Originally posted on Your Mark On The World
By Cassandra Staff
Entrepreneurship is challenging! Being an entrepreneur means being tested and pushed beyond reason. This is especially true for social entrepreneurs—those offering market-based solutions to the poor that address a social need, such as selling affordable, safe drinking water.
Social entrepreneurs must navigate the already turbulent startup waters with the added challenges of operating in widely uncharted territory. They likely work in an environment with little infrastructure (physical or economic) while traversing a young, confusing ecosystem. Plus, they must build their team, develop their business strategy, seek funding, and keep a laser focus on the social impact they intend to achieve.
The Global Social Benefit Institute (GSBI®) programs at Miller Center for Social Entrepreneurship exist for one reason: to help social entrepreneurs help more people by filling resource and information voids and providing in-depth mentorship. The GSBI offers business model-focused programs tuned to social businesses at their particular stage of development. The best part is that each program participant is paired with at least one Silicon Valley business executive mentor throughout the entire 6- or 10-month duration of the programs.
I talk to social entrepreneurs often, and my favorite question is, “How can GSBI help me?” Let me count the ways!
GSBI mentors are successful business leaders with decades of experience and connections who volunteer to work intensively with social entrepreneurs.
Mentors are selected carefully. Besides strong business acumen and operational experience, mentors need the interpersonal skills to interact and empathize with someone from a different culture, who is often struggling with minimal resources and funding.
GSBI mentors become “trusted advisors” who—through their education, background, and experience—know the fundamentals of business planning and the challenges of executing on those plans. And because Miller Center is part of Santa Clara University, mentors share SCU’s mission to create a more just and sustainable world. While not necessarily experienced in Base of the Pyramid (BOP) markets, mentors must have experience in international business environments, able to work in a variety of cultural, legal, and market environments.
The primary role of the mentor is not to provide answers or act in a consulting capacity, but to support the entrepreneur in asking the right questions and using a variety of resources to find the right answers.
Sustainable Growth & Scalability
The GSBI believes that helping organizations achieve sustainable growth and scale involves four crucial factors: the impact model, business model, operations, and financing, or investment readiness:
1. Impact Model
The impact model has to be clear, showing value to beneficiaries, how that value is measured, and the ability to convey these details to impact investors.
GSBI programs work toward five milestones demonstrating the strength of an organization’s impact model:
- Clear mission statement
- Problem statement based on the beneficiaries’ input
- Validated products or services that are compelling to the poor
- Formalized metrics that prove impact
- Documented impact metrics demonstrating superiority to alternatives
2. Business Model
A social enterprise’s business model and its associated metrics must show how the business model works, in detail. Throughout a GSBI program, entrepreneurs are encouraged and supported to better articulate their business models. They identify:
- Clear target market
- Unit economics with margin per product/service
- Value chain, including customer ROI
- Customer acquisition methods and market development plans
- Partner relations
The overlap between impact and business models is the most critical piece: When a business grows, it helps more people. With increased impact comes more revenue. The overlap area essentially defines the value proposition. When the business and impact models are complementary and integrated, the business can grow economically while scaling its positive impact on the poor.
3. Scalable Operations
Scaling means creating efficiencies to achieve the profit margins and cash flow necessary to fund growth Scalable operations require building:
- Management team
- Operational budget plans able to compare to actual results (e.g., KPIs)
- Process manuals for quality control and repeatability
- Strategic initiatives for multi-year, sustainable growth
- Integrated KPI/strategic initiatives with financial metrics
4. Investment Readiness
Investment readiness includes a broad set of elements related to the financial components of the business, including:
- Audited financial results
- Multi-year financial projection for baseline business and strategic initiatives
- Breakeven analysis, profit, and cash flow
- Justifiable ask
- Complete due diligence folder
The “justifiable ask” that we help entrepreneurs formulate includes:
- How much funding is needed
- What form of capital is being sought (debt, equity, grants, etc.)
- The use of the funds and how it’s tied to the strategic initiatives and expansion plans
- The ROI for the investor, either as social impact, financial returns, or a combination
In the end, Miller Center GSBI alumni can articulate a great impact model, a solid business model, efficient operations, and a clear financial ask.
If this sounds valuable to you, apply to our programs at www.scu.edu/applyGSBI. We have a rolling application, and applications received before October 21 will be considered for GSBI Accelerator and GSBI Online programs starting in January 2017.