1) Preparing the Ground
Putting your enterprise through the ‘stress test’
Mission Statement and goals: Before you think about buying anything, hiring anyone, or marketing make sure you have a clear mission.
What do you want to fix, change, or create that will make the world a better place?
Your mission statement should be broad enough to last the test of time but specific enough to direct your work.
A mission statement of “Make the world better” will always be relevant, but too broad to have any specific actionable goals. Find a healthy medium.
- What are you actually producing/selling?
- What do you need? Space, permits, tools, training, etc.
- How will you turn raw materials or labor into your product or service?
- How can your product be more sustainable than other products on the market?
- What are your social responsibilities?
- What is the bottom-line when you incorporate environmental and social good
- Customer – Who are you selling to? May be individuals, other businesses, etc.
- Strategy – How are you going to sell your product to your customers?
i) Criteria for an Activist Enterprise:
- 1) Purpose. It should involve a product or service that works towards addressing a pressing social need such as women’s rights, freedom of speech, prison reform, etc. And we are not talking about just selling T-shirts! You want to create genuine products and services that make the change you want to see in the world.
- 2) Planet. It should incorporate efficiency and environmentalism in every aspect of it’s business operations. Saving resources is not only green, it also saves money. Which is also ‘green’!
- 3) Profit. It should generate an income that allows at least a living wage for it’s owners.
- 4) People. It should always strive for fair working arrangements for anyone who helps in business operations such as volunteers, paid workers
and private contractors. The operating principle is fair trade, it does not have to involve money. At Hedonisia Hawaii we cannot afford to pay salaries. So we have an Intern Manager Program that allows lots of time off!
ii) PUT IT TO THE TEST
Don’t worry if your plans and ideas change along the way. That is quite natural and evolutionary!
What Factors to Consider with your Social Enterprise
Three analyses we can utilize are the SWOT Analysis, the PEST Analysis and the Stress Test. The
first two are related so you can choose the one you are more comfortable with.
Strengths, Weaknesses (internal) and Opportunities, Threats (external).
- What strengths and weaknesses are you personally bringing to this business?
- What Opportunities or Threats are in the marketplace and may affect your business?
- Strengths are based on your product or service, reputation, knowledge, geographical location, resources, experience, leadership, growth, unique character and originality or market position. Your business’ strengths help you to distinguish your product and establish it deeper and longer. These are your best practices, the things that put you above the competition; and they are what you must utilize to establish market share.
- Weaknesses. Can be related to a gap in skills, poor location, unreliable product, negative involvement and motivation, financial issues and anything else that may slow down your project’s development. Some weaknesses are unavoidable or may be part of the product idea. Things like this MAY make you want to reconsider your business idea.
- Opportunities involve elements that the business could exploit to its advantage. Opportunities come from the external environment. Sometimes a weakness can become an opportunity! For example, say your weakness is being a small company operating amongst large companies. The advantage you have over these companies is the ability to change/ adapt quickly. Being the ‘first to market’ is a great advantage you can have over your competitors.
- Threats are all elements in the external environment that could cause trouble for your project. As they are external, they are difficult to handle. These range from political policies (policies that go against your business, tax, and cost increases) to changing technological developments, sustainable financial backing, the closing of geographic markets, and so on. Competitors are also an important factor to look at in terms of threats.
iv) P.E.S.T. ANALYSIS
If you want to focus more on the external environment, utilize the PEST analysis which stands for Political, Economic, Socio-Cultural, and Technological.1 This analysis is looking broadly at the factors which are out of your control (in the short term–see 5a. Perseverance). In each of these areas, you want to ask questions about your plan and see how they hold up. Be as critical and honest as possible, sugar-coating your answers here will only hurt you in the long run. Below are a few questions you can ask yourself in these areas, but the more questions you ask, the better.
- Can you operate in this place? Are you in the right location with respect to zoning and building codes to legally and effectively operate your business? Will you have to move?
- Is the current political tide diametrically opposed to your product or goals?
- Is there corruption and nepotism in the political arena?
- Is it legal? Are there any regulations that might stop you?
- Are prices rising for materials you will be using continually throughout your process?
- Is it possible to make money from the product or service?
- What is the local labor climate? What kind of people-power does your enterprise require? For example, running a Sustainable Community like Hedonisia normally requires a great deal of people-power. We solved this economic problem with our intern-manager program and fair-trade volunteer program.
- Does your idea truly have the potential to make a difference?
- What steps can you take to minimize the impact of your product or service on the environment?
- Is there enough of a social and cultural backing to put momentum into your enterprise?
- What groups or parties will be most opposed to your enterprise, which will be most supportive?
- Are there radical elements or ‘bad fruit’ that can, by association, add or remove value to your movement?
- Are there new (or old) innovations that you can utilize to add value to your enterprise?
- Are there new products appearing which catalyze or hinder your future growth?
- Do you have the know-how to undertake this enterprise? A technological question does not necessarily mean ‘high-tech’, it can also ask simple questions like this one about ability and skills.
The next analysis to consider is a stress-test. There are a variety of stress tests available to businesses and social enterprises alike. A simple stress-test to utilize is to take elements of your internal environment and consider what would happen if you only met 90%, 75%, and 50% of your goals.
When starting Hedonisia we had to look at several internal factors and ask these types of questions. We had to build a physical location in order to host volunteers, managers, and guests. In this area we asked, can we obtain the materials we need? Then examined, what if we only obtained 90%, 75%, and 50% of the materials we needed. What other options are available to us, can we still continue?
Another area we examined was our people power. As stated above, in the Economic section, running a sustainable-community requires community–people! Some times, things like people-power are both an external factor and an internal factor. Generally people-power is the largest item of any enterprises operating budget. We asked, what would we do if we only had 90%, 75%, and 50% of the people-power we anticipated.
A large challenge, of any enterprise, is income and expenses. What would happen if your income was 90%, 75%, and 50% less than expected–and for how long could you sustain this? What would happen if your expenses were 10%, 25%, and 50% higher than expected?
PROCEED OR PASS?: Is the Idea Viable Enough to Move Forward With?
- Is the idea viable or does it need to be scrapped or revamped in someway?
- Is there something you can do to overcome the obstacles in your way?
- If you have to go back to the drawing board that is quite okay! Better a truly viable product or service that really makes a difference than some sort of ‘green washed’ idea!
The key term in both these analyses is to understand that they are looking at the short-term environment. Remember, in the long-run nothing is fixed. It is also important to remember that answering ‘no’ or seeing obstacles as a result of these analyses is not a reason to stop. These analyses are meant to clarify the environment for you. Is there a lack of social and cultural backing right now? Maybe you need to adjust your short-term goal, not entirely quit your enterprise. Is the cost of labor too high right now? Maybe you need to consider a fair-trade strategy like volunteerism or bartering.