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.