Social Enterprise Business Models Which one is best for you? - PowerPoint PPT Presentation

Social Enterprise Business Models Which one is best for you?

Presentation Outline What is a business model? u What is the purpose of a business model? u What are the types of business models? u What are the benefits to Social Enterprise? u

What is a business model? A one page document u The structure of the business (sole-proprietorship, co-op, etc.) u How does the business generate revenue? u What value does a business offer and to whom? u Who are the customers? u Helps us to understand how and why our business works? u Most lenders or partners will read this section u Osterwalder and Pigneur 2009; p.14 P . 2, https://www.marsdd.com/mars-library/social-enterprise-business-models/

Business Model Purpose Helps stakeholders understand and articulate how a business is set up to u create, deliver and capture value Social Enterprise Business Models: u u How you will generate both financial and social value and what the relationship is between the two u A clear business model will help alleviate challenges by making them more easily identifiable

What’s special about social enterprise? Balancing a social mission WITH an intention to trade and manage a business u requires a special set of skills Addressing a social impact inside a business operation can also be costly u Designing a viable and sustainable business model is integral u Social enterprise business models are different from ordinary business models u Ingrid Burkett, “Using the Business Model Canvas for Social Enterprise Design” Knode; p.6-7

Keeping your mission clear How does the social mission interact with the business aspect? u Important that the business makes money, but don’t lose sight of the u social/environmental/cultural mission Map out both the commercial part and the impact part of your business u

Benefits to Social Enterprise Helps us understand, design, Helps us test and develop articulate and discuss the prototypes to see if our ‘nuts and bolts’ of our impact and our business business concept actually ‘stacks up’.

For Profit Advantages Disadvantages Flexibility Subject to taxes and no tax receipt u u Any type of revenue stream Cannot get funding from charity u u Can attract investors with shares Responsible to shareholders u u Easily convert to different model No formal social purpose u u with shareholder approval Familiar structure u Many experts in this field u

Example Gore Street Café

Registered Charity Usually requires volunteers Advantages u Must have revenue generating u Can accept donations and issue u activities to be sustainable donation receipts Fundraising must be conducted u Can receive funding from other u within legal parameters charities or grants from other charities Limited in funding sources u Limited ability to incur debt Regulations on what charities can u u purchase as assets Generally exempt from property u tax Subject to an annual spending u requirement No investors with conflicting u priorities Additional reporting required u

Example Hope House - Club 84

Non-profit Advantages Disadvantages Tax exemptions from income tax, Donations are not tax deductible u u possible property tax and HST Limits on ability to raise capital u Legally enforceable non-profit (cannot issues shares) u purpose Regulatory uncertainty (if social u Flexibility in purpose/activity enterprise raises too much money u could risk tax-exempt status) Grant-making flexibility u No investors with conflicting u priorities

Example

Co-operative Advantages Dis-advantages Legally enforced requirement to No preferential tax treatment u u operate on a cost-recovery basis, No ability to issue donation u reinvesting surplus into community receipts Ability to attract outside capital u Reduced control for founding u Flexibility in activities member u Challenges in maintaining u participation

Example Cloverbelt Agricultural Co-operative

Key Business Model Question When you consider the package of services/products on offer by your team, how does it generate net cash / income / profits?

Impact vs. Commerce It is important that an SE focus on RIGHT REVENUE = a mix of revenue that is appropriate for the particular impact being delivered and where there is a real probability that the business of the enterprise will generate profits and become commercially viable The impact system needs to be The commercial business around u u understood in terms of the social which a SE is structured needs to value it is generating: operate as such: u Assess whether social value is u Needs to be viable ‘saleable’ u Sustainable u Whether commercial or impact u Generate sufficient revenue customers will pay for this social value u Cover operating costs u Will it generate revenue u Generate profit u Potential for independent revenue streams to flow into the enterprise around the impact value proposition Ingrid Burkett, “Using the Business Model Canvas for Social Enterprise Design” Knode; p. 22

Business Model Canvas Let’s work!

Cost Structure Takes account of both the commercial operating and production costs and the u costs involved in impact delivery Understands some costs are involved in keeping the business going and some u extra costs are needed to actually deliver impact Understanding and articulating impact is critical to evaluating cost structure u Important to articulate what activities are undertaken and what resources are u needed to deliver impact Ingrid Burkett, “Using the Business Model Canvas for Social Enterprise Design” Knode; p.28

What’s the real cost? u Typical Business Operation u Impact Costs Costs u Support and participation u Inventory costs (extra staff costs for people to support workers) u Premises u Work readiness costs u Wage/salaries (licenses, permits, uniforms u Equipment, machinery and etc. for disadvantaged tools workers) u Utilities u Provision costs (for non- attendance, extra sick leave u Communication and postage etc.) u Insurances u Impact training (e.g. Training for support staff) Ingrid Burkett, “Using the Business Model Canvas for Social Enterprise Design” Knode; p.29

What is a Value Proposition? What value are we Creating? u Keep in mind our 2 customer groups u Social value: Social outcomes and benefits which are generated through SE u Commercial value: the goods or services you want to sell in the marketplace u

Creating Our Value Proposition In early stages, it can help to separate social and commercial u Social/Impact Value: The social value you are seeking to deliver, and what u makes it attractive to customers Commercial Value: The goods and services you are producing and selling, and u what makes it attractive to customers Keep in mind, commercial customers may not be interested in your u social/impact value

Value Proposition Examples Impact Value Proposition Commercial Value (IVP) Proposition (CVP) Sustainable employment for Great coffee, fresh food, people who have been personal service unemployed long-term

SEE JEOPARDY! Social Enterprise Business Planning Business Models 101 200 200 200 400 400 400 600 600 600 1000 1000 1000

Thank you, Miigwetch