Agenda - Sustainable Funding Masterclass on 26 September 2012

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Diversifying Revenues

More voluntary groups are looking at diversifying their income and achieving greater impact by creating social enterprises within or as subsidiaries/trading companies.  For many charities this enterprise activity generates value in a number of ways e.g.:

  • Different enterprise activities, some maximising profit, others maximising societal return e.g. social firms, and other maximising both societal and financial returns.
  • Unrestricted funding in support of the charity in the form of annual dividends and revenues at exit upon the sale of the enterprise if you chose to exit and you can find a buyer.

Success Criteria

In reviewing social investment and social enterprise/trading income possibilities, there are a number of success criteria that should be considered in order to take full advantage of the opportunities to raise unrestricted funding and to successfully manage the risks associated with enterprise development and growth.

It is important to note that one should not automatically assume success.  Challenges must be identified and addressed.  Risks need to be managed.  Enthusiasm is generally a given, however strategic and business planning, financial control and reporting are essential.  One may be successful when enthusiasm is combined with a business-like culture.

There are a number of issues that should be considered in addition to the commercial.  These include being clear about the vision, mission and need for the service and its purpose.  This means addressing how an organisation would choose to balance achieving your social mission and maximising the profits of the social enterprise. 

An organisation should also look at the social enterprise from a commercial perspective e.g.

  • Is there a market need? What is the extent of that market today and into the future?
  • Do you have a product to meet the market need?  Who are the competition and how do you stack up against the competition?  What is your unique selling point (USP)?
  • How does the business work – the business strategy and the business model?
  • Do you have the people to make it work in terms of the mission related activities as a commercial-type enterprise?
  • How do the finances stack up – profit and loss over a three to five year time frame, cash flow, investment needs and return on investment (social and financial)?
  • Is the financial investment available to support the initial start-up costs and cash flow needs?

In summary for social enterprise/trading to be successful, an organisation should:

  • Identify and involve key stakeholders in the process.
  • Create a strategic context that is entrepreneurial in spirit and innovative in action.
  • Address organisational readiness issues, barriers, inhibitors and the risks that need to be managed.
  • Clarify and define your values and remain consistent with them.
  • Understand your assets.
  • Be market lead.
  • Be systematic, take calculated risks.
  • Business planning and cash flow matter.

Running parallel to fundraising and to social enterprise development organisational readiness has been mentioned several times.  Having a clear strategic context and strong plans are vital.  A critical analysis of resources, capabilities and robust services and products are key to future sustainability.

The Master Class

The master class will introduce you to how to develop a social enterprise(s) building on your experience; exploring how to transform your ideas into viable revenue generating enterprises.  We will follow a systematic approach that outlines the steps to a successful enterprise including creating your ideas (idea generation) to feasibility and priority setting, business planning, market research and planning, and how to prepare and present your business case to potential social investors and funders.

The following is an agenda for the day.

  • Introductions and presentation of your business case
  • Types of social enterprises and case histories
  • A how-to guide for those just starting off or in early stage development covering the systematic process of enterprise development –the building blocks to success - including:
  1. Establishing the need and purpose of the enterprise activities, and the balance between social and financial return.
  2. The creative process and how to identify and leverage core competencies and organisational experiences.
  3. Creating and evaluating participant enterprise ideas – establishing evaluation criteria, identifying enterprise ideas and screening (business feasibility and priority setting of the ideas); and discussion of next steps e.g. business planning, budgeting (including profit and loss, cash flow, investment needs, and return on investment), risk analysis, marketing and sales plans including pricing strategies, and implementation strategies.
  4. Presenting your enterprise ideas to social investors.
  5. Becoming investable ready - setting the strategic context/organisational readiness assessment.
  6. Achieving stakeholder buy-in/managing the change process.
  7. Governance/legal/leadership and responsibility/accountability issues, and dealing with organisational readiness, barriers and inhibitors.
  8. Next stage development and approaches to growth including enterprise portfolio development.