Fundamental Ingredients Of Successful Social Entrepreneurs

Tips-for-social-entrepreneurs

If you're chipping away at building your own purpose-driven enterprise and are looking for some advice and fresh perspectives from global leaders in the field, look no further.

Our second report in the Impact Boom series looks to arm you with deep insights about the common traits of successful social entrepreneurs, as well as key points to consider when starting up a new enterprise.

We've compiled snippets of tried and tested knowledge and experience from world-leading changemakers who have featured on the Impact Boom podcast.

Whilst ideas are cheap, it's delivering positive impact which can be more difficult. We hope these insights help you on your journey!

 

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How might you push the boundaries, change the rules and create solid impact as an entrepreneur?

 

Highlights from the interviews (listen to the podcast for full details)

[Tom Allen] - With social entrepreneurship on the rise, and a growing number of purpose-driven people proving that businesses can return healthy profits and deliver considerable positive social and environmental impact, it's hard to think of a good reason to operate a business purely for financial returns. 

But just like any business, running a social enterprise is not easy, and getting one off the ground requires grit, persistence, great design and strong strategy. The ability to iterate, adapt and constantly respond to strengths and weaknesses are key components of successful entrepreneurs.

In this episode, we arm you with deep insights about the common traits of successful social entrepreneurs and have compiled insights from 12 of the global leaders from the field that we interviewed this year.

When speaking with the CEO of Social Enterprise UK, Peter Holbrook, earlier this year, I asked what he believed to be the fundamental ingredients a budding social entrepreneur needs to get out there and launch something that makes an impact. Here's how he reponded... [0:45]

[Peter Holbrook] - All of my knowledge and experience is enthusiasm, passion, a handle on the finances, these are all critical things.

But, fundamentally, the two things that you've got to get right is price and quality. Because, people will not buy your product, however socially inspiring they might be, if your quality is rubbish or you're just way too expensive. You need to have a competitive offer.

Social enterprises that fail, fall in to the trap of thinking that whilst they're smashing it in terms of social innovation or having great stories about transforming lives, they don't have a compelling price and quality proposition.

Get the price and the quality right, then the value add, the competitive advantage comes in the social narrative that can be built around those products and services.

 Robert Pekin & Emma-Kate Rose with the Food Connect team.

[Tom Allen] - So, whilst having a compelling price and quality proposition were strongly pointed to, when I asked David Brookes, Managing Director of Social Traders the same question, David also pointed to having a clear focus and expanded on key areas that can't be ignored. [2:39]

[David Brookes] - I think there are some fundamental ingredients. In a way, social entrepreneurs are not too dissimilar to other small business leaders or entrepreneurs.

As I mentioned earlier, our businesses are purpose-led businesses, and so a few of the sort of key ingredients that social enterprises and social entrepreneurs need is clarity and conviction around your mission.

Often we find that social entrepreneurs and enterprises tend to go a little bit broad and are looking to solve all the problems of the world. So, clarity around mission is really important.

I think having good business processes, good business planning, doing the market testing and research is important. Putting a lot of focus on the business and financial fundamentals is really important from my perspective and setting up the business with the right legal structure, governance and resourcing. You know, making sure that you surround yourself with like-minded and capable people and putting the right people in key roles.

There are a few things I think that are key for us and what we're seeing and experienced working with social enterprise is, particularly with a lot of start-up and early stage social enterprises over the last eight or nine years, getting the financials is really critical to minimise the risk of business failure. If your enterprise falls over in eighteen months or two years or three years, then you're no longer having that positive social impact that you set the enterprise up to generate in the first instance.

[Tom Allen] - With David Brookes pointing to clarity around mission in order to not spread oneself too thin, Tatiana Glad of Impact Hub Amsterdam reiterated the importance of having a clear sense of purpose.

What advice would you give to someone who is thinking of starting their own social impact initiative? [4:55]

[Tatiana Glad] - The first thing is to have a purpose and a sense of what you're trying to change in the world and what your theory of change is behind that. We could have five people working all on making food healthier but we might have five different approaches to that. I think they're all valid until the food system has actually shifted.

I THINK HAVING A CLEAR PURPOSE AND A CLEAR THEORY OF CHANGE THAT YOU CAN ARTICULATE.

Ours is impacting societal issues through entrepreneurial action. And I think having a good strong entrepreneurial team. At the Impact Hub we believe in has to be collaborative action and we believe in the power of community and we don't think anybody does it solely alone. So making sure you have a good entrepreneurial team and/or environment that supports you because when the going gets tough you've got to lean on somebody.

TO START SOMETHING YOU NEED THE COMPLIMENTARY SKILLS. NO-ONE HAS ALL THE SKILL SETS. YOU SHOULD ALWAYS LOOK FOR PEOPLE THAT ARE AS GOOD AS OR BETTER THAN YOU.

Advice-for-social-entrepreneurs

[Tom Allen] - In many ways, Isaac Jeffries tied in Tatiana's emphasis on purpose, with the business and financial fundamentals David spoke of, when we asked him what he believed were the most important traits of a social entrepreneur. [6:18]

[Isaac Jeffries] - The two things that keep coming up for me are the combination of passion and discipline. By passion I mean you've got to have someone who is driven about three things:

  1. The cause. I've never changed anyone's mind about a cause. I've never said, 'I know you want to save the whales, but you should really care about immigration policy.' You need to bring it with you and know a lot about it. It's got to be something you like to argue about at dinner parties.
  2. A customer rather than a beneficiary. If you're relying on customers, you need to genuinely care about that person and what you're going to do and how you're going to solve a problem for them. If you see a customer as a cash cow, it's going to be really hard to build things that they desire and it's really easy to be quite adversarial with them.
  3. To be passionate about their team. Starting any business like this is tough, so you need to care about the people you work with. 

On the discipline side, the two things that stand out are...

A social entrepreneur needs to be really good at saying no to good things, in order to say yes to the best things.

That's the essence of strategy for me; the ability to make trade-offs.

The other thing I see that needs a lot of discipline is monitoring the numbers. I really enjoyed what Wouter Kersten said on a previous episode of Impact Boom, where he said Cash Flow Is More Important Than Your Mother. If an entrepreneur comes to us and start with that approach, it's really easy for us to help them take that even further.

If you have an entrepreneur who doesn't particularly care about the financials, they're probably going to struggle when things get difficult.

So with purpose, clarity of mission, strong strategy and an understanding of financials all noted, Lauren Shuttleworth of Words With Heart shared great advice, particularly relevant for the procrastinators amongst us. I asked Lauren what advice she would you give to other social entrepreneurs who are starting their own journey? [8:24]

[Lauren Shuttleworth] - 

Just start.

The biggest learning is what you pick up along the way. You're not going to be able to get everything all in a row and perfect prior to launch so don't even try.

[Lauren talks about the Words With Heart journey and how they pivoted.]

We completely rejigged the business model and that completely revolutionised who we are and our impact now. I would never been able to have pre-planned that at the start.

I think the biggest thing to starting a social enterprise is to begin and pivot as you go.

 Arne van Oosterom

[Tom Allen] - When talking to Anika Horn, a social enterprise advisor and serial entrepreneur, Anika also placed high importance on getting out there, with emphasis on designing with and not for your target audience. [9:58]

[Anika Horn] - 

I think the best way [to start a social enterprise] is to go and talk to your customers.

I've met a lot of social entrepreneurs who are more 'hero-preneurs', who know they want to be a social entrepreneur, and they are going to figure out what issue in the world they want to solve along the way, but I don't think that's a healthy approach to really making an impact.

Figuring out whether that problem that you are seeing is a problem that only applies to you or to a bigger target audience is the first step.

Then really try to understand the problem in depth. By that I mean, 'how does it affect the beneficiaries or target audience in their daily life? How does it make them feel? What are their pain points? What are they hoping to gain from a solution that you are creating for them?'

I think it's crucial for any social entrepreneur to create a solution with their target audience and not for them.

[Tom Allen] - Dean Foley, of Indigenous Accelerator Barayamal reiterated the importance of 'doing' whilst pointing budding entrepreneurs towards the necessity of good collaboration. Here's what Dean had to say. [11:10]

[Dean Foley] - 

Try and find people you can collaborate with and work together. That's more powerful than trying to do everything yourself, even though that won't always work. Find like-minded people you can work with.

Just go out there, do it and find like-minded people to work with.

[Tom Allen] - Anne Lennon of Social Change Central introduced us all to what they have defined as the three C's, yet again with the advice of not sitting down for too long. When asked what Anne believes are the fundamental ingredients a budding social entrepreneur needs to get out there and launch something which makes an impact, here's how she responded. [11:56]

[Anne Lennon] - At Social Change Central we talk about the three C’s:

  • capital  - (even if it’s just time) to make it tangible/test it,

  • counsel  - advice to fill in their skills/knowledge gap. You are not expected to have all the answers and there is no shame or failure in admitting you were wrong about something.  I think social entrepreneurs need to be open to criticism early on. You may end up needing to alter your original plan significantly, so be flexible. It’s essential to remember that your journey is ultimately about creating lasting social impact.

  • the courage to do it - this is a big one. For me with my background in law I was trained to be very very risk adverse. The concept of the lean startup and MVP are so alien to the law. I think if you ponder over something for long enough anything can become a bad idea. At some stage you just have to take the leap.

I love the poem called 'the DASH' by Linda Ellis which talks about how on your death notice there will be two dates; the date you were born and the date you died and these will be separated by a small dash. A simple dash, that tiny punctuation mark represents your entire life. The poem forces you to ask the question of how will you spend your dash?

Don’t sit too long on an idea and take the leap.

Social-entrepreneur-leaders.jpg

[Tom Allen] - When our Contributing Editor, Rachel Stevens, spoke to Katie Johnston of EcoBling, Katie shared advice when it comes to successfully getting finance as a social entrepreneur. Here's what she said. [14:13]

[Katie Johnston] - To be honest I only had the first thing I ever did which was the investor event that I went to. I went there with a really really vague pitch. They were asking me financial questions and I had no idea what they were talking about. Later on I had to Google all of the words that they said.

So I think when approaching investors you have a very clear, concise, specific pitch and therefore need to have a very clear, concise, specific idea. Investors don't like to fill in the gaps, they want to know everything, and they want to know it very quickly.

When it comes to funding they want to know that you've piloted the project, that there is going to be a demand for your project or your product and they want to be able to fit into your business straight away.

You've got to be able to show them that your product is successful even if you've only done a few market stands and people are buying your product and really excited about it. Customer feedback, they want to know what other people think. They don't want to guess, they want to know.

Obviously it's a risk for them to give you money because you're essentially, in the broader scheme of things, quite unknown, and so they want to see that you have got over yourself, you've got away from your self-doubt, and that you've got a good grip on what you're doing. If they can see that confidence and clarity and see that by giving you money it's going to be starting quickly, that it will move quickly towards making a profit and they are getting in return on their investment. Then I think you're onto a winner.

[Tom Allen] - As Founder of Ashoka Netherlands and FASE Benelux, Jamy Goewie shared the typical challenges that she sees social entrepreneurs coming up against and provided advice for social entrepreneurs when she spoke to Rachel Stevens, highlighting the importance and priority of having a strong team. [16:09] 

[Jamy Goewie] - 

WELL OF COURSE ONE THING IS FINDING THE MONEY. THAT'S A CHALLENGE FOR SOCIAL ENTREPRENEURS IN GENERAL BUT WHAT WE ALSO SEE MORE AND MORE NOW IS FINDING THE RIGHT TEAM MEMBERS.

I THINK FOR ANY INVESTOR IT'S QUITE KEY TO SEE WHICH TEAM IS BEHIND THE SOCIAL ENTERPRISE OR IN THE SOCIAL ENTERPRISE.

What I really see and I see this across all sectors within the social enterprise ecosystem, is a lack of really good financial specialists. So obviously we have a lot of people who have a great financial background and want to move into the Social Impact space. This is still very different from having the experience in the social impact space because this is a specific kind or type of financing where you also sort of have to put impact measurements and impact metrics at the centre as well. So we see that it's a really specific field of financing which is rare to find the right people. It's a rare profile.

Brisbanes-best-accelerator

[Tom Allen] - Sandy Blackburn-Wright of Social Outcomes also reiterated the importance of having a strong team. She also spoke about business modelling and what she believes is the best way to get funding as a social enterprise [17:34]

[Sandy Blackburn-Wright] - Firstly, when I first started working in social enterprise, it was when no one knew what it was, so I was still at Westpac; the Westpac Foundation has funded social enterprise development for decades now. We had to explain as the opening line of every conversation what on earth social enterprise was.

Now, I think some people think that social enterprise is a new word for a charity. Often I look at it and go, "Where's your business model?" They go, "What do you mean?" For me it's all about the business model. If your social value you want to create has no underlying business model that can pay for itself, it's not an enterprise, and so it will never work.

I think as those of us who have been supporting the development of this sector for a long time would agree, we spend a lot of time just getting to that point.

People come and that want help and support and mentoring, and coaching, and dah-dah dah, which you happily do, but there isn't a business model, and you can give that feedback and people struggle with it.

It's not that the social idea of what you want to do is wrong, it's just, this is not the vehicle for it. Rethink the business model. Getting the business model right, I think, is the key. Once you've got that business model, start selling, because people often say, "Well, I've got to get grant funding, or I've got to get investment, or I've got to get all these things."

The best way to get investment in your business is to sell stuff.

Ideally the best way to do it is get a contract before you even start, which is what the likes of Luke has done at Vanguard Laundries, and it's been tough, but their skyrocketing success with Vanguard Laundries is because they did the hard yards around getting a reasonable sized contract first. If you can do it that way, that's the best way, and if not, just start selling. Really we're a social enterprise in terms of Social Outcomes.

Just start selling and get people to pay you for what it is that you're doing. Whether you're selling coffee, which is my least favourite social enterprise, by the way, or whether you're doing anything, customers are your investors.

We get too caught up about finding funding and investors and so on, but if we focused more on actually growing the business and just selling things to customers, I think we would need less funding, actually. If we do need it, and it's not just about selling a service that fairly low entry, and if you do need a capital injection, then I think it's important to have the business model in place, to have thought it through well, but also to be able to communicate it.

For a lot of people they might have something that's great, but they can't talk to people about it. Sometimes the business case is an idea, but they haven't done any financial projections around it. They don't really understand the market well enough, and particularly they don't understand their competitors.

I don't like social enterprises that might create themselves to fill a tiny, wee niche, and then you're just saying, "Well, why are you bothering? It's a lot of effort for a tiny, tiny niche." Something that's going to make enough of a contribution to make it worth the effort, then you've got to be thinking about how you're communicating the viability of that business, as well as the impact in a really succinct, compelling way to potential investors.

Every investor will tell you, the thing that they look at more than anything else is the person, and how capable is that management team. It's preferable not to have a single entrepreneur. It's preferable to have a team of people, but that's what they'll look at more than anything.

Yes, they'll look at the financials, and the business model, and the market analysis, but if they don't like you and the team, they'll walk away, even if it's a good idea because they don't feel they can work with you. Being really honest, open, working hard, being articulate about what it is you're doing and communicating all of those things, and building those relationships is incredibly important.

[Tom Allen] - To finish off, Alex Hannant of the Akina Foundation reminded us of the importance of understanding the root cause of the problem we're solving, designing with communities (not for them) and the type of leadership required to make impact. [21:31]

[Alex Hannant] - I'd put this on four levels and this kind of thinking has also led into how you build learning programs to build these capacities.

Ultimately, anyone who wants to try and change anything which is social and environmental has to have some kind of systems literacy. They have to understand the problems they are working with in a very very deep way.

Pamela Hartigan who was the Director at the Skoll Centre, Said Business School had a phrase of 'apprenticeship to the problem'. So that people have a really deep understanding of the systems, the communities, the issues that they're dealing with. And I think that's absolutely essential.

Coming in and suddenly trying to solve other peoples problems for other people is just fraught with any number of risks around legitimacy. You're more likely to create far more damage than you're going to do anything good.

So first thing is understanding the problem and having that systems literacy. The second thing is then having the skills to design solutions; do they have that innovation capability? Do they have the ability to test, refine, iterate? Design thinking is great competency. Understanding how to use data and evidence and all that kind of stuff; so good innovation. That sort of bleeds into the social skills which are absolutely critical in building teams and organisations but also being able to relate to the communities and customers that you work with. So if you don't have that, you can have all the technical skills, but you may not be able to interpret or translate some of the data points you get. I think also in the technical skills you're talking about good strong commercial skills or at least knowing what you don't have and being able to build a team with people that do have those capabilities. But last of all, the top level is the humility and self-awareness piece. Personal leadership. Understanding the limits of your own capability. Understanding your motivations for why you might be doing something.

Appreciate when you're wrong. Being able to change and being able to absorb criticism. Natural attrition of just doing things which are really difficult for long periods of times. So really those are personal leadership qualities.

So to recap, systems literacy and understanding the problems you're working with. Two, technical skills which span innovation and broad base of commercial skills. Three, having those social skills which build trust and enable people to relate and enable people to communicate. And then fourth, that kind of personal leadership and resilience and that sort of really good sense of emotional intelligence, self-awareness, which ensures that you don't get too buffeted around on the journey that you're inevitably going to go through.

 Daniela Martinez's Cirklo Team at work in Mexico.
 

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