social delta

Consulting and support for social enterprise in Canada

Category: Great Resource (page 1 of 2)

Dutch Social Enterprises: Leading by Example

In the Netherlands there is a national organization dedicated to promoting and supporting social enterprise.

They recently released a report that documents how leading social enterprises in their country are affecting the way business is done. Those social enterprises, by doing business the right way, are leading by example.

I particularly like their analysis which indicates that social enterprise can effect change in three ways:

  • Raising the possible are the activities that show how business can be done responsibly, so that other businesses can choose to adopt those sustainable practices as well.
  • Raising the desirable are the activities that change norms and values in society and increase cultural pressures, which motivates executives to act sustainably.
  • Raising the acceptable are the activities that contribute to higher institutionalized, formal standards, so that it becomes unacceptable not to adopt more sustainable practices.

To paraphrase, social enterprises can show what is can be done, they can challenge existing business practices and they can actually set the bar higher for other businesses to emulate.

The report is full of excellent resources, ideas, and indications of what success looks like for any social enterprise. It offers an aspiration view for social entrepreneurs wishing to grow their social impact.

Social Delta recommends it as inspirational (yet practical) reading. Download it or read it online for free here.

Good pricing practices for Social Enterprise

Perhaps one of the most common question social entrepreneurs have is how to set prices for their goods or services.

Pricing is a particular challenge for mission-based social entrepreneurs; in a mission-based social enterprise, the consumer is the beneficiary. For example, the product they sell (whether a good or a service)—such as environmentally friendly paints–is serving the social enterprise’s environmental mission directly. For them, good business means not only maximizing net revenue (using a higher price), but also maximizing the number of rainbarrels sold to mitigate water run-off. (using a lower price)

This can be a real conundrum.

However, pricing is not a guessing game, and need not be feared. Here are six basic principles for the new social entrepreneur to keep in mind when setting prices:

  1. Determine your pricing strategy: Are you trying to attract customers in a crowded market? Are you trying to maximize profits to fund social programs? Are you trying to get rid of excess inventory? Are you trying to maximize sales while covering costs? Each of these goals will inform your pricing strategy. Market penetration might require a loss leader, where your selling price is lower than the competion, but also may be below your cost. Freemium pricing allows you to give excess product away if another product is purchased at regular price. Value-based pricing will set a price based upon a consumers perceived value of your product, and will typically maximize profits, but this often requires strong marketing.
  2. Know your costs. No matter what pricing strategy you employ, you will need to know your unit cost. This is calculated by adding the fixed costs (overhead) to the variable costs (typically input costs of goods sold) and dividing by the volume produced. Generally speaking, prices that are lower than unit costs are unsustainable over time (loss leaders, door crashers, freemiums), prices at unit costs (absorption pricing) will sustainably maximize sales, and pricing above unit costs will endeavor to maximize profit (cost-plus, value, or premium pricing). An entrepreneur will always know and understand the unit cost of their products, and their pricing will invariably orbit around those costs depending on their marketing goals.
  3. Understand your competition. If others are selling something comparable to your product, know their prices, and take time to understand their value proposition. Their packaging, their branding and their public outreach will likely be designed to allow them to increase their prices based upon perceived value. If you know your costs, and you have a strong value proposition to compete with them, you can set your price closer to theirs (or above, see next point) in order to maximize revenue, or closer to cost to maximize market penetration.
  4. Be bold. Trust that your product is as good (or better) as any competor. Design it to be both needed and wanted by consumers. Don’t lower your prices out of humility. (only lower prices if it is jeopardizing your marketing strategy goals)
  5. Be flexible. If you lower your prices to below cost, do so with a limited time horizon. You may need to reduce prices if the market changes. Conversely, if demand is stong, you may want to incrementally nudge your product up to increase net revenues.
  6. Follow proven practices. Be aware of the value paradox, where consumers will not see your product as having any value if the price is too low (or free). Consumers see rock bottom prices as an indicator of poor quality or flawed goods. Try some pricing tricks like bundling (where multiple products are sold together), nudging, or decoy pricing. (read this great article on the decoy effect). There are many proven approaches to pricing and researching which best practices can be applied to your business is time well spent.

A word on sliding scales…many social enterprises express an interest in setting prices based upon the consumer’s ability to pay. They often ask about sliding scales or occasionally “pay-what-you-can” options. Although this approach may be seen as a way to promote equitable access to your product, it is a very difficult way to maintain a business, because input and overhead costs rarely are set on a sliding scale.

However, there are approaches that are more sustainable, while still being inclusive. Tiered pricing (also known as price discrimination) allows for a series of stepped prices based upon proven criteria: tiered prices can be set by age, by income level, by profession (like current preferred pricing for front-line pandemic workers), or by services offered (first class, box seats, etc). Social Delta frequently recommends setting the price, and then offering discounts or bursaries to those who qualify. In this approach, the perceived market value of your product is clearly associated with a specific price (which would cover costs), but your business is willing to sacrifice revenue to ensure that it is responding to the needs of excluded customers.

Setting a price for your product requires a clear understanding of your business goals, a rock solid knowledge of your business costs, and an awareness of your competition. There are no rules to setting the right price, and if there were rules, there would be many exceptions to each rule. However, setting price is not a guess, nor is it magic. Setting prices is 90% diligence and 10% good fortune

Social Delta can help you with determine which pricing strategies and approaches to consider to meet your goals.

Get your Ottawa Social Enterprise on the map!

CSED invites Ottawa area social enterprises to take part in the 2020 Spotlight survey! The survey is being conducted to develop an economic and social profile of Ottawa’s social enterprise (SE) sector as a way to build community awareness, understanding and support.

Who this survey is for
The survey is open to Ottawa area social enterprises operated by charities, nonprofits, co-ops and for-profits (with a clearly defined social mission). Aspiring social entrepreneurs who are in the process of starting a social enterprise are also invited to complete the survey.

Why this survey is important
Your participation will help create a collective and common understanding of Ottawa’s social enterprise sector and its impact, and help shine a spotlight on the products and services that are available.

How the information will be used
An aggregate profile will be shared with social enterprises, governments, funders and others to enhance understanding of the sector and inform future support and investment activities. As a way of complimenting their own promotional activities, SEs that complete the survey can also choose to include their products and services in a new business directory that will be launched on CSED’s website.

Complete the survey for your chance to win!
All surveys completed by Friday, September 18th will be entered to win one of three free passes to Unleashed 2020, CSED’s annual social enterprise conference being held on November 19, 2020. The winning names will be drawn randomly and announced in the September issue of SE Connections.

If you have any questions about the survey or need help, please contact: team@csedottawa.ca.

Click HERE to begin the survey!

Ottawa Tool Library: online store now offers tools for sale at great prices

The Ottawa Tool Library (OTL) has just opened an online webstore to sell high quality, tested used tools and surplus “nearly new” inventory from corporate partners.

During the COVID pandemic, it appears that more and more homeowners, apartment dwellers, and others are becoming avid do-it-yourselfers. If that sounds like you, then you should at least take a look at the selection of tools that are for sale through the OTL webstore.

Perhaps you are in the market to buy a push lawnmower, a set of saws, a drill, or some other tool that you’d like to have at the ready whenever you need it.

Visit the new store and take a look at the fantastic deals they are offering on quality, tested used tools. Tell your friends. The inventory is updated regularly, so check back often.

Every dollar earned through the webstore supports the mission of the Ottawa Tool Library (and their parent non profit, the Society for Social Ingenuity). The organization offers programs and activities that provide affordable access to tools; promote self-sufficiency, reuse, and repair; and reduce our collective impact on the environment.

The OTL, of course, loans tools to all who want to become a member. They offer unlimited borrowing of almost any tool you can think of for an annual individual membership of $200. (there are, monthly, family and student rates as well) Click here for more information on membership options.

The peril of social entrepreneurship

Even the most potent idea will be watered down to nothing if you put it in a turbulent sea.

Social Delta is in the business of helping organizations and individuals create business solutions to social problems. We believe in social entrepreneurship as one possible, powerful tool to sustainably create change. But we don’t believe in fads nor do we believe that social change happens because one person thinks that they have developed a quick fix.

Increasingly, we meet and work with young people (ages 14-40) wanting to become social entrepreneurs out of a sense of disenfranchisement in the free market economy, buffeted about by political fictions and misinformation, and feeling either beaten or inspired by their perception of the world going off the rails.

When we work with these new, or aspiring, social entrepreneurs, we want them to grasp a few basic concepts before they launch into their dream career:

  1. Be ready to work harder than ever. Social entrepreneurship is hard work and 99% of the time has very little glamor. Starting and maintaining any business is hard, but starting and maintaining a business with a non-negotiable social bottom line is very hard work.
  2. You are not the solution. Social change can be catalysed by individuals, but it is created by many people, often working in an imperfect cauldron of partnership, competition and collaboration.
  3. Anything you can think of has (likely) been thought of before. Our best piece of advice for new social entrepreneurs is: study what others have done and are doing to address the social concern that is the foundation of your business. It is shocking what an internet search will reveal. Years of study and learning about the issues and the root causes of the social problem are often necessary for you to truly understand why the issue is so hard to solve. Sometimes it is better–as in more effective–to join and existing team of passionate social actors than to create your own business.
  4. Be prepared for the long haul. An app will not solve plastic waste problems. A year of selling coffee will not save a youth at risk from addictions. A single day hack-a-thon (sic) will not solve poverty in your community. Intractable social problems are called intractable for a reason: they often have no quick or easy solution. If you are choosing a career in social enterprise, you will more than likely need to devote multiple years (perhaps a lifetime) to realize the change you envision. We live in a world motivated by expediency, but social change of any sort doesn’t happen overnight…even with a business mindset.
  5. Don’t be fooled by success stories. Every social enterprise is on the knife edge of survival, and success is both a relative term, and a difficult status to maintain. Rather than lauding the successes of contemporaries, learn from their daily challenges and seek to maximize your own social impact.
  6. Measure what you are doing. From day one, set measurable social goals and evaluate if you are doing the best you can to address the social problem that inspires your business. Measurement has to include both business indicators like sales or inventory levels, but more important is to set social goals and measure if you are getting close to them. If not, you’ll likely need to change your operational (business) decisions to ensure that your social mission is, in fact, being served best.

We recommend that every new social entrepreneur read a recent Stanford Social Innovation Review article entitled “Tackling Heropreneurship.” The author expresses concern that social enterprise is becoming so fashionable that it is—like a potent idea in a turbulent sea—being watered down by those who want fame, fortune and a better world crafted by their own hands.

Building a social enterprise requires a balance of egotism and altruism. You need to be self-confident, committed, and something of an idealist. However, at the same time, you need to be humble, patient, collaborative and willing to rely on the efforts of others.

Social entrepreneurship should be considered less of a career and more of a calling, and in our experience, academic institutions, media, government and intermediary organizations are increasingly spouting that entrepreneurship is THE new tool for solving social problems. As a result, many of our most idealistic young colleagues are not fully understanding the social fabric that needs to be changed before they embark on their personal entrepreneurial journey to change it.

Buy Social this holiday season

In this season of employing our disposable income to honor friends, family and loved ones with gifts, there are several opportunities to use your holiday budget to promote good in our communities.

Today, in Toronto, there is a social procurement event, where social enterprises and social purpose businesses are actively offering their wares to both consumer and corporate customers and there are presentations on how to incorporate social goods and services into business supply chains.  This event serves as a good reminder of the power of social purchasing, whether at a corporate or personal level.

There are many resources online to find that perfect socially responsible gift. You can visit Akcelos, which is a developing source for social enterprise links across the country. The Ottawa based Centre for Social Enterprise Development also hosts an online listing of Ottawa social enterprises.  Social Enterprise Ontario also features a searchable  online directory.

And finally, join me and many others in person at HUB Ottawa on the evening of December 12 for the “Gifts that do Good” event. This is a free showcase, to be held from 6-9pm at 123 Slater Street, 6th floor. Click here for more details.

Happy Holiday shopping, and on behalf of the many social enterprise vendors in Ottawa and across the country, I hope you find purpose in the meaningful gifts you give to others.

UPDATE:  CCEDNET has just released their list of BUY SOCIAL and BUY LOCAL links  here

 

Social Impact Measurement workshop

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.

Social Enterprise: A tonic for your pessimism

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.

Book Launch: June 18

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.

 

 

Social Entrepreneurs: Get Good Professional Advice

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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