1 IREX Social Enterprise Development Familiarization Training Gbanga, Liberia May 13 th – 17 th Kim Alter Virtue Ventures LLC

Part Four 2

3 Innovative Solutions to Problems Video case: Aravind

Social Enterprise Design

Be clear about the purpose Solve a social problem? Earn money to fund social costs or overhead? Strengthen organizational capacity? Create entrepreneurial culture? Diversify funding? Hire and retain staff? Attract new donors? Sharpen mission? Strengthen community relations? Improve service and program delivery?

6 Social Enterprise Design Process 2. Theory of Change Idea Generation 5. Feasibility Study & Refine concept 6. Business Plan 4. Draft business concept & models 1. Identify market failure / social problem 3. Screen and select ideas © Virtue Ventures Ideas for potential business solutions to social problems Pre-qualified SE concepts w/compelling ToC SE concepts which captures social & business components Spurs problem analysis Validates feasibility of SE concept Process Result Plan to implement 7. Implement Social enterprise

7 Inception and Direction The problem is the social enterprise opportunity The vision is the image of successfully solving the social problem

8 Mission Objectives Theory of Change Social criteria Financial criteria Assets and resources Market information Operating environment Organizational factors Stakeholders Preferences Informs Design

9 The Mission is the Anchor To Vision Unrelated Opportunity

10 Objectives are Aligned Vision Social Impact Objectives Social Impact Objectives Financial Objectives Financial Objectives Mission

11 Impact Goals Local business -Opportunities Women - Gender roles Community -EmpowermentChildren -Education Environment -Renewable Farmers -Markets Local NGO -Engagement Workers - Employment

12 Principles of Design Social Aspects  Start with the social problem  Needs or special conditions of your clients that must be factored into enterprise design  Social market analysis  Determine stakeholders and their roles related to the social enterprise  Identify social stakeholders and their needs and wants

13 Business Aspects  Financial criteria  Assets (have)  Resources (needs)  Market information  Strategic environment  Organizational factors  Stakeholders (customers and business relationships)  Preferences Principles of Design - 1

14 Social Market Landscape “Beneficiaries” of impact  Client  Community  Environment  Public Competitors  Direct competitors Role of subsidies in the market  Substitutes Collaborators  Strategic alliances and partners

15 Strategic Environment Opportunities Threats Barriers Industry dynamics Demand Market Segments & Size Trends Competitors

16 Social Criteria Special design considerations or attributes required to achieve social impact objectives. Social Criteria often hinges on special needs or limitations of clients and/or beneficiaries. Social Criteria can impact:  Operations  Productivity  Financial results  Choice and type of enterprise

17 Assets Identification Tangible  People  Land  Money Intangible  Reputation / brand  Methodologies  Relationships  Skills and expertise

18 Organizational Factors Core competencies Capacity  Human Resources  Financial Stakeholder buy-in Risk Profile Preferences Competitive advantages Culture

19 Financial Aspects Cost structure Revenue structure Subsidies Opportunities for financial leverage

20 Resource Strategy Driven by resource requirements Strategies  Earned income  Grants  In-kind subsidies  Equity  Soft loans /patient capital (below market rate)  Commercial loans

21 Personal Fit Passion and Commitment  Commitment to realizing social mission Qualifications/experience  Maximise resource utilisation Stage of life  Avoid burn-out Time/activity  Matches preferences

Idea Evaluation

Prioritize Screens Prioritizing screens depends on:  What are you trying to achieve?  What you have?  What you don’t have?  Organizational culture/priorities?  Financial needs?  Costs and cash flow?

Scoring Opportunities Opportunity Enterprise idea Fit with Mission Fit with Social Criteria Fit with Organization Fit with Assets Fit with financial criteria Market Potential Fit with preferences Create a custom scorecard based on your organization’s Social enterprise criteria, priorities, purpose

Enterprise Idea Evaluation What is the mission; how does the social enterprise help to accomplish the mission? What is the social theory; how social enterprise social impact goals be achieved? What are the financial goals? Social enterprise’s community and environmental impact goals? What are the human resource needs for running the social enterprise? What specific characteristics/needs of the clients must be considered in the social enterprise? Timeline for implementing the social enterprise? Is there stakeholder support for the enterprise? What is the best type of business model to achieve social and business goals? What are the critical factors for ensuring social enterprise success? What’s it going to cost? What biz attributes/characteristics are preferred?

26 Clarify enterprise concept  In addition to solving a social problem, is this a real business idea? Quick and dirty qualification of enterprise concepts:  Products or services?  Customers?  Demand?  Business model?  HR requirements?  Cost?  Operational requirements?  Positive impact on organizations and clients?  Risks and threats?