How do you operate?
The last topic of this learning platform will provide an opportunity to summarize everything you now know about your social enterprise and put it down in one canvas. Looking at all the key parts of your business model in a structured way, you will see if (and how) your impact-generating activities relate to commercial activities and what is missing in order to turn an idea into a business.
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How to develop a social business model?
We will use a world-famous tool - business model canvas - to create and describe your business model. It is a strategic management tool that helps businesses to communicate their business idea clearly and quickly - what value it creates and its key components.
In the case of social enterprises, this tool is slightly improved and updated. In order to respond to the dual nature of social entrepreneurship - the synthesis of social impact and commercial-economic activities, the tool encourages to consider not only the business side but also impact-creating activities.
For social entrepreneurs, this task - to communicate their business model clearly and comprehensibly - can be twice as challenging. After all, it is necessary to explain not only the business, but also the impact-creating processes - how the organisation will create both financial and social value.
Social business canvas
Social business canvas includes the following components:
Value proposition
We like to call it the heart of the organisation.
Segments
Who are you creating the value for?
Channels
How are you planning to reach your audience?
Relationship with the audience
What relationships do you want to build and how?
Income
What income your created value will generate?
Key resources
Tangible and intangible, these are the things that your business model could not operate without.
Key activities
How are you creating the social and commercial value?
Partnerships
Defines your suppliers, co-creators and other partners
Costs
What is the cost structure that supports your activities?
1. Value proposition
Value proposition is the heart of an organisation. Without organisation's beneficiaries and customers, it simply wouldn’t make sense to exist. Therefore, we start filling in the business model by answering the question - what value do we create for them?
A good value proposition should be able to explain in one short sentence what value you create for your audiences and why they should want to come back to you over and over again.
Examples
Beneficiary value proposition
What value do we create for our target audience? This question should not pose a big challenge - you have already analysed the problem you are addressing and have planned your impact and solution in the previous topics.
For example, the value created by social enterprise for its beneficiaries could be: “Opportunities for meaningful and decent work for people with disabilities” or “Quality, inclusive and modern education for children in rural areas”.
Impact Measurement
The next step is to name how you will know if you have reached and fulfilled your beneficiary value proposition. This is nothing more than the impact measurement indicators you chose.
Customer value proposition
A customer value proposition should explain why someone would want to buy your goods or services and what value you create for your paying customers. For example, “Quality and affordable restaurant that uses local produce” or "Addresses lack of activities for children and teacher shortages in rural areas"
Depending on the business model and idea, value propositions to the client and beneficiary may be more or less intertwined. If you have a highly commercial product or service and compete with it in the market - for example, opening a restaurant for people with disabilities, or providing employment opportunities for single mothers and selling their produce - your two value propositions will be quite different. The value created for the beneficiaries will be job opportunities, skills provided, financial independence. Meanwhile, in addition to your mission, the features of the product - quality, origin, functions, comfort - will also be relevant to customers. These are all that they value and would like to pay money for you, even if they can choose from all the restaurants in the city.
Another scenario - your product is less commercial and paying customers or organisations buy not only your service, but also the impact it creates. In this case, the two value propositions will be closer to each other and sound more similar. Remember our example from earlier. Value for children is quality education, meanwhile value for the client, such as the purchasing municipality, is a solution to lack of activities for children and the lack of specialists.
2. Segments
After describing what value your organization creates for your target audiences, name the segments themselves - for whom you create value. It is probably no longer necessary to remind you that social enterprise has two groups of segments: beneficiaries and customers.
We have dedicated a separate topic to the analysis of both of these groups in this platform, so for this step you will only need to go back and remember who you are your:
Beneficiaries
Who is facing the problem you are solving? Who do you want to help with your proposed solution?
Clients
Who will buy your goods or services? Who will pay for them?
3. Channels
Channels show how you will reach your target audiences and communicate with them, how you will convince them of your value proposition. There are many different channels from the well-known social networks, websites, television, to word of mouth, specialist recommendations, exhibitions, conferences. In summary, these are the various ways and means by which you will reach and communicate with your customers and beneficiaries. In the business model canvas, identify the channels through which you will reach both customers and beneficiaries.
Consumers often go through several stages in decision-making: when they are not yet aware of your product, when they are considering whether to use it, when they make a decision, when they purchase, and finally, when they start using it. Entrepreneurs are advised to think about all these stages and decide how to reach and help their users in each of them, while thinking about distribution and communication channels.
In the case of social enterprises, there is another dimension - impact. Think about whether you want to communicate about the impact side of your enterprise in all of your distribution channels? Perhaps some channels should only talk about impact and not focus on commercial activities and vice versa? This decision depends on your business and the type of customers. To whom they give higher priority - whether they buy from you only because of the impact or whether the service and its features are in the first place.
4. Relationship with the audience
With beneficiaries
What kind of relationship do you want to make with the beneficiaries? Are you looking to build a community or distance yourself?
With customers
What kind of relationship will you build with your customers? Do you want to create a family-like relationship or maybe communicate while maintaining distance?
5. Income
Parts of the business model discussed above provide an overview of the value created and audiences your social enterprise serves. Therefore, the next step is to identify how much income these values will generate.
List all your sources of income and indicate their percentage shares. If possible, indicate which incomes come from impact-creating activities (e.g., grants, donations) and which sources are generated by commercial activities (sales of goods and services).
6. Key resources
The rest of the business model overviews the inside of the organisation. We will start with the resources you have. Resources describe tangible and intangible things without which your business model would not be able to function. In case of social enterprise, you need to identify the resources that are necessary for your commercial activities AND the resources without which you would not be able to create impact.
Main types of resources
Physical
Buildings, inventory, transportation
Intellectual
Brand, network, specific knowledge
Human resources
Employees, partners, volunteers, consultants
Financial
Cash, credit score, access to financial support for impact activities (e.g. grants)
Impact resources
Impact measurement methods, research, additional resources required for impact activities
In the business model, list the key resources that are necessary to carry out your commercial and impact-creating activities.
Once you identified all the required resources, it is recommended to assess which of them you need to have locally. That means they belong to you. And which ones can be secured from the outside, for example by making partnerships.
Of course, you may not have all the resources you need at the moment. Especially if you are just starting your social enterprise. Then this step is a great place to think about how and where from to secure all the missing resources. It is important to note that you must have access to both the commercial and impact resources needed. Otherwise, one side of the business will simply not be able to operate and the business model will fail - you will either stop generating revenue or you will no longer be able to create impact.
Finally, this part of the business model is a great opportunity to think about the resources that may be needed as you grow and expand in the future and to ensure they are all available when the time comes., bei užsitikrinti, kad laikui atėjus, jie būtų prieinami.
7. Key activities
Core activities define the things your organisation needs to do to create promising value for its target audiences. Meaning that they ensure that you generate both social and economic / commercial value.
In the business model, identify the most important activities that are:
Commercial activity
Intervention (impact-creating activities)
8. Partnerships
The partnerships section in the business model lists all of your organization’s suppliers, collaborators, co-developers, facilitators, and others. Partnerships are necessary for your organization to achieve both commercial and impact goals..
In the social business model name what partnerships are necessary for your:
Commercial activities
Impact creating activities
9. Costs
We examined the inside of your social enterprise: discussed resources, activities, and partnerships. Because of that, we can now better understand how the cost structure looks like.
In the model, name all the costs you incur and estimate what percentage of the overall costs each represent. If possible, indicate which costs are due to impact-creating activities (eg social worker salary, training costs, impact measurement costs) and which are commercial (eg utilities, raw materials for products).
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Your social business model canvas
VALUE PROPOSITION
We like to call it the heart of the organisation.
SEGMENTS
Who are you creating the value for?
CHANNELS
How are you planning to reach your audience?
RELATIONSHIP WITH THE AUDIENCE
What relationships do you want to build and how?
INCOME
What income your created value will generate?
KEY RESOURCES
Tangible and intangible, these are the things that your business model could not operate without.
KEY ACTIVITIES
How are you creating the social and commercial value?
PARTNERSHIPS
Defines your suppliers, co-creators and other partners
COSTS
What is the cost structure that supports your activities?
TEST YOURSELF
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