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Part 5 -How to make a social enterprise sustainable?

If you want to do something very good there is no money for it. It is something very weird in our society that our value system is completely opposite to our intuitive nature.” ¬David

In the previous articles many overlapping questions were already discussed. Mostly because in the end we strive to build successful enterprises that are able to sustain themselves. During the table discussion it was rightly pointed out that even for the only for profit businesses it can take up to 5 years to generate enough income that provides livelihood at least for the founder.
Here you can find two articles about the journey in the “simple” start-ups world:

-How Long Will It Take To Have a Successful Startup?
-Growing your business: How long it really takes?

We should not be surprised that similar challenges apply also for social enterprises. Someone even came up with the question: How can we build social enterprises that will last for 10-20-30 years? This question is hard to be answered because a company has to change and evolve with the world by time. And of course with technological and social changes some products or services can turn to be useless in long term if they do not evolve.

 

The other occurring question was: How do we keep a project running? As the previous articles pointed out and discussed in detail, if we take our project to an enterprise level it will operate as a business from a management, operation and strategic perspective. A social enterprise has to face with similar challenges like the traditional businesses while keep being true to its core values and mission.
When the founders want to quit but also want to keep the company running is a critical step in every organization’s life. There is no only social enterprise specific recipe for that. Usually founders are rarely good managers and after a company reaches a mature phase of growing most of the times a management team takes over the daily operations of the companies. Naturally we have to find people who are interested in our project and try to find to who can we hand it over when the time comes. And of course we have to differentiate between projects and already established, running enterprises.
We can differentiate two kinds of involvement while running a social initiative:
There are employees who need to make a living, they need to make money to stay dedicated, enthusiastic and focused in long term. And there are students/volunteers who would like to contribute in providing value for a community. The volunteers’ engagement often varies therefore an enterprise has to have its core payed employees. Hopefully after 3-5 years the company is mature enough to be able to provide this financial compensation. For volunteers it is always good to involve locals and even young high school students who go through a very valuable learning process by being involved in a social initiative that will be also valued by their future employers later in life.

During the table discussion 3 different stages were identified:
1,Community based/volunteer based
2, Subsidy based
3, Real running business with valid business model (mature), real independence and sustainable
With other words based on the previous articles too we can say:
1, is the early stage start-up phase when an initiative is taken in a community, the project has already started but it is still an early stage “start-up” that should clarify its value proposition.
2, is the NGO phase when the organization has found its first donors and it is able to operate using subsidies (to become an NGO is an option not all social enterprises follow this path)
3, is the real business phase when the value proposition, the costumers and the product market fit are crystal clear that allows the enterprise to sustain itself based on its “social business” activities.
The first stage is very important to source energy from to feed our burning passion later too. Because there will be many obstacles on the way that require us to be persistent.
With stage two the subsidy/NGO way there are some problems. The pitfall is that applying for subsidies can cost enormous effort to fulfil the requirements. The energy and time spent on writing proposals can be almost as much as the amount of subsidy. That is the point where it is better not to fixate our ideas and mindset on static problems, such as a certain government organization we have to keep trying to find loopholes and alternative solutions and create a real business case as it was outlined in Part 4. https://www.wachama.org/blog/part-4-how-to-turn-an-ngo-into-a-social-enterprise
In nutshell: In order to make our social enterprise as sustainable as possible we have to have a business model and from that point from a management perspective we will operate like any other company see Part 2.
 

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