Determining the feasibility of a social venture - what is "success"?

Anna (my fantastic assistant) and I have spent much of the past few weeks working on the financial model for a new business venture for one of our clients. They are a wonderful organization that helps women through many types of big life transitions. They offer a comprehensive range of services to these women, from a daytime drop-in center to keep women off the streets to residential living to childcare to substance abuse & mental health support. they are now branching into the development of a social venture in order to add a job skills & training component as well as provide more visibility for the organization in the community and, hopefully, generate some revenue. We are assisting them with developing a model for a small bakery & cafe. In developing the financials, we needed to determine 1) how much the job training portion costs and 2) whether or not the bakery/cafe could be break even or better on its own, without the job training pieces. The main reason for breaking this out in this way was because I felt that it was extremely important for them to understand going into this whether they were just needing to obtain funding for the job training portion or, if they were developing a business model that, as a standalone, without the social mission piece, would also needed underwriting.

There has been a lot of attention lately on whether social ventures have to be "profitable" to be considered "successful". It is my continued belief that the financial feasibility of a social venture is determined by the intent and by what is reasonably planned for. For example, for this organization, running a business that is at least break even or, preferably, profitable but finding grant support for the job training portion would be successful. Running the business itself at a continued loss (understanding it may take 2 years or so to get to break even) AND needing grant support for the training portion would not be successful. However, for this particular scenario, it is not reasonable to assume that they can run the bakery/cafe and the training program profitably, at least for many years. Does that mean it's not "successful"? No. It means that this organization must go into this with their eyes wide open and with a full accounting of what the true costs are that are associated with a job training program (e.g. extra staffing, less productivity, higher cost of goods sold, per student training fees) and be able to locate a reliable source of funding for those costs. And, they must keep their eye on the business side of running the bakery/cafe, keeping COGS under control, understanding their market and phasing into this in a way that makes sense for where they're at financially and culturally.

Again, another illustration of why it's so important for organizations to get assistance and to really assess why they're entering into social enterprise, what level of enterprise they're ready for and what the true cultural and financial costs are. Then, it can be successful for the organization, the community, the clients and the world. That's where the real change happens.

Social IS environmental; the environment IS social

I constantly find myself pulling out social and environmental bottom lines when I'm creating promotional materials, writings and deliverables. Each time I write something like "developing a business that manages to profit and a social/environmental bottom line" I feel frustrated that many of us in the social enterprise field and many in the environmental sustainability field don't necessarily behave as if social and environmental issues are intertwined. I believe they are. How can a social service organization claiming to be addressing issues of poverty not also take under consideration that poverty and the environment are linked? For example, a worldwide reduction in farmland combined with farmers planting corn to be used as alternative fuel instead of food has caused an astronomical 60% increase in the price of tortillas in Mexico. The poor who can barely afford to eat cannot afford even the most minimal of food staples. How can an environmental organization who is interested in helping people reduce their carbon footprints not also take under consideration the reality of a working class American family that may buy conventional foods and petroleum-based plastic products because they are by far cheaper than organics and items made from natural materials? When you're living paycheck to paycheck, you are thinking about surviving today, so solutions need to be put forth that are achievable for everyone. For example, teaching people to buy used - shop thrift stores instead of running to Wal-Mart is a place to start. I get that we are all doing the best we can and that we can't all attend to every issue out there. However, I think we all need to think about the interconnectedness of everything - bring social and environmental issues closer together - without a society, there wouldn't be a need to attend to the environment. Without an environment, there is no society. I look forward to the day when we can stop separating the two and know that they are two parts of a whole.

"We have spent 99% of our history in the wild. Sky, water, and trees are embedded in us. Sever that and we've severed what it is to be human." -John Todd

The integration of life and work - of society and business

I haven't blogged for a while - life has gotten in the way and work has been pared down to getting the necessities done. Life has calmed down again and I can begin to attend to other details of work. As I was speaking with a client this week, I was again reminded that life and work cannot be separated. That, to me, is the crux of social enterprise. You cannot pretend like doing business and attending to social and environmental needs are separate activities. They are all intertwined and all affect each other. For example, this particular client is an extension of a program that provides residential and other services to mothers who are in drug and alcohol recovery. This program is a catering company that provides job skills and training to women who have "graduated" from long-term recovery. I'm assisting them with writing their ongoing business plan. On paper, this business could look really good - it has the potential to be profitable, it provides a much needed service to the women they serve and they offer healthy foods catering in a region where there is not a lot of availability of healthy foods. However, the single biggest barrier to the success of this business is NOT something most businesses would consider but is a reality of our society. This business needs a non-client, professional chef to oversee the business - order supplies, create recipes, teach the women how to assemble & prepare the food and generally run the food operations. But, they've found it very difficult to find someone with the right skills and when they do finally hire someone - they've not been able to consistently pass drug tests. In short, finding a "sober" chef has proved to be one of the greatest risks of this business. The reality of this community - and many others across the country - is that drug and alcohol use is rampant and is especially so in the food industry. If we dig deeper, we open up the Pandora's Box of issues systemic to our culture that cause so many people to need to find ways to "numb out". As I write their business plan, I am again reminded that you cannot separate social issues and business. Ignoring the drug issue would be ignoring the biggest barrier to this businesses' success.

My definition of success for the field of social enterprise? When we no longer call it social enterprise, but integrating social and environmental impact is the "norm" for the way all businesses are planned and operated.