Social Enterprise
Business Planning
DEN-L
July-August 2013
IREX Liberia SE Training 2013
Presentation Outline
• Business plans for Social Entrepreneurs
 Why?
 What for?
 What?
• Difference from regular plans
• SE Business plan components
• Q&A
Soc
Why Business Planning?
• Management tool

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Links strategies to tactics
Grounded in reality
Responds to market forces
Many uses
• Most nonprofits lack knowledge of how to
prepare b-plans
• Demanded by more donors
• “Failing to plan is planning to fail”
Soc
What is a Business Plan?
A detailed presentation about your
organization’s (scaling) plans that
demonstrates how it will succeed in
financial terms AND the social impact
that it will create.
Soc
A Road Map
To
Vision
Business plans chart
the course to realize
the organization’s
Social
Entrepreneur
vision.
Acquisition up
20%
2 new senior
Staff hired
25
Links
between
business &
citizen’s sector
Soc
Why do you Need a Business
Plan?
• For the
investor/donor:
 Evidence of the
nonprofit’s ability
to conceive and
execute scale
 Articulates
financial needs
and uses of funds
• Use – sales
document
• Communications tool
• For the social
entrepreneur:
 A planning
framework
 A management
tool for resource
allocation and
decision-making
• Use – Management
and implementation
plan
6
Soc
Purposes

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
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Planning Framework
Articulates vision and mission
Sets goals and objectives
Defines strategies and specific actions to
achieve objectives
Measures results
Communicates ideas, plans & social value
Projects necessary resources, expenses,
& revenues
Provides a basis for SOUND decisionmaking
Soc
Business Plans vs. Proposals
• Business plans are:
 Flexible documents
that change in
accordance to market
forces
 Results-oriented
 Market-driven
 Project blueprint
 Open - treats project as
going concern
• Proposals are:
 Fixed for the life of
the project or funding
period
 Process-oriented
 Donor-driven
 Not usually used as
management plan for
project
 Closed – treat
projects as timelimited
Soc
Anatomy of a Business Plan
Market
Research
Human
Resource
Plan
Marketing
Plan
Concept & Objectives
Vision
Mission
Operations
Plan
Financial
Plan
Soc
Vision
Interrelationship
Mission
Objectives
Market Research:
Target Market
Competitors/external factors
Business Assessment
Operations
Plan
Marketing
Plan
Human
Resource
Plan
Financial
Financial
Plan
Plan
Financial
Contingency
Plan
Plan
Soc
Strategies and Tactics
S
t
r
a
t
e
g
i
e
vision
Strategic Goals
s
tactics
tactics
Objectives
tactics
Objectives
tactics
tactics
Objectives
tactics
tactics
tactics
Soc
Social Entrepreneur's Market
Social Market
• “Beneficiaries” of impact

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Client
Community
Environment
Public
Government
• Competitors
 Role of subsidies in the
market
• Collaborators
 Strategic alliances and
partners
“Business” Market
 Demand
 Competitors
 Industry Dynamics
 Trends
 Barriers
 Opportunities
 Market Segments & Size
Who’s your “customer”
• Donors are
stakeholders to whom
social entrepreneur is
accountable for results
• Clients are
“beneficiaries” of social
services or social
impact.
• Customers are those
buying social enterprise
products and services.
Soc
What’s your context?
Competition
Opportunities
Threats
Weaknesses
Collaboration
Strengths
Soc
How attractive is your industry?
Barriers to Entry
Power of
Suppliers
Rivals
Power of
Buyers
Substitutes
Soc
The Five Plans for All B-Plans
• Marketing
 Getting products and services to your target market
• Operations
 Day-to-day functions of running your organization
• Human Resources
 The people you need to execute your scaling plan
• Finance
 Capital required to finance scaling activities
• Contingency Plans
 What could go wrong and what will you do about it if
it does?
Soc
Marketing Plan
• Target Market
 Beneficiary/client needs/wants
• Marketing mix: 4 Ps
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Product
Promotion
Price
Place
• On going market research
Soc
SE Marketing Considerations
• What are you selling?
• To whom are you “selling” your value
proposition?
• Outreach component for the target population
and community?
• Obligations to stakeholders—i.e. donors and
government? Partners or networks?
• Pricing considerations for target group?
• PR component to protect organization’s
reputation?
Soc
Operations
• Managing service delivery while scaling
 Quality Assurance
 Including managing and measuring time
• Monitoring and measuring hard and soft
deliverables
• Designing systems with capacity to grow
 transparency
• Social Impact and Monitoring Systems
 Systems that collect and measure social impact
• Customer and client satisfaction
Soc
Human Resource Plan
• Management team
 Roles & responsibilities of various actors
• Staffing and recruitment plan
 Incentives and reward systems
• Governance
• Capacity building plan
 Staff, institution, target group
• Considerations for SE staffing duality (for
enterprises)
 Program and business
Soc
Capacity Investment Choices
Productivity
Return on Investment?
$
Job
hard skills
soft skills
credit/savings
$$$$
education
Soc
Capacity Building Plan
Capacity
Building
Method
Benefit to Enterprise/organization
Mission
On-the-job
training
Provide a job
Skilled labor

Processing
skills
Training/TA
Improves productivity, product quality

Inventory
tracking
Training/TA
Improves inventory management

Soft skills
Training/
practice
Stabilizes work force

Leadership
development
Training/
practice
Higher self-esteem, morale, productivity,
self- management

Savings
program
Savings
service
Reduces risk aversion through financial
security

Health
services
Health
program
linkage
Improved health = higher productivity
No
Soc
Financial Plan
• Social Enterprise B-Plan
 Financial objectives
 Budget
 Resource Acquisition Plan
Includes grants and gifts
 Cash flow
 Income Statement
 Balance sheet
Soc
Role of Subsidy
$$$
Social subsidy
Social Enterprise
Breakeven Point
Investment
SE Revenue
24
Private Business
Breakeven Point
SE Expense
Business Expense
Business revenue
Years
Financing & resource acquisition
Year 1
Prospect
Year 2
Prospect
Earned income
(sales)
Interest income
Parent organization
Grants
Gifts/contributions
Soft Loans
Commercial loans
Soc
Risk Analysis & Contingency
Planning
• Build capacity to make accurate
projections
• Add in buffer for expenses
• Use “what if…” scenarios
• Sensitivity analysis for major decisions
 Major expense categories
• Test business plan assumptions
• Objectivity
Soc
Planning the Plan:
Recommendations
IREX Liberia SE Training 2013
Is the idea a concept?
Social Enterprise
28
SK
OLL
Get Grounded
Theory of
Change
Social Enterprise Design
29
IREX Liberia SE Training 2013
SK
OLL
Understand:
Nature of social problem
Needs/limitations of clients
Assess the Market
30
IREX Liberia SE Training 2013
SK
OLL
Where to begin
• Clarify your business and its goals
• Build scenarios
 Play it out your idea
• Identify deal breakers
 What will make or break your business
 Money, laws, partners, etc.
• Identify key design influencers
 Competitors, industry dynamics, regulatory
environment, demand, required resources
• Reality Test
 Objective feedback
 Quick Market Test
 Benchmarks
31
SK
OLL
Pare it down
• Scope
 For most SEs scope is a practical issue of $
 Location; (other resources) have’s have nots;
 Time
• Strategy
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Low hanging fruit
Window of opportunity
Proof of concept/display
Inflection point for impact
• Assumptions
 Informs market research
32
SK
OLL
Planning the Plan:
Recommendations
IREX Liberia SE Training 2013
B-Plan Essentials
•
•
•
•
•
•
•
•
Consensus and ownership
Appropriate participants
Adequate preparation time
Financial considerations
Relevant flexibility
Solid market research
Participatory methods (within limits)
Realistic (achievable) targets
Soc
Planning 1-2-3
 Time spent convincing nonprofits benefits of BPlans, is time well spent!
 Include appropriate stakeholders.
 Link human resource incentives to
achievement of B-Plan goals.
 Make it official: celebrate the completion of the
Business Plan or important sections.
Soc
Appropriate Participation
• Identify for which Business Plan elements
consensus must be reached
• For each section clarify individual and small
group roles for output.
• Set strict deadlines
• Devise incentives to
meet deadlines
Soc
Set Realistic Planning Targets
• Business planning takes weeks or months
and requires resources.
 Develop the Business Plan work plan,
including:
deadlines, key people, financial resource
 Plan on time and money for research
 Conservatism is the rule of thumb
- do not be overly optimistic with targets
 Be flexible to changes
Soc
Dynamic Process within Limits
• Business plan changes must be based on
sound business decisions.
• Agree on Bplan elements that are
nonnegotiable.
• Educate on the conditions that warrant
Bplan changes (market,
environmental/industry changes).
• Schedule business plan reviews to discuss.
Soc
Business Plan Components
•
•
•
•
•
•
•
•
•
•
Executive Summary
Vision & mission statement
Organizational and Environmental Assessment
Market Competitive Analysis
Marketing Plan
Human Resources Plan
Operations Plan
Financial Plan
Risk Assessment and Contingency Plan
Supporting Documents
39
Soc
Social Targets Require Brutal Reality
• Select impact measurements early and
do a baseline study
• Build information system to collect and
measure impact.
• Collect anecdotes evidencing social
impact.
• Budget for social impact monitoring.
• Timing and manner of social impact
dependant on vision and mission.
Soc
Social Return and Impact
• “ Social Bottom Line” for social
enterprises.
 Social Return on Investment (SROI)
measures the social value the social
enterprise creates in financial terms as a
ratio of the investment.
 Social impact measures qualitative and
quantitative social impact based on social
objective and type of organization
 Most nonprofits are accustomed to using this
type of measurement.
Soc
E.g. social impact measures
Impact from livelihoods Org
Impact social service org
Asset accumulation
Improved education
Scale
Improved housing
Client income
Quality of diet
Job Creation
Access to health care
Skills acquisition
Increased autonomy
Soc
Monetizing SE Value
• Enterprise Value = economic value of
the enterprise. Cash flow analysis of
business performance.
• Social Value = direct demonstrable
cost saving and revenue contributions
• Blended Value = enterprise value +
social value – debt
Soc
Financial Projections
$$$
Social Enterprise
Breakeven Point
Private Business
Breakeven Point
SE Revenue
44
SE Expense
Business Expense
Business revenue
Years
Double Bottom Line
Income Statement
Total Operating Expenses
Total Gross Revenue
NET PROFIT/LOSS BEFORE
SOCIAL COSTS
= Financial Bottom Line
Less Social Costs
= Social Bottom Line
NET PROFIT/LOSS AFTER
SOCIAL COSTS
= Double Bottom Lines
Soc
Subsidy in Income Statement
Income Statement
Gross Profit
Income earned through
enterprise
Operating Expenses (before taxes)
Costs related to operating
enterprise
NET PROFIT/LOSS (before taxes)
Income less expenses
Subsidy
Less Grants, donations,
gifts
NET PROFIT/LOSS AFTER SUBSIDY
Total lost or gained after
subsidy
Soc