Session 2
Levitt Social Entrepreneurship Program
January 25, 2014
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Developing and Organizing a
Viable Business Model
Flow of This Morning’s Session
• Introductory Dialogue and Activity
• Business Models and Their Value
• What Is Your Venture or Initiative?
• The Two Pillars of a Viable Social Venture Business Model
• Strategic Development
• Core Business Model Elements:
• Market
• Money
• Management
• Next Steps in Our Program and Process
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Stages of Social Venture Development
• What have you done with your venture
idea since December?
• What have you learned about each of the
components in the “Big Idea Sketch Pad?”
• What else do you need to clarify in order
to determine what will be the key elements
of your venture?
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Catching Up
--I Ching
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
“NO GOOD ENDING CAN BE EXPECTED IN
THE ABSENCE OF THE RIGHT BEGINNING.”
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Opportunity Identification, Clarification, and
Assessment
Leads to
• Viability Assessment (or Feasibility Assessment)
Leads to
• Business Plan Development
But not in a single cycle linear process: a strong
venture development process will involve multiple
iterations, gaining refinement from each cycle.
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Stages of Development
Growing Out of Exploration of Session 1
• Asset Identification and Evaluation
• Asset Valuation
• Opportunity Identification and/or Clarification
• Opportunity Evaluation
• Opportunity Valuation
• Risk Assessment
Result: Overall Assessment of Opportunity Worth
Further Exploration and Development
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Opportunity Identification/
Clarification and Assessment
• What is a “Business Model?”
• What does it mean to have a “Viable
Business Model?”
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Let’s Talk…
A Sound
Business Model Integrates
• Real Value Proposition
• Social Value Creation Cycle (in the form of a
logic model or theory of change)
• Resources to Finance and Fund It
• Capacity to Implement It
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Viable and Relevant Mission and Vision (the
social purpose)
Value Creation Cycle
Daivd Renz: Midwest Center for
Nonprofit Leadership at UMKC
(from The Nonprofit Strategy Revolution. David LaPiana 2008)
Strategic Fit
Organization
Capacity
Strategic
FIT
Mission,
Vision & Values
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Market:
-Clients
- Donors
&
Funders
Three Basic Elements:
• Market Assessment
• Money Assessment
• Management Assessment
Leads to Overall Assessment of Venture
Feasibility and Viability
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Viability Assessment
Payor
Customers:
-Donors
&
Funders
Beneficiary
Customers
(Clients)
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
The Market (Customer) Question
Market Viability Assessment
Focus on:
• Demand
• Competitive Advantage
• Differentiator(s)
• Price and Cost Structure
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Builds on Assessment of Porter’s Five Forces
This is the ability to produce social value by:
• Using a unique asset
and/or
• Delivering outstanding execution
• We employ the perspective of Porter’s Five
Forces Model to examine and understand where
and how we fit
Daivd Renz: Midwest Center for
Nonprofit Leadership at UMKC
Competitive Advantage
(The Nonprofit Version)
Daivd Renz: Midwest Center for
Nonprofit Leadership at UMKC
Strategy vs. Reality
Let’s Talk…
Take about five minutes to prepare:
What is your venture or venture concept? What is
the social venture or program that you have
determined has great potential for creating social
value? What is the “social value proposition” and
how do you expect to deliver on it? (or your best
case scenario)
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
In two minutes or less (your elevator speech):
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Key Components of
A Well-Developed
Program Design
(The Social Value Proposition)
Mission & Vision
• Mission, Vision, Values
• The mission:
• Continuing philosophical perspective
• Makes explicit reason for the agencies
existence
• The Vision:
• Is what can be accomplished by providing
mission services
• An end state
Objectives
• Provide short-term and long-term outlook
• Intermediate results: Immediate impact or
change
• Final results: The long-term impact or ultimate
change
• Should be stated in measurable terms
• Time frame
• Target of change
• Results
• What services will you provide?
This is an obvious question, but one that requires
detail and specificity. In addition to describing the
services, you must also outline the service delivery
pattern.
• At what times of the day will you provide the
services? Will the services be provided on site or
at a remote location?
USASBE Social Entrepreneurship Certificate
Module 6
Program/Product/Services
Market
• Who is the target market for the program?
Understanding the demographics of the target market will
inform marketing strategies, pricing, and service delivery.
For example if you will be providing clinical services, your
price will be influenced by reimbursement schedules of
third-party payers. Additionally, it is important to clarify if
the target market demands the services, or are you
providing services that will require you to create
awareness. The two scenarios will require differing
marketing approaches.
USASBE Social Entrepreneurship Certificate
Module 6
• Who will you sell this to?
• How will these services be delivered and sold?
• Is this place-based, or Internet-based, or some
combination?
• Where will the actual business be located and
what kinds of facilities will be needed?
USASBE Social Entrepreneurship Certificate
Module 6
Implementation
Capacity/HR
This decision is grounded in the internal assessment.
• How many people will you need, and will you hire new
staff or use (or redeploy) existing staff?
• Implicit in this discussion is the issue of capacity. If you
use existing staff, what additional capacities will you
need to develop?
• If you hire new staff, what will you pay them (e.g.,
comparable to nonprofit salaries or to for-profit market
rates)?
USASBE Social Entrepreneurship Certificate
Module 6
• Who will manage and who will staff the enterprise?
Program Design
• Inputs
• Client
• Staff
• Material resources
• Facilities
• Equipment
Program Design
• Throughput
• Service Definition
• Service Task
• Method of Intervention
• Outputs
• Unit of service
• Service completion
• Quality
Outcomes
• Numeric Counts
• Standardized Measures
• Level of functioning scales
• Client satisfaction
These Add Up to Become
a “Logic Model”
• Your assumptions and expectations for how you
expect to link:
• Inputs, which will support
• Activities, which will lead to
• Outputs, which will add up to
• Outcomes, which will result in
• Long-term Outcomes and Community Impact
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
A very useful device to plan and explain:
Return to Viability Assessment
Three Basic Elements:
• Money Assessment
• Management Assessment
Leads to Overall Assessment of Venture
Feasibility and Viability
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Market Assessment
Money Viability Assessment
Initial Consideration of
• Investor Potential
• Available Capital
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Revenue Potential
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
To Integrate These: Compass Point’s
“Dual Bottom Line Matrix”
Management Viability Assessment
• Mission Compatibility
• Venture Capacity (including complexity)
• Core Constituents or Stakeholders
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Core Competencies
Structure
• Will the venture be a program of the existing
organization or will the venture be a separate
subsidiary?
USASBE Social Entrepreneurship Certificate
Module 6
• How will the program be structured?
• Social enterprises typically take one of three
general forms (Alter, 2009):
• the social enterprise is constituted as a discrete
organization,
• the social enterprise is part of the organization, or
• the social enterprise is a subsidiary or affiliate of the
organization.
• Each has unique value and specific benefits and
legal implications
USASBE Social Entrepreneurship Certificate
Module 6
Structural Options
Alter’s “Hybrid Practitioners”
• Nonprofit with Income-Generating Activities
• Cost Recovery
• Earned Income
• Social Enterprise
• Socially-Responsible Business
• Corporation Practicing Social Responsibility
Purely Philanthropic to Purely Commercial
Traditional
Nonprofit
Nonprofit
with
IncomeGenerating
Activities
Social
Enterprise
Socially
Responsible
Business
Corporation
Practicing
Social
Responsibility
Traditional
For-Profit
Mission Motive
Profit-Making Motive
Stakeholders Accountability
Shareholder Accountability
Income
Profit Redistributed to
Reinvested in Social
Programs or Operational Costs
Shareholders
Social Venture Planning
• Money
• Market
• Management
o successfully deliver social value
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
In other words, social venture planning is
the process by which we plan and
articulate how we will integrate
• Traditional
• Insurable
• Personal Liability
• Property
• Financial
• Investments
• Debt
• Returns
• Uncertainty
USASBE Social Entrepreneurship Certificate
Module 6
Managing Risk?
Some Risks to Assess
•
•
•
•
•
•
•
•
•
•
•
Management Capacity
Workforce Capacity
Organizational Culture
Organizational Infrastructure
Enterprise Concept
Level of Required Capitalization
Prospects for Long-Term Funding
Prospects for Changes in Marketplace
Changes in Knowledge and Technology
Stakeholder Backlash
Competitor Response
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
(from Dees et al 2001)
1. Explain the Venture
2. Market research on potential customers
3. Desire and Need for Product or Service
4. Assets and Capacity (including management, personnel, facilities, &
competence)
5. General Business/Revenue Model and Pricing Strategy
6. Preliminary Financial Information:
a) Start-Up Costs and Time needed to begin to generate revenue
b) Start-up capital needs and availability
c) Pro Forma/ Financial Projections (including estimates of revenues
needed to break- even and timing to break even)
7. Discussion of feasibility:
a. Mission relevance
b. Risk acceptability
c. Competitive capacity
d. Quality & quality assurance
e. Feasible for your organization now?
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
The Summary: Key Elements of
Feasibility or Viability Assessment
Move to a Business Plan?
• Build on all of the information of the
feasibility assessment.
• Add depth to each of the elements of
the feasibility assessment to create a
business plan.
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
If the venture is deemed feasible…
• Develop and Clarify Your Logic Model (complete the
form)
• Read the materials on financial viability assessment in
preparation for next workshop, which will focus on
“Funding and Financing Your Social Venture”
• Contact your Levitt Program facilitators and advisors
(Laufer, Helm, and Renz) as needed to help
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
Wrap-Up:
For the February Workshop
• Comments?
• Clarifications?
Workshop 2: Aaron Levitt Social
Entrepreneurship Challenge
• Questions?