What not to do when starting a social enterprise?

A lot of times we think about what to do as a social enterprise. I'm flipping this around because it's just as important to know what not to do. A lot of individuals, nonprofits and charities start a social enterprise thinking ‘here's the steps to do it’. They never think about the what to avoid.

What do I know about social enterprise? Over 15 years ago I started my own telemarketing firm. It started as a sales and marketing consultancy, until I realized that having a retainer from my clients would be better if I did their ongoing business to business sale. So I hired people to book appointments for startups.

Here's what I figured out by accident. Hiring in an urban center didn't make a lot of sense. I didn't need people to be in an office. They could work from home. I started to recruit in rural areas and Northern Ontario, realizing that I had a great job for individuals who were remote or had limited mobility to leave their homes. I had created a social enterprise without even realizing that I had done it.

I started with a solid business model. And then I was able to add impact.

What not to do when starting a social enterprise?

Lesson 1: Don't start with the losing business model.

This is a very common thing. There are lists of businesses that a proven to have the highest failure rate including restaurants & retail stores. Reading these lists can save you from some immediate stress.

Start with the lists that are successful. Food trucks, translators, bookkeepers, apps, landscaping services, start with something that already has a proven business model, and then infuse as much good into it as possible.

Lesson 2: Don't rely on people just wanting to feel good about their purchases.

That is not a sustainable competitive business advantage. Take cleaning supplies. 10 years ago there were a few environmentally friendly cleaning supplies that came to market. But when they entered the market they started as a price premium. What they realized is that they had to be the same price as other cleaning products and then the fact that they were environmentally friendly would seal the deal.

People weren't going to pay a premium price because it was good. The sustainable competitive advantage is not just because you're a social enterprise. You still need to use market best practices.

Lesson 3: Don't think that people owe you something.

People are not going to refer to you just because you think that they owe you something. A really great example of this is my father who didn’t refer business to me when I ran the telemarketing firm.  Only when he saw the value and benefits I provided to my clients did he refer business to me. He spoke to his friend who ran a consulting business with 40 locations and he told him that his daughter's telemarketing service had some fantastic results. I landed him as a client, and was able to scale my business even more.

Just remember, even my father didn't refer to me because I'm his daughter. He referred to his friend because he thought I could help him.

Lesson 4: You can only be strategic when you aren't worried about the next check.

This is all about getting to the other side of the grant cycles. If you're a nonprofit or a charity, how do we actually ensure that you have stable revenue streams? Using the social finance continuum to move from  donations and grants to creating a revenue stream allows you to be more strategic. Having sustainability means even more opportunities come your way.

Lesson 5: Starting is hard, maybe just buy it.

With Just Like Family Home Care, we didn't from scratch. We bought it in 2022. It already had quite a few locations by the time that we bought it, so then we were able to actually scale up to 41 locations by 2024. Maybe you don't have to start everything from scratch. Maybe you could just buy something. A social acquisition as a social enterprise is another way to look at things and creating even more impact, quicker.

Lesson 6: You don't have to own everything.  

We have a lot of founders, a lot of startups. I gave the example of a social acquisition as we didn't do it by ourselves. We have 3 charities who own this business. You don’t have to do this alone. We can do this in partnerships, creating even more champions!

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