From Innovation to Social Enterprise

Hosted by Patrick O’Heffernan (March 2007)

In his indispensable book, Migrating from innovation to entrepreneurship (Encore Press, 2006), Jerr Boschee describes the evolution of non profits from dependency – total reliance on grants and gifts, through sustainability with a little earned income, to self-sufficiency through income alone, to a social enterprise supported by income and operating for a double or triple bottom line.

Are you ready to exit dependency? How can you take great innovations and turn them into a profitable social enterprise? How do you deal with the harsh reality that the bottom line of an enterprise is survival and profits, regardless of its social mission?

Patrick O’Heffernan recommends the following six steps:

1. Articulate to yourself an idea that stirs your passions
If you are not energized every time you think about it, it won’t work. And, if you can’t explain it in your sleep in a tight, easily understood paragraph or sentence, it won’t work.

2. Do a reality check
Test your idea on a range of people. If any of them cannot understand it or find serious flaws, rethink it until you have clarified the idea and answered the questions – and still have your passion.

3. Estimate the resources you will need – both time and money – then quadruple it
Entrepreneurs moving from the NPO to the enterprise world frequently underestimate how hard and how expensive it is. And remember, whatever number you estimate for marketing is too little. One of the bitter experiences of a lot of NPOs is that good marketing often beats great products.

4. Set up metrics and monitor your income and outcomes daily
Boschee advises to watch your financial numbers every day. Go beyond that –watch other metrics such as number of phone calls, website hits, people served, etc, and relate these to your financial numbers. This will quickly tell you if you are on-track, if you need to make changes, if you are correctly capitalized or will need cash – before a crisis.

5. Don’t be afraid to change
If your data monitoring is telling you that your price is too high, or your profit margins too low, or you delivery times too long, or your advertising is not reaching your market, change! No plan is perfect, no product is perfect, and every process can be made more efficient. This is why you track your data – to see when and where change is needed.

6. Know when to fold’em
If your numbers tell you it is not working and you cannot develop a strategy to reverse the slide, quit. Spending your time and your investors‘ money past the point of obvious failure prevents you from using that time and money for another idea. An important difference between developing an innovative idea and developing an enterprise based on that idea is that the enterprise can fail in the real world, costing time and money. While that can be painful, it is not necessarily a bad thing –learn from your failure and move on.

Join Patrick O’Heffernan in the conversation

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