1. Developing and Organizing a Viable Business Model Session 2 of the Levitt Social Entrepreneurship Program February 23, 2013 Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

2. Flow of This Morning’s Session Introductory Dialogue and Activity Business Models and Their Value Stages of Social Venture Development What Is Your Venture or Initiative? The Two Pillars of a Viable Social Venture Business Model Program Design and Logic Model Core Business Model Elements: Market Money Management A Quick Assessment Next Steps in Our Program and Process Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

3. --I Ching “NO GOOD ENDING CAN BE EXPECTED IN THE ABSENCE OF THE RIGHT BEGINNING.” Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

5. Let’s Talk… What is a “Business Model?” What is a “Viable Business Model?” Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

6. Stages of Development Opportunity Identification, Clarification, and Assessment Leads to Viability Assessment (or Feasibility Assessment) Leads to Business Plan Development But not in a single cycle linear process: a strong venture development process will involve multiple iterations, gaining refinement from each cycle. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

7. Opportunity Identification/ Clarification and Assessment Growing Out of Exploration of Session 1 Asset Identification and Evaluation Asset Valuation Opportunity Identification and/or Clarification Opportunity Evaluation Opportunity Valuation Risk Assessment Result: Overall Assessment of Opportunity Worth Further Exploration and Development Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

8. Some Risks to Assess (from Dees et al 2001) Management Capacity Workforce Capacity Organizational Culture Organizational Infrastructure Enterprise Concept Level of Required Capitalization Prospects for Long-Term Funding Prospects for Changes in Marketplace Changes in Knowledge and Technology Stakeholder Backlash Competitor Response Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

9. A Sound Business Model Integrates Viable and Relevant Mission and Vision (the social purpose) Real Value Proposition Social Value Creation Cycle (in the form of a logic model or theory of change) Resources to Finance and Fund It Capacity to Implement It Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

10. Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC Value Creation Cycle (from The Nonprofit Strategy Revolution. David LaPiana 2008)

11. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge Market: -Clients - Donors & Funders Organization Capacity Mission, Vision & Values Strategic Fit Strategic FIT

12. Viability Assessment Three Basic Elements: Market Assessment Money Assessment Management Assessment Leads to Overall Assessment of Venture Feasibility and Viability Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

13. Payor Customers: -Donors & Funders Beneficiary Customers (Clients) The Market (Customer) Question

14. Market Viability Assessment Builds on Assessment of Porter’s Five Forces Focus on: Demand Competitive Advantage Differentiator(s) Price and Cost Structure Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

15. This is the ability to produce social value by: Using a unique asset and/or Delivering outstanding execution We employ the perspective of Porter’s Five Forces Model to examine and understand where and how we fit Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC Competitive Advantage (The Nonprofit Version)

16. Daivd Renz: Midwest Center for Nonprofit Leadership at UMKC Strategy vs. Reality

17. Let’s Talk… Share with your colleagues… In two minutes or less (your elevator speech): What is your venture or venture concept? What is the social venture or program initiative that you have determined has great potential for creating social value? What is the “social value proposition” and how do you expect to deliver on it? (or your best case scenario) Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

18. Key Components of A Well-Developed Program Design (The Social Value Proposition) Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

19. Mission & Vision Mission, Vision, Values The mission: Continuing philosophical perspective Makes explicit reason for the agencies existence The Vision: Is what can be accomplished by providing mission services An end state

20. Strategy and the 5 “Ps” Strategy as a Plan Strategy as a Ploy Strategy as a Pattern Strategy as a Position Strategy as a Perspective

21. Program Hypotheses A series of “if-then” statements Cause and effect (factors) Process Output Means-Ends continuum

22. Program Hypotheses Development Steps Identify Critical Issue and Factors Cause and effect of each factor Identify resources, data and assumptions Brainstorm solutions Prioritize solutions Provides framework for service

23. Policy and Budget Policy Guidance Communication Systems Client Interaction Financial Guidance What will the strategy cost? How will we fund the strategy? Is it financially feasible?

24. Finances What will it cost? Direct? Indirect? Is there revenue? Who will pay for the program? Do we have the capacity to financially manage? Implementation What do we need to do to start the program? Where will we provide the service?

26. Objectives Provide short-term and long-term outlook Intermediate results: Immediate impact or change Final results: The long-term impact or ultimate change Should be stated in measurable terms Time frame Target of change Results

27. Outcome Objectives Service Result Flow from the problem analysis Establish criteria for numbers served Multiple outcomes for a strategy or program

28. Process Objectives Target program actions Establish milestones necessary to meet intermediate outcomes Focus on internal activities

29. Group Work

30. Program Design Inputs Client Staff Material resources Facilities Equipment

31. Program Design Throughput Service Definition Service Task Method of Intervention Outputs Unit of service Service completion Quality

32. Outcomes Numeric Counts Standardized Measures Level of functioning scales Client satisfaction

33. These Add Up to Become a “Logic Model” A very useful device to plan and explain: Your assumptions and expectations for how you expect to link: Inputs, which will support Activities, which will lead to Outputs, which will add up to Outcomes, which will result in Long-term Outcomes and Community Impact Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

34. Take A Few Minutes… Please take about ten minutes to sketch out the basic logic model that explains the process by which your social venture or initiative will accomplish the outcomes that will result in social value and community impact. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

35. Return to Viability Assessment Three Basic Elements: Market Assessment Money Assessment Management Assessment Leads to Overall Assessment of Venture Feasibility and Viability Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

36. Money Viability Assessment Initial Consideration of Revenue Potential Investor Potential Available Capital Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

37. To Integrate These: CompassPoint’s “Dual Bottom Line Matrix” Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

38. Management Viability Assessment Mission Compatibility Core Competencies Venture Capacity (including complexity) Core Constituents or Stakeholders Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

39. Social Venture Planning In other words, social venture planning is the process by which we plan and articulate how we will integrate Money Market Management To successfully deliver social value. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

40. The Summary: Key Elements of Feasibility or Viability Assessment 1. Explain the Venture 2. Market research on potential customers 3. Desire and Need for Product or Service 4. Assets and Capacity (including management, personnel, facilities, & competence) 5. General Business/Revenue Model and Pricing Strategy 6. Preliminary Financial Information: a)Start-Up Costs and Time needed to begin to generate revenue b)Start-up capital needs and availability c)Pro Forma/ Financial Projections (including estimates of revenues needed to break- even and timing to break even) 7. Discussion of feasibility: a.Mission relevance b.Risk acceptability c.Competitive capacity d.Quality & quality assurance e.Feasible for your organization now? Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

41. Let’s Do A Quick Assessment Take about ten minutes to work alone or with your work group, if you have one, to take a look at the “Quick Market Test” and then complete the “Quick Market Test Scorecard.” After you have completed this, we will invite observations about the topics where you know the most and the topics where you will want to engage in further research and analysis. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

42. Move to a Business Plan? If the venture is deemed feasible… Build on all of the information of the feasibility assessment. Add depth to each of the elements of the feasibility assessment to create a business plan. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

43. Wrap-Up: For the March Workshop Meet and Begin to Work With Your Coach Develop and Clarify Your Logic Model (complete the form) Use the Worksheet Sets 4 and 5 (from the book, Venture Forth) to gather and organize your data to begin to assess the feasibility or viability of your venture. Read the materials on financial viability assessment in preparation for next workshop, which will focus on “Funding and Financing Your Social Venture” Contact your Levitt Program facilitators and advisors (Laufer, Helm, Andersson, and Renz) as needed to help you and your coaches to progress in the development of your social venture. Workshop 2: Aaron Levitt Social Entrepreneurship Challenge

44. Questions? Comments? Clarifications? Workshop 2: Aaron Levitt Social Entrepreneurship Challenge