Category Archives: Social Enterprise

Social Enterprise: Defining Your Mission

Social Enterprise Mission from The Startup Garage

Social Enterprise: Defining Your Mission

A key part of a company’s business plan is the mission statement.  In particular for non-profits and social enterprises, the mission statement serves as a constant reminder of the social aim the organization is dedicated to.  Writing a strong mission and corresponding guiding principles is a key planning step to keep your social enterprise on track during the various stages of business. For a social enterprise, the mission and guiding principles must provide guidance for tackling the tension between mission and margin.  Below, we provide a list* of the areas from which you can draw inspiration as you write your mission statement and guiding principles:Writing a Mission Statement that matters from the startup group

  • Employees: What is your role with your employees?  Are they a means or an end or an intricate part of who you are?  How does that manifest itself in your business and its structure?
  • Community: What is your relationship to your community?  Is it simply a place of business?  Could you move one hundred miles away without any loss of impact or connection?  Or would your community miss you because you were impacting it positively?
  • Environment: What will you do and not do to earn a profit?  What are your profit goals?  Who is rewarded when a profit is made?
  • Wages: How will wages be calculated?  What is your commitment to moving in the direction of a living wage?  What type of benefits are you committed to providing?
  • Governance: To whom is the organization accountable?  To whom are you, the leader, accountable?
  • Decision making: From whom are you going to seek input, counsel and advice?  Will decisions be made by consensus or chain of command?  Where will the buck stop?
  • Business Ethics: What will be the basic business terms by which you will conduct commerce?
  • Diversity:  Whom will you welcome into your organization and how hard will you work to get them there?
  • Personal Development: To what degree will the enterprise be a vehicle for personal growth?  To what degree will you seek to encourage spirit at work?  What about fun?
  • Advocacy and Public Policy:  Which social issues is the organization passionate about?  Will you seek to affect those issues with your work alone?  Will you be a public voice?  Will you seek to influence public policy?
  • Impact: How will you measure your impact and what will you call success?  What are you willing to spend on measurement?  How open will you be to the course corrections that measurement suggests?

An example of a company with a well-articulated Social Mission and a downloadable PDF of their guiding principles is Yonkers, NY-based Greystone Bakery, who strives to provide job opportunities to people who are considered “hard-to-employ” such as ex-prisoners.

 

*Lynch, Kevin.   Mission, Inc.: The Practitioner’s Guide to Social Enterprise.  Berrett-Koehler Publishers, 2009.  Print.

 

Social Enterprise, Non-Profit and For Profit: The Differences

Social Enterprise Profit vs Non-Profit from The Startup Garage

Social Enterprise, Non-Profit and For Profit: The Differences

 

While the most important difference between a social enterprise and any non-profit or for profit company is an emphasis on the balancing act between the mission and the (profit) margin, there are many specific business attributes unique to a social enterprise.

 

  • Corporate Accountability:  Along with traditional financial and legal accountability, a social enterprise is responsible for constructive and voluntary accountability measures.  These measure provide stakeholders with information on resource efficiency and whether or not the organization has met its objectives.
  • Governance:  Many governance issues can be addressed in the social enterprise’s corporate bylaws.  Similar to a non-profit, there is the heightened responsibility for moral governance of your organization as to fulfilling the organization’s mission.
  • Transparency:  Social enterprises face the challenge of building trust with their stakeholders and thus have an additional incentive to provide ample amounts of transparency in their success metrics.
  • Compensation & Wages: This issue is significant for a social enterprise.  A social enterprise falls somewhere between these extremes of a non-profit, which is limited to executive compensation that is reasonable and often pays staff employees below their market value, and a for profit, which can practically pay their executives and staff whatever they think is necessary for top performance.  It is important to pay staff employees a wage that is competitive with the compensation rate for the same work in the for profit sphere.  However, when it comes to executive compensation, it would reflect poorly on the social enterprises’ pursuit of their mission if the executive compensation even remotely resembled that of the for profit sphere.
  • Employee Ownership:  Offering an Employee Stock Ownership Plan (ESOP) is a means of raising finances and saving money on payroll by offering shares of company stock to employees.  An ESOP allows business owners to offer equity in the company in exchange for, most often, a reduced salary.  Offering ESOPs to employees has the added benefit of promoting employees to take a vested interest in the company and its success and may be a good way for a social enterprise to free up additional capital.
  • Management & Worker Communication:  Social enterprises are more often characterized by participative management from the employees than a traditional for profit business.  Similarly to a non-profit, the employees are often dedicated to the organization’s mission and are likely to want to be involved in deciding the direction of the company.
  • Local Involvement:  If the social enterprise’s mission is to address a local issue, than local involvement is going to be especially important.
  • Diversity:  Improving the diversity of a company’s workforce is becoming a popular issue for all companies, for profit, non-profit and social enterprise.  But as a companies with a mission, both social enterprises and non-profits can make it their goal to bring diversity to a multitude of professional, social or other group settings.
  • Civic Engagement & Giving:  Especially for customers of a social enterprise’s business, a social enterprise business model provides a way to both give back to the community while receiving a quality product.  This may be more attractive to consumers who don’t have the resources to make an outright donation but want to feel good about what companies they give their business to.
  • Environment: One of the key tenants of a social enterprise is a commitment to the triple bottom line: profit, people and planet.  Environmental stewardship is an important part of a social enterprise’s role in the corporate world.

 

What is a Social Enterprise?

What is a Social Enterprise from The Startup Garage

What is a Social Enterprise?

You may have heard the term “social enterprise” being discussed in the business world — but what does it really mean?  A social enterprise is the joining of a social cause with a business activity.  It is easier to understand the concept of a social enterprise if you think of a business continuum with non-profit organizations on one end and for profit organizations on the other end.  Between the two profit extremes lie the social enterprises.  They can take the form of anything from a non-profit organization engaged in mission-supporting commercial activities, a dual-purpose businesses that mediates profit goals with social objectives, to a profit-oriented businesses engaged in social commitments such as corporate philanthropies.  Together, the variety of social enterprises represent a paradigm shift in business motives.  Purely economical decision making and economic Darwinism have given way to a focus on the value of creating a positive impact on society sustainably through ethical and social capital.

In a social enterprise, there is a necessary tension between the dual motives of mission and margin, and this tension drives the whole business.  A social enterprise differs from social entrepreneurship in that the enterprise is the vehicle through which profits can be reinvested for growth, and entrepreneurship is the socially innovative action that serves as the tipping point for change.

An advantage of a social enterprise is that it has a more entrepreneurial spirit than a traditional non-profit, but remains socially proactive by seeking to influence and change environments rather than respond reactively.  A social enterprise can attract and retain a staff that desires pursuit of a social mission while still having the opportunity to make a profit.  In business lingo, the social enterprise pursues the “triple bottom line” of people, profit and planet.

Socially and environmentally-focused business models seek to solve a community problem in the “people” or “planet” categories through a variety of methods.  The products or services of a social enterprise are designed to address issues such as economic inequality, improving health, promoting the arts/sciences/media, conserving the environment, rebuilding the local community, alleviating poverty through the supply chain, employing workers from a chronically under-employed population or driving capital to other purpose-driven enterprises.

Whether you have a question about a Social Enterprise, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Non-Profit Legal Issues: Profit-Seeking Activities

Non-Profit Legal Team Setup from The Startup Garage

Non-Profit Legal Issues: Profit-Seeking Activities

Since non-profits are established with a specific promise to return the profits into the organization and to not pass them along to any officer, director or employee of the organization, some financial transactions are bound to raise a red flag or be a cause for a non-profit to lose access to federal grants, community donations, and tax exemption.  These transactions fall into two categories.

Private Benefit/ Inurement

  • While directors and staff employed by a non-profit have a right to a reasonable salary, anything beyond what is considered reasonable, even if it’s not a monetary compensation, is considered to be an inappropriate and illegal appropriation of non-profit funds.  This category includes the crime of embezzlement.

Unrelated Business Income

  • A non-profit could stand to lose its 501(c)(3) tax-exempt status if it has too much income generated from activities or trade that are regularly carried on and are unrelated to the exempt function of the organization.
  • If your business plan includes regularly carried on trade or business from which you would like to retain a profit, you can consider structuring your business as a social enterprise rather than a non-profit.  California recently introduced two “hybrid” corporate forms for social enterprises: flexible purpose corporations and benefit corporations.  The Startup Garage has helped several social enterprises begin their businesses – please look through The Startup Garage’s web site for more information on beginning a social enterprise.

 

Whether you have a question about Non-Profit Legal Issues, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Benefit Corporations vs. B-Corporations

Benefit vs B-Corporation Social Enterprise from The Startup Garage

Benefit Corporations vs. B-Corporations

With the new era of Social Enterprise upon us, we are seeing more and more companies blend their business structures between for-profit financial efforts and philanthropic social returns. This rise in social awareness and communal benefits has led to rise of Benefit Corporations and B-Corporations across the nation. Often confused, these two types of enterprises contain many similarities yet key differences that are outlined below.

1. Benefit Corporations are corporate structures. They are legal state entities that are similar to those of S-Corps, C-Corps, or LLCs. Not all states have passed Benefit Corporation legislation; as of 11/14/11, only 6 states have legally recognized them.

2. B-Corporations are regular enterprises that have received “B-Corp” certification. By filling out an Impact Assessment, meeting established requirements, and passing an advisory board review, a non-profit organization by the name of B-Lab distributes “B-Corporation Certificates.” B-Lab then requires the company to alter their bylaws and structure to that of similar legal Benefit Corporations. There are currently a little under 500 recognized B-Corps across all 50 states.

3. A company may be both a Benefit Corporation and B-Corporation. This may only be done in states that allow Benefit Corporation entities and if the company in question has met B-Lab certification requirements.

4. B-Corporation certificates are mostly applied for in states that currently do not have legal Benefit Corporation structures.

5. Although Benefit Corporations must produce and publish annual Benefit Reports, it is not required that a third party assess or audit their performance and verify their procedures. In comparison, B-Corporations must first pass B-Lab’s B-Impact Assessment with a minimum score and are then liable to be randomly reviewed on-site every two years to make sure standards are being met.

In general, both Benefit Corporations and B-Corporations have the same objective: to further their social aims through a for-profit driven business. They are both held accountable for their decisions in regards to their customers, shareholders, and the environment as well as for their transparency in their publically published reports on social and environmental performance.

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Whether you have a question about Benefit Corporations vs. B-Corporations, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Starting a Business and Thinking About the Environment

Social Enterprise Environment Business from The Startup Garage

Starting a Business and Thinking About the Environment

In nearly every business, business administrators are thinking about ways they can run their businesses efficiently. A new trend that is emerging rapidly today is environmentalism. In nearly every industry, people are thinking about ways they can run their business efficiently without harming the environment. It has become apparent how important this is. Eco-friendliness is not only a trend; rather, in some cases it is even regulated by state or local law. Even though most people think that environmentalism is solely based on saving the planet, it can also save you money, which is very important while starting a new business. Although most startup businesses will not have to deal with environmental regulations, there are still small easy ways to support the environment, and your wallet. Here are just a few things to think about to be more environmentally friendly while starting a new business:

  • Recycling: Recycling can be done easily and without any unnecessary hassle. Many local trash places offer recycling services and will provide recycling containers that usually are picked up on a regular basis. Recycling saves space in landfills, and also saves energy and resources. Not only can glass, plastic, paper, and aluminum be recycled, but when you are ready for an upgrade from those old computers and cell phones, there is recycling options for those as well. In most cases recycling will not cost a thing.
  • Cutting down on paper usage: Most businesses use paper as a central form of communication and relaying information. One way to cut down on paper usage is printing less. This can be done by emailing rather than printing, giving meetings with a projection screen rather than hand-outs, and requiring people to apply online rather than in person, just to name a few. Not only will cutting down paper use be better for the environment, it will also cut a few dollars out of your strict startup budget.
  • Be energy conscious and efficient: This is another very important way to help the environment while saving you some cash. Energy is expensive now a day due to the decreasing amount of our renewable resources, so this is one way that you can most likely save the most for your startup business. Just a few things that you can do to save energy are: turning off the lights, unplugging unused electronics, and using natural lighting as much as possible, etc.

Not only will doing these small few things help the environment, it will also be great for your business. With so many environmentally conscious people today, customers respect businesses that will take the time and effort to do their part in helping out the environment. Also, while practicing some of these environmental processes, you can save your startup business money which is very important with a tight budget. So even though helping the environment is important in its own right, it can also benefit your business.

Whether you have a question about Starting a Business and Thinking About the Environment, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!

Give and Your Business Shall Receive

Entrepreneurship Give and Business Receive from The Startup Garage

Give and Your Business Shall Receive

If you are networking to build your startup business, you might want to try the Give and Receive approach. The Give and you shall receive principle is popular in a lot of religions and mythologies. The same idea can be easily applied to your small startup business. Here, we suggest that you implement a more altruistic method of networking for your business, but keeping the same old objective to gain company awareness and sales of your product or service.

Volunteer. Find an organization, group, charity or a non-profit organization to which you can volunteer your time, services or product. Volunteer for something that has meaning to you and encourage your employees and family to do the same. The contacts made will be invaluable. The positive feelings from doing something with no strings attached or expectations are in itself a reward, plus you may have some fun too!

Partnering or sponsoring can build good PR for your company and brand. Serve on a planning committee for a prominent event in your community like a marathon or fundraiser. Become a board member for a nonprofit organization. By being an ambassador for a good cause you do get the chance to introduce yourself and to promote your business to people that have already build good impressions about you.

Educate. Sharing your expertise with others at seminars and training meetings can interest potential customers appreciate your product or service and later on buy it. Teach about the things that you know best and that would lead your future customers to your products or services. It is not hard to sell when your customer has some knowledge and confidence in your product or service. When you put on a workshop or seminar, you become the expert the go-to guy in the view of the class. Face-to-face interaction, whenever possible, is the key to building those priceless relationships.

Return on investment. It is important to clarify that this is not at all a short term strategy. The people you connect with are likely not in an immediate need of your products and services and the give and receive will not work right away. Over time, building those relationships will create value. If you position yourself as a respectable person as well as an expert in your field, you will be the first person that your contacts come to when they need your help or know someone who does. Therefore, investing your time and energy outside of your office may not lead to an immediate return but could plant seeds for the future.

Its surprising how if you give your best and do it for the right reasons, people will remember you, and business will follow.

 

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