As a social entrepreneur, I know that the core purpose of your business, activities, ideas and projects is to create social impact and bring about positive change. Yes, but in our 21st century world, you might need to make money to provide the framework to create these social values. This means you will have to consider business smodels, revenues concepts and income streams, just like traditional business does. Unfortunately many social entrepreneurs identify themselves as a charity and refuse to invest in the design of their ideas. Since we need more ideological and purposeful commerce in our world today, let’s explore how to navigate this terrain and make money for the mission.
You need to make money to structure your value creation
Your sole purpose is not to milk, extract and accumulate financial capital as a social entrepreneur. But that does not mean you will not design a model that allows you to make money consistently so that you can give more value. Very often, those that receive the direct value of your products and/or service (the offer) might not be able to pay for it. This is a very common phenomenon for social ventures. Sometimes, even if they can pay for it, the fee you charge might not cover the cost of production nor can you make profit to grow.
In some cases, you might cover your cost but you cannot grow because you have to continuously invest in training, standardisations etc. But there are strategies to design models to enhance or boost your current structure. Check a previous blog and videos – part 1 blog, part 2 blog, part 1 video, part 2 video, and part 3 video to learn more about how to integrate revenue models into your social enterprise or project.
What is a business model?
This is how Wikipedia describes it “the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts”. In much easier terms, it is the whole framework behind your idea or project. A business model can be referring to the project model. It embodies the approach you have to use your idea to generate value and profit. It is within creating your model that you,
- identify the products and/or services your plan to offer/sell,
- then to who, which is the target market or the end recipient of the value,
- and any anticipated expenses.
Let us examine a simple example and how to make money
So as a social entrepreneur, say maybe your dream or vision is to bring health care to a remote region. It is all about dentistry and teeth care for teens and young adults. You want to offer education about teeth care and also treat teeth issues. Great. However, the end recipients who are teens and young adults cannot afford the full cost. They can only pay about 20% of the cost. You can design a business models like this. Your main issue now is that you have expenses of about 80% that the customer cannot pay for. This is an exciting challenge! If you design a model that generates the remaining 80% or more, you might even make profit to keep operations steady and begin to grow.
Integrating third party of social entrepreneurs
Hoping you have watched the previous videos about money for the mission, you now know that you have to integrate a third party into your model. Thi third party will cover the 80%. How do you get the third party? And by the way, the third party can be a side business attached to the main business. For example, you have a borehole at the dentistry and the local population can pay a very fair price to get the water. You only retain the cost to maintain the borehole and invest the profits into running the dentistry. See how do you create two solutions in one?
Finding more third parties
Who else will profit from the recipients receiving the health care? Is it the government in that region or of the country producing the health care equipment? Is it a medical device company producing dentistry equipment or teeth care products? Are there companies offering complementary products in that same region to other regions that are open to extending their Corporate Social Responsibility CSR? Can the extended family members of your audience pay? Or is it just the simple man on the street that recognises that everyone deserves a great teech care no matter where they are? When you have to integrate a third party to fund your model, it becomes a revenue stream of its own.
Make money by designing revenue models.
Designing a revenue model is very important. You might have one-offs ideas to raise funds, then when that cash has been used up, then you begin to think again about ways to raise the next funds. No. Write out all the potential ways you can consistently raise funds or make money. For example, if merchandising is a revenue model you want to engage in, then expand this kind of model to develop more income streams. If you will raise funds by educating the end consumers and organising lectures, workshops, or events, this is a revenue model.
Revenue streams are incentives to make money that need their own very extensive care. So imagine the third party scenario where you decide to get companies with no CSR to partner to fund the 80% cost of the dentistry. You will have to develop a strategy to reach these companies, pitch them the ideal partnership, send them progress reports and continuously care for them as an intermediate customer. Here is how Wikipedia puts it – A revenue model is a framework for generating financial income. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value. It is a key component of a company’s business model.
What are income streams?
Income streams are the different channels from which cash comes in. If your revenue model is merchandising, then what can you merchandise? Are you focusing on digital merchandising, textile products or other branded products? Say your revenue model is fees for workshops, then what different kind of workshop will you offer to generate income streams? Online workshops, life workshops, weekend workshops? How much of these kinds of either online or offline workshops would you need in a year?
What kind of income streams would you generate from the workshops? Can you combine models? Like sell your merchandise at the workshop for which you already collected a fee to attend? But remember, your purpose is not to make money, but to give the value through the dentistry, so do not milk every opportunity to make money. Let there be enough headspace to build a sustainable venture. Integrate the streams from which you receive financing into your project design.
This was a very technical blog about how to make money to grow your value creation enterprise. Stay with us as we release more implementation tools for you. Subscribe not to miss out and hey, we are launching our mobile app soon to build a tribe of social entrepreneurs beyond borders. Want to be in our network, pre-register now. Thank you for reading to the end and share with anyone who you believe will need the information.