal resources or pro-bono talent (my favorite is MBA interns from local universities – start now to get a fall intern!), hire a coach to help guide the process and supplement your team, or hire a consultant to lead the work. If you choose to hire a consultant, be careful not to rely on that individual to do all the work, as it often becomes difficult to bring it back to the organization to execute.

What is the best way to fund and sustain our social enterprise?

First, it is important to have a good planning process, which looks at the market to ensure an adequate flow of customers as well as ways to finance the venture via start-up and working capital. People often underestimate these numbers, and they are critical to the ultimate success of the venture. Second, we recommend that you find a support system through a local start-up community or Social Enterprise Alliance chapter. This support system will help you as you grow and evolve, and it can be a source of invaluable emotional support. Finally, when you are ready, search out local and national support for growth capital. We especially like REDFworkshop for social enterprises employing individuals with barriers. They also have a cohort process (called the Fellowship) each year. We also find many local foundations enjoy helping nonprofits to start social enterprises and will fund a range of needs, including business plan development and seed capital through impact investing.

What are the keys to success?

There are many theories why some social enterprises flourish while others languish. To find the answer, we did a deep dive into research (special thanks to Rolfe Larson for his seminal work on the subject!) that examines what makes a social enterprise successful.

The top 5 are:

1. Buy-in & ongoing support from existing organization – If you are starting a social enterprise as part of an existing nonprofit, the board, executive director and other management must agree that operating a social enterprise would be beneficial to the organization. In addition, there needs to be a champion responsible for the coordination, support and expertise in the social enterprise. This person should possess both the skills necessary to run an enterprise and the passion to carry the idea through to reality.
2. Specialized Niche/Competitive Advantage – Market demand is a major determinant to the success of any enterprise. Just because you “build it does not mean that people will come.” If the product or service created is not meeting a long-term need, the enterprise will not be financially profitable. The product or service must have a unique quality that separates it from competitors as well as a strong brand that allows it to stand out in the marketplace.
3. Active and Fluid Business Plan – Having a “road map” to follow is essential to the success of an enterprise. Starting with a business model canvas helps you develop your hypothesis surrounding the main areas of your business. Once you have tested that hypothesis, a longer business plan is useful as your operating manual. Just ensure it is ACTIVE and frequently updated as you begin piloting your enterprise. Successful social enterprises are able to strike a healthy balance between focus and flexibility.
4. Use of Data to Monitor Change & Drive Decision-making – It is becoming increasingly important for social enterprises to demonstrate their impact – both in money AND mission. Having accurate data available is critical for decision-making that creates impact. Successful social enterprises have a “dashboard” to provide key stakeholders with the right data to inform good decision-making. Once that information is in hand, it’s important that it actually gets put to use; organizations must be willing to self-correct if the data points go in a new direction.
5. Ability to Adapt to Change – The culture of a start-up is constantly shifting as the organization grows. Furthermore, even established social enterprises must continuously change to adapt to the broader market. Learning how to use data to monitor and manage organizational change is a key to longevity.

Social enterprise is not for the faint of heart, but in my experience working with new and existing social entrepreneurs these traits have endured for developing or expanding a social enterprise. We welcome your input on the questions above. Feel free to send us any additional questions you have about social enterprise, and we will work on addressing those in a future blog post!