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Copyright 2016, theSedge.org

Top 10 Mistakes That Prevent Success

In Social Enterprise

+ A Remedy For Each

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The concept of social enterprise has brought to light the vast potential for designing projects that are

both impactful and financially sustainable.

Since you have taken time out of your busy schedule read this, I know you’re ready to make a positive social impact in the lives of those you care about.

You are among the growing crowd of Changemakers looking for new solutions to eliminate the persistent social and environmental problems we face today.

Maybe the key you are looking for is how exactly to best launch and grow a financially sustainable

social enterprise — financial sustainability meaning you are equipped with an abundance of the resources you need to truly make lasting, meaningful, and far-reaching impact.

Given the overwhelming need for transformative change in so many areas, combined with the complexity of truly making the most of social enterprise, it’s more important now than ever to take

time to learn from the experiences of those who have been in the trenches and come out the other side.

Let’s look at the Top 10 Mistakes that hold smart social entrepreneurs like yourself back from fully maximizing the impact you are driven to create in your community and the world.


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#1 - Letting Legal Dictate I have also heard this one described aptly as “choosing an outfit before you know where

you’re going”. Because there is not yet a widely accepted standard legal structure for

social enterprise, it can be easy to get wrapped up in choosing the legal framework for your project before even knowing exactly what your project is going to look like!

I had the pleasure of meeting one of the lawyers who designed the UK’s legal option for social enterprise - the Community Interest Company, or CIC. She was quick to recommend that the legal structure should not be the first question in the conversation when getting ready for social enterprise.

In fact, despite there being a lack of standardized legal structure for social enterprise in most

jurisdictions, there are still many creative ways to have the more traditional structures work for social enterprise - all it takes is some thought and smart legal guidance.

REMEDY:

Take the time to thoroughly evaluate the legal options available to you and your unique situation,

but do so once you have a solid business model and proven strategy in place.


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#2 - Not Exploring Multiple Ideas (or Falling in Love with Your First Idea) It’s easy to get so excited about the first idea for what your social enterprise could be, that sometimes you can

forget to go through a conscious process of idea generation and selection.

Choosing to pursue a business idea is like getting married. You are committing to stand by and support this idea for

the long haul! So don’t be too hasty with your decision! Date a while. Test the waters on a variety of ideas and

explore your alternatives before committing your valuable time and resources to the first idea that

surfaces.

REMEDY:

Taking the time upfront to go through some creative brainstorming exercises provides the

opportunity for unexpected and wildly amazing ideas to show up and take their rightful spot in the conversation.

Right from the beginning stages of idea generation through to fully developing a social enterprise, we need to stay connected to why we are doing what we are doing. It should always come back to

solving a problem and serving a group of people. The solution that is developed to solve this problem will inevitably shift and evolve throughout the process, and as social entrepreneurs it’s crucial to be aware of this evolution and embrace it!


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#3 - Thinking That If You Build It, They Will Come This builds off the last mistake of falling in love with your first idea. One of the most valuable qualities of a social

entrepreneur is the willingness to be responsive to new feedback and adaptive in the solution you design and

deliver. Remember, fall in love with the problem, not your solution.

More likely than not, the concept you initially set out to implement will not be the one that works well in the long run. There is a saying that no business plan survives first contact with a customers. Which

means that no matter how confident in you are with your initial plan, it is most certainly going to evolve as you start taking action to put it out there and start receiving feedback from those who you are trying to serve.

A classic mistake for traditional and social entrepreneurs alike is putting too much time and resources

into building or planning something before releasing it into the world for feedback and criticism. This stems from the myth “If I build it they will come”.

Waiting too long to release your idea into the world puts you in the very risky position of releasing an initiative that no one is all that interested in. What’s worse, is that the longer you wait to release the

first iteration of your project, the most time and money you will have spent on it without truly knowing the value it provides to your clients, customers or beneficiaries.


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REMEDY:

One way to combat this myth is to develop your initiative using what is called lean methodology. This methodology champions taking smaller and more frequent actions that allow you put your idea

out there in “lean” formats.

Developing your idea in this more open format allows you to test your assumptions and gather valuable feedback in short timeline cycles. This results in your business plan being an evolving document, rather than the traditional static paperweight, and allows you to constantly iterate and improve on your idea.

Using this methodology drastically reduces your risk of failure, because by the time you have fully “built” out your concept, you will already

know that your product or service is ideally suited to the true needs of your customers and

or beneficiaries. And then is sure to be a success!


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#4 - Not Staying True to Your Vision for Social Change

Above all else, as you integrate social enterprise strategies into your existing organization, or possibly

as you design a brand new triple bottom line social venture, you need to stay grounded and centred in your social or environmental mission.

After all, social enterprise is a means to an end and not the end itself. With ‘the end’ of course being achieving the social or environmental impact you seek. Or better yet, working yourself out of a job

once true positive transformation and systems change takes place. As a social entrepreneur, you never want to lose sight of this fact.

The danger in adding social enterprise strategies into the mix for greater financial sustainability is that drifting

away from your vision for change can be a gradual and unnoticed process.

You might not realize you have lost your vision for social change until push comes to shove and your social or

environmental outcomes come into conflict with your economic or financial outcomes. By that point, you could be facing an all or nothing decision that may put everything you had worked for at risk.


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REMEDY:

There are steps you can take to mitigate this risk in your social enterprise work. Mainly, you want to make sure you have clearly defined vision, mission and values statements that are known and

embraced by your entire team.

You can hold annual retreats to create and re-visit these tenets that are so core to your work. It should be clear to everyone on the team what the priorities are so that each person can make the best decisions for the ultimate goals and vision of the project.


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#5 - Setting Unrealistic Forecasting or Targets

If you fail to meet the original financial targets

and forecasts for your social enterprise, this can really throw your project off course. It is

not only discouraging and tough on team morale to fall below expected outcomes, but from the financial perspective, the outcomes

can result in danger of having to shut down the project completely.

On top of all the blood, sweat tears of the hours you’ll have to put in to get the project off the ground, most businesses require an initial injection of start up capital that will cover initial costs before

revenues build up to breakeven with expenses, and a social enterprise is no different.

If your projections of either costs or expected revenues are off, you run the risk of not achieving breakeven before running out of start up capital. If you haven’t heard the term before, the financial breakeven point is where revenues exactly cover expenses.

Any revenues that are generated over and above the breakeven point can then be used to either

reinvest into the enterprise, or be funnelled to directly cover program costs that serve the social or


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environmental mission. If breakeven is not achieved before start up capital is used up, you run the risk of losing the resources of time and money that you have already invested!

REMEDY:

This mistake can be mitigated with some good old fashioned studying to brush up on financial concepts.

Or, if that idea really scares the pants off you, you will want to recruit a financially-savvy person to the team to manage the financial monitoring and forecasting!

Keep in mind that it’s important to have someone on the team who understands the financial side of

things, and to not just rely on an accountant. Of course an accountant’s advice is extremely important, but you need someone familiar with the work you are doing to correctly forecast and also to know what questions to ask of your accountant when required.


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#6 - Not Asking for Help Until It’s Too Late (or trying to do everything yourself)

This is a big one and unfortunately it’s such an easy trap for

any leader or entrepreneur to fall into.

When you work alone, or in a small team, it can feel like you have to be the jack-of-all-trades. Especially when it’s a newer project that is evolving quickly and doesn’t quite

have all the resources it needs to flourish yet.

REMEDY:

While it’s important to remain flexible and take on challenges that might be outside of your comfort zone in order to to get a new projects off the ground, you also need to be able to ask for help!

This spreads out the responsibility so that you are not crushing yourself under a workload that you cannot manage. Working yourself to the ground is not sustainable and it’s not good for the health or

success of your social enterprise.

Take the time to gather an excited team early on, who can get behind your vision and who shares

the same passion and drive to see it through.


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#7 - Expecting a Silver Bullet Social enterprise is not a silver bullet. It is one strategy to achieve social impact of many that can be explored,

studied, implemented, and mastered with hard work and practice. (This is a good point to mention that social enterprise

strategies may not be a good fit for some organizations.)

Talking about readiness for social enterprise could be an

entire separate discussion. But I’ll say this - taking the time to look within at your individual strengths, impact goals, team capacity and willingness to take on risk are all factors when assessing your readiness and suitability for social enterprise.

REMEDY:

Although Expecting a Silver Bullet made it to the top 10 list, my guess is that it doesn’t apply to you, because you are taking the time to do your due diligence and research!

So let’s keep going…


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#8 - Not Embracing Your Failures and Mistakes Yes, it is useful to learn from those who have been through the trenches, and this should help us bypass downswings in the work we do.

That said, inevitably there will be mistakes and failure from time to time. If this is not happening, you

probably aren’t pushing the envelope enough! Hopefully these failures will be smaller and less frequent thanks to the guidance of mentors and advice from those before us.

The author and entrepreneur James Altucher says,

“It’s in the valley of failure that we sow our seeds of success.”

So what is the best way to appreciate failure and move forward afterwards?


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REMEDY:

One story that stands out on theSedge.org website is from one of our Socent Mover & Shakers, Ashley Good.

The story was about one of Ashley’s friends who was

determined to become the best hockey player after immigrating to Canada as a child so that she could better fit in.

After weeks of careful practice her coach said to her,

“you’re just not falling enough”.

Ashley goes on to explain:

“Practice is for finding your edge. You want to know that exact point when you are

leaning so hard into a play that you know the exact point between standing up and

laying on the ice. Once you find that edge that you can push into every play as

hard as you can.”

By pushing ourselves to reach that scary point being on the brink of failure (or just plain falling into

failure) we give ourselves permission take the risks that can often result in high rewards.


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#9 - Not Building Off Your Strengths I briefly touched on this idea already, but it’s worth having it’s very own section.

You massively increase your chance of success with a social enterprise initiative when it is directly building off your strengths and core capabilities.

Within the realm of wanting to increase literacy for example, it’s possible to design a social enterprise around many convening tangents of this goal. If you already work in the area of financial literacy

and are exploring a social enterprise revenue stream, it doesn’t make sense to start a bookstore when what your team is already really good at is logistics.

Building off strengths of knowing how to efficiently manage supply chains and logistics is a very different from strengths

that would be needed when managing a brick and mortar store with staff and inventory.

REMEDY:

As with many of these top 10 mistakes, mitigating them really comes down to purposeful and thoughtful planning.

Which brings me to the last top 10 mistake that prevents social entrepreneurs from launching financially sustainable social enterprises…


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#10 - Not Taking the Time to Develop a Well-thought-out Plan As I mentioned, this mistake really relates back to many of the previous ones, so I would say it’s the biggest hitting mistake that

prevents well-meaning social entrepreneurs from truly achieving the biggest impact they strive to make.

I believe the reason this mistake has a such a big impact on the creation of financially sustainable social enterprises is due to the

sheer complexity of what needs to be pieced together, like pieces of a puzzle, for a social enterprise to truly embody the

triple bottom line of social impact, environmental impact, and financial sustainability.

As a social entrepreneur, you are truly crafting a masterpiece as you conceive and implement your changemaking initiative. Where a traditional business typically crafts one value proposition for one

target market (more on those terms in the third video), a social enterprise has to juggle multiple stakeholders and multiple goals, all while delivering value in usually brand new innovative ways that haven’t been tried and tested before!

REMEDY:

With some thoughtful strategic planning early on in the process, and as you go along the way, you can most certainly fit together the pieces to launch and grow a successful social enterprise!


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Remember, don’t let these Top 10 Mistakes stop you from achieving YOUR

VISION FOR CHANGE IN THE WORLD!

Go to www.theSedge.org for more resources to help you launch a successful social enterprise and take your impact to the next level!


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