It can be difficult for social entrepreneurs to build profitable business models. I outlined a framework below that a social entrepreneur can utilize in order to start thinking through a business model.
Business Model for Social Entrepreneurs
Your answers to the following questions should provide you with the components of your business model. I tried to use a specific example when discussing each step. I recently spoke with a member of the Princeton Impact Project about his social impact internet radio show. It is easier to understand some of the steps below if don’t speak theoretically, so I use his radio show as part of the examples below. Please let me know if I can clarify anything.
- Identify Needs: What problem are you solving? If you are unable to specifically pinpoint one problem do not be alarmed. You have been beating your drum to a different beat up until this point. Keep in mind, though, in order to generate revenue you will need to identify specific problems your, for example, radio show aims to solve. It is helpful to provide access to information and to create a space for open conversation, but that is merely the platform. It is the vehicle for driving specific social change.
- For example, do a show about homelessness in New Jersey. Propose a framework for creating a path to employment for homeless people. Invite the stakeholders on your radio show so you have a homeless person, an employer, maybe the mayor, other community organizations, etc. This would be a sustainable solution to homelessness because rather than building homeless shelters to enable homelessness you would be providing them with the tools to carve out a place for themselves in the economy. This would require a plan with many steps to ensure you were carefully nurturing each individual as they transformed their lives and completely changed their human behaviors in which they have grown accustomed to. To show measurable impact in the first month would consist of you establishing partnerships with local soup kitchens, homeless shelters, staffing agencies, and employers. Another performance indicator or milestone might be that by the end of the second month you complete the production of a small training course for each person who goes through the program to get certified in which represents a badge of honor to the person as well as an indication to future employers that this person is reliable. The training course can include recorded talks you edit together from your past radio shows. The possibilities are endless. It all depends on your imagination.
- Target Market: Who has the problem you are solving? How many of these people exist in your target market? In the case of the example above, the potential market would be all homeless people in New Jersey. You may narrow your initial target for the first few months to only be homeless people within Mercer County simply because that is where you have access to the customer.
- Products and Services: What are you selling to the target market to empower them to solve their problem from #1? If you provide a training course to each person you can put a price tag on the course, and then tax their paychecks until the balance is paid. If you provide temporary housing you can tax for that as well. Staffing agencies already use this idea of taxing workers a few dollars per hour as their service fee for connecting them with the job.
- Perhaps you can also start working on a plan which teaches other people how to start a radio show used to tackle social problems. Document the process you are going through now. Social entrepreneurship will disrupt every aspect of our lives in the same fashion technology did. Maybe you will be the person who redefines public radio. You are ahead of the curve right now so do not stop. You can make radio become the glue which holds this nation together.
- Existing Alternatives: What competitor alternatives currently exist? Homeless shelters, but they are not a sustainable solution. They can be viewed as a mechanism for exacerbating the problem.
- Market Access: How will your target market connect with your product?
- Obstacles: What could derail your plan?
- Key Partners: What relationships do you need to cultivate in order to succeed?
- Financials: If you are successful, how much revenue can you generate per customer? List answers for a customer who purchases one of your products, all of your products, and how many times you sell to the same customer. In the case of the homelessness example you may wonder, “What if I help every homeless person and we have no homeless anymore?” Great job! Now you could evolve your business model and provide the same customers who previously homeless with more personalized, and meaningful products. You know everything about who they are and what makes them tick. They may even become important factors in future movements you orchestrate.
Hopefully the above questions get your gears turning in the right direction. Each time you work on a new initiative to solve a different social problem you must go back through these questions. It may help to focus on one initiative at a time. You can build the infrastructure of a business model, produce the specific products for the target market, and set up the sales process. Hand-off the tasks of managing the system and continuing the execution cycles to teams who prefer that type of work.