Social Enterprise – What does it mean for you ? Social Enterprise Toolkit Marketing your Business Business Planning

Aims clarify the meaning of social enterprise and explore how organisations can be more enterprising increase awareness of the options around social enterprise provide practical advice to those interested in developing a social enterprise

Why change ? Broader strategic approach will safe guard the future wellbeing of the charity ? To carry out non charitable activities to fund charitable activities ? To risk manage and give strategic focus to new ventures ? Avoid “tax leakage”, a trading subsidiary can “gift aid up” profits to the charity

What is Social Enterprise ? “any organisation that trades with a social purpose, using business principles and enterprising approaches to achieve socially explicit goals”

What is Social Enterprise cont. ? Having a clear social and/or environmental mission Generating the majority of your income through trade Reinvesting the majority of your profits to further the social mission equals SOCIAL ENTERPRISE !

What is Social Enterprise cont. ? “Triple bottom line” Financially self sustaining organisation Reduced dependency on public funding Increased independence

What is Social Enterprise cont. ? Key issues: Sustainability – to grow income through activities that don’t conflict with social values of your organisation Capacity – ability of members and volunteers with your organisation to marry commercial and social objectives to create a surplus

Different Approaches Emerson, (2005)

The “Triple Bottom Line” Social Aims Enterprise Orientated Social Ownership Financial and social returns are conflicting “bottom lines”. Creating a surplus is the goal, but it is not the only goal. Profits are re-invested in the mission rather than being distributed to shareholders. SKS Scotland: Mentors Toolkit

Conflict 1: Mission Outweighs Profit (?) Social Mission Profit (Surplus) SKS Scotland: Mentors Toolkit

The Advantages of Social Enterprises Offset “Bottom Lines” with Non-Monetary Resources Volunteering Support from people who offer their services without being (fully) remunerated. This volunteer work can be found at various levels: among board members (nearly always), among trainers or guidance staff (less often), or through more specific contributions of professional skills etc. Social Capital Mobilising other non-monetary resources: local networks and partnerships, trust relations with other operators, sympathetic capital from the general public etc. This "social capital" can be used in many different ways and can have a direct or indirect impact on the enterprise. It often contributes to reducing costs, in particular what economists call "transaction costs SKS Scotland: Mentors Toolkit

Sustaining That Vision … Integration into the Community Governance that meet Social Purpose Financial Security Access to Social Networks The Social Enterprise Foundation uses the term sustainable enterprise to indicate the business must be successful in the long-term and that the wider impacts of the business must be considered as they will have a knock-on effect to the local community. SKS Scotland: Mentors Toolkit

Conflict 2: Sustainable Business Models 11/9/2010 Conflict 2: Sustainable Business Models Capability of Organisation Sustainability of the Venture Strategic Fit? 4

Conflicting 3: Purposes 11/9/2010 Self-Sufficiency Subsidy Conflicting 3: Purposes 5

Stakeholders

Stakeholders

Sustainable business models The aim of a social enterprise should be to become self-sustaining by reducing or elimination dependency on public grants. At least 50% of income should be from trading. . . (Salamon 2004) This income should be: Socially sustainable. Economically sustainable. Ethically sustainable.

Revenue Checklist for Models(1) Component of business model Question for all business models Questions specific to Social Enterprise Models 1. Customer Value. Is the enterprise offering customers something distinctive, better value or lower cost than alternatives? What allows your enterprise to offer its customers something distinctive? Can it allow you to solve a new set of problems for customers? 2. Adding Value What is the range of products/services that might add value to the mission of the Enterprise? Are these primary or ancillary? Are services users and end users the same? Are there different groups of service users? How can these service users best access your services? What barriers exist to you reaching them? How does a Revenue Model affect the clients, the community and stakeholders? 3. Pricing How does the firm price the added value? Evidence that customers will buy? In terms of social impact what make one pricing model better than the other? What are the social costs and benefits of proposed revenue streams? What conditions makes pricing better value? 4. Revenue Sources Where does the revenue come from? Who pays for what value and when? What are the margins in each market and what drives them? What drives value in each revenue source? Are revenue sources different eg on-line/offline? Who is already doing this and what makes them successful? What is new and what is better in this offering? [adapted from Afuah/Tucci 2003]

Revenue Model Checklist (2) 5. Connected activities Which set of activities does the firm have to perform to offer this value and when? How connected are these activities? What impact will it have on core business? How do revenue activities relate to charitable functions? What types of new (commercial) activities must be performed? How much better can a Social Enterprise format help you in performing existing activities? 6. Implementation What organisational structure, systems, people and environment does the Enterprise need to carry out these activities? What is the fit between them? How does the added values business proposition impacts on the structure, systems, and people the Enterprise? 7. Capabilities What are the firm's capabilities and capabilities gaps that need to b e filled? How does a firm fill these capabilities gaps? Is there something distinctive about these capabilities that allows the firm to offer the value better than other firms and that makes them difficult to imitate? What are the sources of these capabilities? What new capabilities are needed to build revenues streams? In what way do commercial activities affect social mission? [adapted from Afuah/Tucci 2003]

Revenue Model Checklist (3) 8. Sustainability What is it about the enterprise that makes it difficult for others to imitate? How does the enterprise sustain its (competitive) advantage ? What kind of relationship we need with other organisations? Does the Revenue Model make sustainability easier or more difficult? How can you take advantage of it in the long term? How to find suitable partners to deliver services. How do you manage the relevant business network? 9. Profit What is the relative (dis)advantage of a firm vis-à-vis its suppliers, customers, rivals, stakeholders, potential new entrants, and substitutes? What is the impact of the Revenue Model on the relative(dis)advantage over suppliers, customers, rivals, stakeholders, potential new entrants, and substitutes? 10. Cost structure What drives costs in each component of the revenue model? What is the impact of the model on those cost drivers that underpin the components of a business model? [Afuah/Tucci 2003]

Social Value Marketing Proposition 11/9/2010 Social Value Marketing Proposition Opportunity Capital People Politics Regulatory Tax Social Value Proposition Tax Demographics Fiscal Regime Social Enterprises: Developing Sustainable Businesses Austin, Wei-Skilleran et al, 2007 11