During a recent webinar, Mike Ravenscroft of the PeaceTech Accelerator in Washington and a diverse panel of entrepreneurs discussed the ways in which social enterprises can become profitable while still making a significant impact in the communities they serve. The panel featured three established social entrepreneurs: Fonta Gilliam, the founder and CEO of Sou Sou, a crowd-sourced banking community that modernizes the traditional savings and loan models found in cultures around the world; Gideon Taub, the founder and CEO of Pinkaloo Technologies, a company that uses fintech to modernize and increase charitable giving for businesses and employees; and Laila Akel, the co-founder and CEO of RedCrow, an organization that helps other companies operate in high-risk environments using an application that detects and minimizes risks. Here is some of the expert advice given by the entrepreneurs.
What is some advice for entrepreneurs who are making an impact but struggling to generate profit at a sustainable rate?
Laila’s advice is to first get out of your comfort zone. In her opinion, social entrepreneurs tend to stay within their circle and only speak about their project to people who understand their mission or are members of their own community. Many social entrepreneurs find it difficult to venture out and talk to people who don’t understand the problem that their organization wishes to address or the solution they have proposed. Laila encourages entrepreneurs to find these types of people and talk to them, as these connections could help your organization create a bigger change just by others spreading the word about you. In her experience with her own company, when talking to people who didn’t understand her mission, she found it helpful to try to approach the problem and her organization’s solution from another’s point of view, to see it as they did and then discover a way to make them understand the importance of her work.
Which approach should an entrepreneur use when establishing his or her business plan? Should an entrepreneur lead with how to make the biggest impact or how to ensure financial sustainability?
Fonta explained how running a social enterprise is essentially the same as running a business. Therefore it is necessary to lead with the financial viability of your organization and how you can generate revenue. While it is important to maintain the social-impact aspect of your work, when talking to investors and potential customers you must show that you are business first. You must focus on the business model, because if you don’t you run the risk of not being able to maintain your business, and if your business fails, creating social impact isn’t possible. Laila mentioned how there is a misconception about social enterprises — many people believe they should not make a profit and should only exist to enact change. However, she feels that making profit is not shameful, but rather a way to improve a community through job creation. Another benefit of turning a profit is having the resources to allow students to intern at your organization and to be able to teach them about social entrepreneurship. Making a profit from your ideas does not defeat the purpose of an organization, as there is more than one way a social enterprise can serve its community.
What difficulties do companies face when partnering with banks?
Gideon admits he has faced a lot of difficulties working with banks while developing his social enterprise. He identified how banks’ slow pace of business is the biggest challenge to his work. Long sale cycles make banks very slow to adopt new technologies, and obstacles such as regulations, compliance and due diligence only make this pace of business even slower. This is difficult for entrepreneurs, because they need to quickly build their business, create revenue, and drive profits. Gideon suggests that if you are trying to develop a relationship with a bank, it is important to show the bank how your product or solution can help it and add value to its services. A bank has certain goals that it wants to meet, such as retaining clients and continuing to generate new business. If you can demonstrate how your product will allow the bank to achieve its goals, you are more likely to establish a working relationship with it.
What are the most innovative ways in which social enterprises can overcome the barriers to accessing capital?
Laila discussed how she tried many approaches to get her organization to the first round of funding. One successful strategy she employed was to “hunt” the investors that she wanted and learn everything about them. She would do research to understand the sectors that a potential investor was interested in and decide if her organization was a good fit or not. This strategy also requires an entrepreneur to be persistent. Laila said her company would not take “no” for an answer when trying to get funding from investors. They kept trying after the first no or the second no, and maybe would take a break from pursuing an investor after the third no, but would try again in another six months. Additionally, entrepreneurs should seek out alternative funding options from entities other than venture capitalists. Fonta discussed how her company’s strategy was to find funding from foundations, other organizations, government contracts, or grants. These options are available to social enterprises because of the impact they have in enacting change.
What is the advice for an entrepreneur who wishes to start a business in an unstable economy?
Laila shared her personal knowledge with starting a business in an unstable economy, drawing on her experience establishing her organization in the West Bank. In her opinion, instead of being afraid to start businesses in an unstable economy, startups and the private sector could actually help maintain the economy from collapsing. She found it is important to understand the laws and regulations of the country your business is operating in, as these rules can sometimes make it more difficult to start a business. It is necessary to always have several back-up plans so that you don’t get caught in the economic collapse. Laila suggest that if possible, be registered in multiple countries and be sure to comply with the laws in all the countries that you are registered and operate in.
Why is networking so important to social entrepreneurship?
Networking is important because it can help you connect with people around the world and can lead to opportunities like affiliations, investments or even sales. Networking also helps you reach other communities to tell them about your mission. Through networking, a company can create partnerships or affiliations that result in minimizing resources and saving time and money. Laila explained how to get the most out of networking: You have to put together an action plan. You need to do your research and know who you want to meet and how you reach out and connect to them. Once you identify your targets, you need to prioritize them. Laila said that when her team goes to a networking event, there is not enough time to meet everyone they are interested in, so she prioritizes who she wants to meet based on who she thinks can best help her company to grow. It is also important to make sure you know what you want from the person you are networking with and are not afraid to ask them for it. After you talk to someone it is necessary to follow up with them so they remember your conversation. Maybe you reach out and ask for a meeting or invite them to another conversation. In Laila’s experience, networking for her company has led to many positive outcomes, such as investments and affiliations with large organizations.
To watch the full webinar, visit youtu.be/pIgG5stCL2Q.
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The views and opinions expressed here belong to the authors and do not necessarily reflect those of The Youth Cafe.