3 Essential Abilities for Social Enterprise Success
If there are any universal truths in the nonprofit world, surely one is that with few exceptions, there are never enough resources to help everyone in need of assistance. Despite consistent growth in Americans’ charitable giving, depending solely upon the generosity of private donors and government contracts often leaves our programs in precarious circumstances that are not conducive to long-term growth. For these reasons, launching or acquiring a social enterprise to develop a source of earned revenue can be a tempting idea.
What nonprofit leader wouldn’t want a sustainable source of income that insulates vital programming from the volatility of public and private funding changes? Just as important, what if that social enterprise could also supplement existing programming, expanding the organization’s capacity to carry out its mission?
While social enterprises can help to achieve both goals, they are not a one-size-fits-all solution for every organization, or for every nonprofit leader. For the organization I lead, New Moms, entering the world of social enterprise happened organically. We started 35 years ago when our founder responded to the needs of young homeless mothers and their children in her neighborhood by handing out diapers and formula from the trunk of her car.
Today, New Moms is the only organization in the U.S. with a comprehensive model focused solely on surrounding young moms and their children with the resources they need to transform their lives. We do this by offering housing, job training and family support programs, each of which are vital to interrupting the cycle of poverty and creating strong families.
For many years, New Moms’ job training program lacked a transitional jobs function for our participants to gain on-the-job skills that prepared them to successfully obtain and retain permanent employment. Having referred many of our participants to Bright Endeavors, a social enterprise candle company launched independently in 2007, we were very familiar with the organization and impressed with the skills gained by participants referred there.
Given the synergies between the organizations’ similar focus on young women, the track record of achievement among participants who spent time at Bright Endeavors and the appeal of growing a fledging business rather than starting a new one, New Moms acquired Bright Endeavors in 2010, formalizing the inclusion of a transitional job as part of our job training program. At Bright Endeavors, our participants get experience in a real work environment, learn to budget a regular paycheck and establish the skills necessary to graduate from the job training program and successfully transition to employment in the community.
Over the course of the past five years leading New Moms and Bright Endeavors, I’ve leaned heavily on several skills that I believe are essential to social enterprise success:
1. Competing Means Being Creative
With limited budgets, competing against well-established (and well-funded) brands as a social enterprise requires constant creativity. Consumers may be interested in your social enterprise because of your mission, but if you don’t have high-quality products, the right price point or aren’t delivering the same value as your competitors, your chance of success is limited. At Bright Endeavors, one of the ways we’ve carved a foothold in the market is by providing something very few of our competitors do by offering venues, restaurants and event professionals in Chicago with a rental option for candles that doesn’t sacrifice quality.
These single-use, unscented soy candles are hand-poured into 3-inch tall, clear, glass votives and guaranteed to last the duration of an event or dinner service. After they have been used, we reclaim, clean and reuse the glassware, redirecting thousands of glasses from landfills every year. We also offer delivery and pick-up services, making it an extraordinarily convenient option for customers. Whatever the product or service, identifying these unique differentiators and having the creativity to execute on your plans with limited resources is a fundamental competency every leader must embrace in social enterprise.
2. Don’t Just Compete, Partner With Others
Running a nonprofit organization is hard, and the complexity only increases when you’re also responsible for the growth of a small business. At the same time, because of your social mission you have access to a range of stakeholders and others in the sector who want to help you succeed. Leaning on others with social enterprise experience is invaluable, which is why we take full advantage of the resources available to us as a member of REDF’s national portfolio.
With a community of colleagues across the country with whom to discuss best practices and lessons learned, along some well-poised technical assistance to improve our business, the learning curve associated with operating a social enterprise isn’t quite as steep. By nature, those who work in nonprofit social enterprise are passionate, informed and thoughtful—and because of your social mission they want to help you, too. Don’t bypass the opportunity to take advantage of the collective power of wanting to help achieve good in the world.
3. Laser Focus on the Mission
Clearly, leading a social enterprise requires strong business skills, but it’s important not to lose sight of why the social enterprise exists. There’s likely no word a business consultant hates more than “inefficiency,” but it’s a critical component of our business model at Bright Endeavors. We are in the business of social enterprise to generate sustainable revenue that can be used to continue empowering young moms to succeed in the workplace and beyond for many years to come.
While we take our fiscal responsibility seriously, the mothers we serve are the priority. Because participants cycle in and out of Bright Endeavors in cohorts through our job training program, our turnover rate is 900 percent. Each cohort also spends paid time working on personal growth through activities like mock interviews. In any business other than a nonprofit social enterprise, this would be unacceptable, particularly when much of the production process could be automated entirely. However, we know that investing in the whole person, inefficient or not, is the only way to truly achieve our mission.
To date, Bright Endeavors has helped more than 300 young mothers prepare to succeed in the workforce and, last year alone, 56 moms were placed in permanent jobs after working at Bright Endeavors. While there is a constant push-pull to stay true to our mission while continuing to grow the social enterprise, programmatic success has not come at the expense of the business of Bright Endeavors.
We have seen year-over-year growth, with a 44 percent increase in sales last year and are consistently outperforming our revenue goals. Each organization is unique, and the path to social enterprise success varies, but by embracing creativity, leaning on the expertise of others in the community and refusing to compromise on the mission, social enterprise can be a successful strategy for many nonprofit organizations.
Laura Zumdahl is the president and CEO of New Moms. New Moms is a Chicago-based nonprofit that works to interrupt the cycle of poverty for both mothers and their children by providing stable housing, job training and family support. Its program model is unique, and it’s one of the only nonprofit organizations in the U.S. caring for women and children in this way. This year marks the organization’s 35th anniversary.
Laura has nearly 20 years of leadership experience in the nonprofit sector, and she has a Ph.D. in leadership as well. Under her leadership, New Moms has doubled in size, expanding its geographic footprint and capacity to transform the lives of mothers and children in Chicago.