What is a social enterprise? The definition of a social enterprise varies from source-to-source. Some sources state social enterprises do not provide value to shareholders, but that's not true (see Recyclebank, which is a portfolio company of KPCB). So - here's my own definition: "Social enterprises are for-purpose businesses [nonprofits or for-profits] that use the methods and disciplines of business to advance their social, environmental and human justice agendas."
When I was first starting my own social enterprise to help at-risk youth, I Google'd, "How to Build a Social Enterprise?" The articles I found didn't provide concrete steps on how to start using entrepreneurship to tackle a social issue; they provided steps on how to legally incorporate, and how to develop a business plan, which was overwhelming in the beginning. [Note: Knowing what I know now, I would not recommend legally incorporating or developing a business plan first!] This is why I decided to study the ventures of many "successful" social entrepreneurs, like Adam Braun, Jacqueline Novogratz, Sal Khan, Scott Harrison, and many more.
From my research, I found there was a common recipe used to start building a successful social enterprise and worked to capture it. After months of organizing and gathering my thoughts, I developed the B.I.B. methodology, which underlines the success of most social enterprises. Below the video player is a more nuanced explanation of the methodology I created and discussed in my TEDx talk at Columbia University's Teachers College.
B.I.B. means: Business. Impact. Brand. Let's focus on each one of them independently for a moment!
Business - What business are you in and why?
If there's a social or environmental or justice problem that has affected you personally or someone you love, or goes against or is aligned with your core values, and you want to use entrepreneurship to bring it to life, you must do your homework. I'm not talking about spreadsheets and profit margins. You need to know exactly what is being done already because you don't want to take away resources from an existing social enterprise doing great work; and you also want to use your time and resources wisely.
Before thinking about building a business plan or legally incorporating, conduct a SWOT analysis upfront in order to develop your competitive advantage. You want to do something niche-specific. And finally, what's your story? Why do you want to work in said space? Your story will differentiate you.
Impact - What value are you creating and for who?
What is the problem and how are you going to change it? My recommendation is to become customer-focused and use design thinking to learn more about the rudiments of the problem. Afterwards, develop a matrix (incorporating a basic logic model and theory of change) outlining the problem and an ambitious outcome statement; then use lean strategy to make and test hypotheses that get you closer to your lofty end goal. And you have to be willing to exist to put yourself out of business.
Also, anecdotes and qualitative info are great, but you need numbers. What matters most is that need to show you're solving problems that will make our world a better place. Who do you create value for and how much? Be specific. What is your value proposition? What is the benefit you're providing? Is it effective? What is your proof-of-concept strategy? Are you able to scale?
Brand - Who champions you and are they credible?
Your brand isn't just your logo. It's who you are. It's your network. You need more than just your mom's good word--unless your mom works for JP Morgan Chase--to get your social enterprise started. You need credible social capital. You need to gather credible supporters whose shoulders you can stand-on and who'd put their reputation on the line because they believe what you're doing can make the world a better place. To get started on creating your brand, you need to form relationships with co-workers, friends, bosses--folks who could potentially sponsor you. You could also cold-email, cold-call, and convince at least one person with credibility that your potential business and impact are worthy; then more people will follow.
When founding a social enterprise, getting startup funding is extremely hard. I know! If you're able to market your business, impact, and brand though, you will gain traction and raise funds by winning the hearts and minds of potential donors. If you're interested in seeing examples from my own social enterprise (Foster Skills), Khan Academy, Charity: Water, or the Grameen Bank, click on the video player above, or here, for the entire 17-minute TEDx talk.