I Want to Setup a Social Enterprise – But Where do I Start?
Have you got an idea brewing? Have you had a few chats with friends and family who think it’s brilliant? Feel like you’ve found something that marries your personal passion to business?
That’s fantastic. You must be filled with excitement and anticipation. But there is also fear creeping in and a sense of being slightly overwhelmed, right? You are not alone. Starting a socially focused business isn’t simple, but here are some steps you can take at the start of your journey that will give you the best chance of success.
1. Really Understand The Problem You Are Trying To Solve
If you’re thinking about setting up a social enterprise then you will have a social or environmental issue that you are passionate about improving. But tackling this issue is complex and you’ll need to get your head around the problem to be sure your solution is making the positive impact you envision.
A good place to start is understanding what in society may have caused the problem to exist and what are the ripple effects that problem is having in our communities and to our planet. For example, one cause of social isolation in the elderly community is bereavement of a lifelong partner and one of the effect of being socially isolated is depression. In this example, depression could also be a cause to the problem.
It is useful to block out time in your diary to sit down with paper, pens and post-it notes and map it all out. It’s also important to invite others who understand the problem to join you and help you think it all through. As you begin mapping out the causes and effects, the complexity of the problem will become very clear, and overwhelming. But the exercise will allow you to focus your attention in on just 1 or 2 causes and/or effects of the problem, so you can begin to develop a thoughtful solution to tackle them.
Top Tip: There are hundreds of social enterprises already trying to tackle the same issue. Do some research to see what causes and effects they are focused on and the solutions they have developed to tackle these. This can either inspire you to develop similar solutions in your local area (no point reinventing the wheel, right?) or highlight gaps that aren’t already being tackled that you can focus your attention on.
2. Connect With Others Focused On Solving The Same Problem
As I mentioned above, you won’t be the first person in the world who’s standing up to tackling our global issues. But that’s absolutely fine. Unfortunately the complex nature of these issues (as you will have discovered from the mapping exercise mentioned above) means they can’t be solved overnight and will need a lot more people power to make a change.
As a potential newbie in this space, there is also no reason for you to start from scratch. Everyone had to start somewhere and have dedicated time and energy to learning about the problem and overcoming challenges to setting up successful social enterprises. And these people will be happy to support someone joining the movement to make a real impact in the sector. Find these people and reach out to them. You might be surprised how much time you can save and knowledge you can gain from a 30 minute conversation.
Top Tip: As you will expect, the people you reach out to will be very busy (well, they are trying to change the world!) so respect their time and make it easy for them to engage with you. A 2-hour brainstorm in your local area might be hugely valuable to you, but would take a lot of time (including travelling and organisation) for the other person. Make the most of the digital era and see if a 30-minute Skype chat is possible, or allow them to call you from their mobile while they are in transit between meetings. That first 10-minute conversation could lead to a whole lifetime of possibilities, so think long term.
3. Build An Advisory Board To Help Move The Idea Forward
Once you have started getting a better picture of your social enterprise solution, you will want to move quickly to build a simplified version that you can test. As a startup, the biggest barrier is the expectation that 1 person (you) has to understand and move forward all aspects of the business on their own. This is a lot of pressure, especially if you are entering a new sector. But, there are alternatives.
An advisory board is a select group of people who offer advice on setting up and running your social enterprise. They are unofficial, which means there are no legal requirements, they do not have the authority to vote or control business matters, and it means a board can take any shape you want it to.
Generally, the board consists of business experts in your sector and successful entrepreneurs running social enterprises focused on solving the same problem. If you don’t already know people who could be on your board, don’t be afraid to reach out to people. If you connect with someone that seems right for the board, ask them. The worst that can happen is they’ll be flattered and turn it down. But, they might know others who they can recommend.
When setting up the advisory board, be clear on what you want their role to be and be prepared to offer something in return for their time. Small gifts, paying for drinks and offering to cover travel can go a long way to show appreciation for their time and wisdom.
Top Tip: Taking time to reflect on what skills and knowledge areas you are strong in as well as being honest with yourself on what you’re not as confident in. If you have an idea of what skills you need to bring in, you can find people who compliment you.
4. Find Your Potential Customers / Beneficiaries And Get to Really Know Them
I am going to tell you the biggest secret to setting up a successful social enterprise. Are you ready to hear it? Create something that your customers and beneficiaries need and value. Surprised? Maybe not, but what you might be surprised to hear is just how many people create businesses based on assumptions of what people want and then are surprised when they struggle to set meetings with potential clients and have low numbers for the free service they are offering.
Assumptions are a great place to start. Using tools such as the Talking to Humans Assumption Exercise, you can paint a picture of the customers and or beneficiaries you are aiming to focus on. If you’ve connected with others in the sector, you will no doubt have sponged information (even subconsciously) from your conversations.
The next step is getting in front of the people who you’ve identified as your potential customer or beneficiary and get to know them. Using the right questions, you can learn so much about what their biggest headaches are, what makes them happy and how they might interact with your product or service.
Once you have got a better understanding of the people you will focus your attention on, you can go back to your assumptions exercise and update the information. There will no doubt be some information you hit the nail on the head with and other bits that were worlds apart. This is okay and the whole point of the exercise. Every time you amend, update, and re-try on this journey, you are one step closer to creating a social enterprise that will be successful in the long term.
Top Tips: As with other aspects of setting up a social enterprise, there isn’t one place to go that has lists of potential customers and all the information about them. If it was that easy everyone would be doing this, right? It does take time and if this isn’t an area you feel strong in – get support. If you have an advisory board forming, they will be invaluable in helping you frame the questions and also validating your assumptions based on their own experience.
5. Start Testing As Soon As Possible
One of the most impactful moments of your startup journey will be when you test your idea. I’ve never worked with anyone who has tested their idea and not come out the other side with at least one big takeaway they hadn’t expected.
Once you’ve developed a Minimal Viable Product, start testing it with a small group of potential customers (around 50 is good for comparing feedback in a meaningful way) who can be critical and honest about the product or service. Collect the feedback and make sure you take the time to reflect. Were there trends in the feedback? Did you notice customer segments forming? This is all vital to making your product or service a hit when you launch.
Repeat the steps (Build – Measure – Learn) with larger groups of people until you feel ready to launch the startup. Testing can take many shapes and it will all depend on your idea. Some testing environments can be set up specifically to ask people to use the service or product for free and give feedback while other methods could be stocking the product in a shop and seeing what the response is to it. Work out a test plan that works for your idea.
Full Disclosure: For those of you who get high engagement from customers and beneficiaries and clear steps to update the product or service from your tests, it might be that the idea takes a very different shape to when you started this journey and that is alright. It’s better than alright. It indicates you’ve listened to what people need and created something they want to use and value. This will set you up for the best chance to succeed.
On the other hand, it might turn out that the idea you started with is not getting any traction. People aren’t engaging with it in the test stage, the feedback isn’t helping you to pivot and experts in the sector have had concerns. It might be hard to do, but letting go of the idea could be the best thing for you and the idea. You can very easily get caught up pouring time, energy and money into an idea that only you and maybe a handful of people believe in. Think how that time could otherwise be spent exploring a whole new idea.
There is no one right way of going about starting up a social enterprise, but if you are looking to develop a robust idea, test it as well and as soon possible and get to the point where you feel confident and supported to launch – we’d like to support you on that journey.
Sara Osterholzer is the co-founder of The Good Business Club and has spent 5 years working directly with entrepreneurs starting up businesses. As well experience as employee #1 in startups, Sara has run accelerator programmes for early-stage social enterprises.