The Community Laundry Co-op (CLC) is looking for a Business manager to handle the operations of the social enterprise. The Community Laundry Co-op is a charitable co-operative that provides accessible and affordable self-service laundry facilities for low-income and isolated people in Ottawa.
For a good cause, wrongdoing is virtuous.
Publilius Syrus
I’m quite sure that this first century quote wasn’t about failing at a social enterprise, but it is worth taking the liberty now, in the 21st century, of reinterpreting this quote to mean that doing something incorrectly in pursuit of a social benefit is still a virtuous pursuit.
Or is it?
Social enterprise employs a business model to create positive social outcomes. It requires selling goods and services in pursuit of a “good cause,” seeking to change the world for the better. In the current heady discourse surrounding social enterprise and social innovation I often hear the phrase “to fail forward” to highlight that social entrepreneurs and social change agents can learn from mistakes in their social businesses to improve the products, services or social outcomes they seek.
The problem is that social entrepreneurs are playing with live ammunition. If social entrepreneurs don’t succeed, in my experience they often give up and close their doors. When a social enterprise fails and closes, our society is left wounded. People are hurt. Jobs for underemployed are lost. Social outcomes are not improved.
In fact in just the last few years, I’ve witnessed dozens of ambitious, intelligent, and idealistic entrepreneurs from all sectors fail at creating a sustainable social enterprise. Their failures are not seen as opportunities for some form of renaissance or rebirth. In fact, many of them fail quietly, in relative shame, and the lessons they learned are rarely shared with others. The social entrepreneurs find a new passion, or they retire, or they get drawn out of the challenge of entrepreneurship into a salaried position.
Therefore, this blog post is a warning to all who seek to become social entrepreneurs.
If you’ve identified some form of social justice, and you want to change it, you simply can’t give up.
The problem will persist or worsen without you. If social enterprise is not the right tool, then find another hammer to make a difference.
Business is hard work. Social enterprise is even harder work, because social entrepreneurs need to find financial sustainability in a market economy that has, in many cases, created the injustice they are trying to fix. One can’t just dabble in social enterprise. The stakes are just too high.
Social entrepreneur must know that they are fighting against a behemoth, and it simply won’t be easy. They must commit to their work as a calling “for a good cause.” They must know that social enterprise is a responsibility and will likely be a hardship. If you choose this life, you are likely going to get roughed up a bit. Steel yourself for this fact.
Doing the right thing is never easy. Don’t be fooled into believing that social enterprise is easy. And when it gets hard to push onward, don’t allow yourself to give up. Our common good is at stake.
IMPACT HUB Ottawa is hosting a short workshop on theory of change and social impact measurement on October 17, 2018. It is only $10 to register, and the registration fee is donated to charity. Visit https://ottawa.impacthub.net/event/measuring-your-impact/ for more information.
If you are interested in social enterprise, it is likely you’ve heard of Greyston Bakery in Yonkers, New York. They are a leading example of a successful employment and training social enterprise.
Forbes published an excellent article a few weeks ago that is worth reading. It is particularly of interest if you have ever harboured doubts about the effectiveness of social enterprise as a tool for improved community benefits.
Here is a taste:
In the last 35 years of operation, “Greyston has created job opportunities for more than 3,500 individuals and has supported over 19,000 families. At present, over 60% of Greyston’s bakers are formerly incarcerated.”
Deadline to apply: August 17th
HUB Ottawa offers a new cohort of its flagship program, Impact Academy. They are partnering with Synapcity for this special Impact Academy: CityMaker Edition. Here is what you need to know!
What it is: A free, three-month learning program running between September 5th and December 5th, 2018. (Yes, it is a free program for participants this year…so don’t delay)
Who it’s for: Creative and entrepreneurial changemakers working to make our communities more sustainable, inclusive, and equitable and who want to take their projects, ventures and initiatives to the next level.
Topic areas: Transportation & Mobility, Environment & Sustainability, and Healthy & Caring Communities.
Deadline to apply, August 17th, 2018.
Since 2012 Impact Hub’s Impact Academy has supported over 150 social changemakers in their entrepreneurial journey. Social Delta has been an active partner in both the design of the program from its inception, and Jonathan Wade of Social Delta continues to deliver elements of the program. This year, you can get Social Delta’s insights and recommendations on business modeling on October 31st, but each session will bring expert community resources to the classroom, and spectacular living examples to the program.
There is a new, heartening trend out there.
Optimism.
Each day, we read (or hear second-hand) news that brings us tales of human injustices like murder, poverty, gender violence, and child abuse. This sad knowledge forms a foundation for the tide of details about accidents like plane crashes, natural disasters and floods. We are saddled with grief if we are feeling people, and we are labelled as ignorant if we ignore the obvious.
The problem is the optimists. They are actually disproving the commonly held assertion that life is getting worse. The book Factfulness, by the late Hans Rosling and published by his family just this year, was my first introduction to rabidly optimistic views. And today I read “Are things getting better or worse,” an upsetting article written by Joshua Rothman in the New Yorker; it is upsetting in that it upsets the common beliefs of our collective pessimism. Rothman quotes content from scholars and experts around the world that further inform us that by virtually any standard, life is getting better for everyone on the planet. Life expectancy, murder, disease, abuse, addiction…you name it: the statistics in both the wealthy and the less wealthy parts of the world are staggeringly good.
We are easily swayed by bad news. And increasingly we don’t hear the good news. But good news is all around us.
Social enterprise is good news. It is not flawless, nor is it easy, but it is a positive tool about which we can all be optimistic. Imagine: businesses that exist only for the purpose of improving the lives, livelihoods and experiences of our people in our communities.
It is my experience that social enterprise flourishes when social problems feel overwhelming. There are spectacular examples of social enterprise addressing the needs of communities in the North End of Winnipeg, the Downtown East Side in Vancouver, the impoverished areas of Nova Scotia, and many of the aspiring First Nation communities scattered across the country.
I encourage you to visit the links page at the Social Enterprise Council of Canada, or visit Buy Social Canada, Social Enterprise Ontario, or the nascent Akcelos to see listings of social enterprises active in the market. Or read the many well researched reports that celebrate the impact of social enterprises at the Social Enterprise Sector Survey.
Celebrate the optimism.
Support social enterprises across the country as a customer. Learn about how social enterprises are changing the status quo for the better. Believe that even when there are challenges, there are innovative human solutions hard at work.
Monday June 18, 2018
6:30-8pm
6th floor, 123 Slater Street, Ottawa
Register for this free event here.
Author Elisa Birnbaum is the editor and chief wordsmith on the active, informative and longstanding blog on social enterprise and the tools of social change in Canada: See Change Magazine. At the launch, Elisa will offer perspectives on what she has researched, stories about successes and challenges in the sector, and will bring to life some of the many significant changes that have been made by social enterprises in Canada, the US and across the world. She brings a warmth, honesty and tremendous perspective on this changing sector.
Please register in advance.
Note that street parking downtown is also free in the evenings.
There are a growing number of individuals who approach us here at Social Delta with a business idea that is going to make a social change through the sale of goods and/or services. Many of these prospective clients ask if it is necessary to hire professionals to help them launch their business correctly. Of course, we first assure them that hiring Social Delta would be a good choice to invest in professional guidance (offered half in jest, wholly in earnest).
However, in full seriousness, Social Delta recommends that all starting entrepreneurs should hire the professional services of both a lawyer and an accountant.
It is always our belief that social entrepreneurs should remain operating in the informal sector for as long as possible. However, once the business matures to the point where it is appropriate to incorporate as a formal legal entity, it is worth contacting a lawyer to help with the incorporation. It is not difficult to incorporate a business in Canada, but a lawyer can help you shape the language you use to help enshrine your social value proposition as a non-profit corporation, a co-operative, or as a private sector business. Good legal advice is not always cheap, but a one-time consultation can be cheap in the long run as it will inform you of your rights, obligations and the benefits of the various legal incorporation forms to host your social enterprise.
Hiring an accountant early in your business operations will pay for itself many times over. As with the field of law, the field of accounting (and specifically tax codes) is perpetually changing, and getting good advice on how to set up your books, track your expenses, defer taxes, charge and claim GST or PST will make your first year of operations (and every year after) so much easier.
So what should every social entrepreneur ask their lawyer and accountant? Here is a short list of recommended questions, although of course every entrepreneur may also have specific questions related to their specific case:
“How and when should I incorporate my business?”
What are the benefits and limitations of a sole proprietorship, a limited liability company, a multi-stakeholder co-op, or a non-profit? Should I incorporate federally or provincially? Is there hybrid legislation in my province, and if so, what should I be sure to include in my bylaws or articles of incorporation to assure that I could register as a hybrid company in the future?
“Where do I get the money to run my business?”
A qualified accountant who understands your business model will help you choose whether you want to take on debt, sell equities, or self-finance your new venture. Note that not all forms of financing are available in every form of incorporation. Furthermore, financing creates annual operational expenses, and professional advice on how to structure the contracts, loans, equity agreements, membership shares, or other forms of financing can help mitigate cash flow challenges.
“How should I set up my books?”
It is always a good idea to separate your personal and business finances. Have a separate bank account and a separate credit card to help track business expenses. Any accountant will likely tell you that, but they can also tell you what expenses you need to track. What do you need to capture for tax or other government reporting? What are the rules around entertainment and marketing expenses? What are some of the key financial performance indicates that I should be tracking regularly to ensure that the business is healthy?
“How do I manage profit?”
Every entrepreneur thinks that they are going to make a profit, even many social entrepreneurs. However, by hiring a qualified accountant, you can help make realistic financial projections, employing their past experience with both revenue and costs with other clients. They can also help you structure your books to increase the expenses for (investments in?) activities that maximize social improvement (i.e. bursaries, salaries, community investments, philanthropy, sponsorship, and others)
“How much and when do I pay myself?”
An accountant can help structure a business to determine how best to pay yourself. They can help structure the business to minimize income taxes and they can help plan HR costs to not jeopardize cash flow.
“What about all this tax stuff?”
Accountants understand the tax rules better than anyone else. Trying to stay on top of the changes to income tax, or the payment schedules of GST, or the charging of GST in different jurisdictions is not for the under-informed. Ask your accountant about how your status as a sole proprietor, shareholder, salaried employee, or contractor affects personal income taxes. If you have staff, how do you manage payroll taxes (and source deductions, for that matter). Accountants can help you determine eligibility for tax deductions and/or credits, and can help you determine when to charge GST and how best to set up the regular reporting and payment of GST to the government.
“Is there a good time to prepare an exit strategy?”
When choosing how to incorporate your business, it is always good to consider what will happen when you aren’t there. You may want to sell the business, transfer the assets to a community organization, convert to a worker co-operative, or merge with another company. Social enterprises often seek to have an asset lock built into their initial design, in order that the business assets, intellectual property and staff remain in service to the community. Both accountants and lawyers will have advice on governance and processes to consider when you are downsizing, divesting, moving to another country, or merging with other legal entities.
It is often said that entrepreneurs should understand all aspects of their business. I couldn’t agree more…the entrepreneur is responsible for product development, market research, financial oversight, sales, social impact measurement and everything in between. You have to understand it all. Entrepreneurship is often about juggling all the plates.
But it doesn’t HAVE to be that way.
Seeking professional assistance in areas of your business which require special skills is a wise investment of money to save you time, and can prevent future problems. Professionals can help you understand your business better, and make better choices. Social Delta advises that a modest investment early in financial planning and governance will likely prevent a potentially crippling legal or financial problem down the road.
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The marketplace of social deficits
Most social enterprises start because an individual or an organization sees a problem in society—a social deficit—and they want to find a sustainable way to improve that deficit.
Just as inventions historically have helped to address perceived personal needs—from the radio to the steam iron—so too are innovations required to address social deficits, and if those innovations can be commercialized, then they are fodder for a strong social enterprise.
In the last few years, I’ve met an increasing number of people—both seasoned and young—who want to pursue social enterprise as a meaningful career path. However, many haven’t necessarily taken into account the marketplace of social deficits. In the last decade or more, there are some clear, growing areas of need in our society for which a social enterprise might be the right tool.
Below is my quick list of the challenges facing our society; this list describes a fertile field for social enterprise development to start.
Ageing populations will create needs for new financial tools, intergenerational wealth transfer, housing, urban design, mobility and new methods of countering isolation in a world of technology, fading social structures (like the church) and greater longevity.
A diversified global citizenry requires new approaches to schooling, language and cultural training, housing and ways to address conflict.
New health care needs for chronic illnesses and afflictions, including diabetes, arthritis, depression, obesity. Even some of those diseases which were considered acute (and typically life threatening) such as cancer and heart disease are increasingly being considered chronic, as survivors may require ongoing supports to live well.
Our energy needs are extraordinary. With a technologically advancing society, all our lives are affected by available electricity and locomotion. Our shelter, our food, our lifestyle, and even our money are all perilously threatened if we loose power, or if energy costs spurred by limited supply and increasing demand become unaffordable.
Water and other environmental challenges are also looming concerns of the next generation. Clean water is an ecosystem requirement and a threatened resource as the population grows, and as our continued polluting contaminates the limited freshwater reserves on the planet.
Increases in gambling, poor diets and inactivity, violence (gang, domestic, and other abuse), and the (mis)use of both illegal and prescription drugs are requiring us to reconsider the way the society must address social behavioral problems.
Crime appears to be on the increase, although statistics prove otherwise. Of course, we need not be complacent, as preventing crime is worth our vigilence at the local, national, international, and even the metaphysical space of the internet. Identity theft, concerns of privacy and even fears of falling victim to fraud pervade our news, and thus our response to the world around us.
The nature of work is changing and this creates many social challenges. Increased wealth is not translating in to increased welfare. Communal workplaces, telecommuting, and decreases in manufacturing and skilled labour are affecting our communities and exacerbating wealth gaps.
It also appears that the next generation is losing purpose, faith and hope in the structures of past generations (marriage, work, universities, religious institutions, government, etc).
Poverty and income inequality is also a global challenge. Our interdependent world means that poverty across the world will directly affect us all. Wars, famine, refugees, human rights abuses, and criminal activity are all reinforced by poverty, if not initiated by the curse of income inequality and injustice.
This list of social deficits should not drive us to despair. Statistically, global improvements to health, transportation, work, and international relations have enjoyed incredible gains over the last decades (“Factfullness” by Hans Rosling, will help reaffirm your faith in humanity).
Nevertheless, the traditional solutions to social deficits that have got us this far have often been direct interventions through the development of a new product or new service (or law!) by governments, non-profits, or private sector actors motivated by profits. However, the current multifaceted, systemic challenges are in need of more systemic solutions by engaging different sectors, different actors, new ideas, revised expectations, and new organizational structures.
Social enterprise is a tool—when done well—that can house systemic solutions that embody democratic (or collective) ownership, the focus of business thinking, the scale of the public sector and the compassion of the non profit and charitable world. By taking the best of all thinking, social enterprise is a vehicle to tackle both the new and intractable social deficits in our society.