Balancing your head and your heart

The battle of social entrepreneurship

Photo by Nathan McBride on Unsplash

I was recently training a group of current and potential social entrepreneurs about key stakeholders and how to ensure their buy-in at all stages from idea to execution. We discussed various methods, channels of communication, tools such as Social Return on Investment and how to share stories in a convincing and moving way.

I also got the participants to do a small quiz on how they make decisions. Overwhelmingly, the outcome was that most people supposedly used their head rather than their heart, however at the end of the workshop one lady came up to me and shared her current situation.

She had been running her own social enterprise for 9 years, with success, ensuring schools have access to clean water in Tanzania. However the idea came from the need for social change and better resources, with the financial side, and thus the business, following this. She had recognised herself in what I had said during the workshop.

“With a large numbers of social enterprise coming from the third sector, quite often people care so much about the social goal, they might, to some degree, neglect the financial sustainability.”

Her question was simple — how do you solve this problem?

Having been seen as both ‘the capitalist’ and ‘the socialist’ in different organisations, I offered up three solutions.

Get some sales training

One big problem is simply that owners or employees of social enterprises have never done any selling in their lives. They’re not equipped to sell, they don’t know the basic tricks of the trade and because of this lack of education and experience, they avoid selling as it’s out of their comfort zone.

If this sounds like you, then think about how you could improve your sales technique. Perhaps it’s about learning how to use persuasive language, storytelling or valuing what you have to offer, or a combination of these things and more. Put together a list of your strengths and weaknesses of your selling style, fill in the gaps through coaching and education and then get the experience through getting out there and doing it.

Set financial goals for yourself linked to your social outcomes

You may be a great salesperson but making a lot more money than you actually need to, might not be in your psyche. If you’re not motivated by money then sometimes it’s pointless setting sales targets. Each month you have a good idea of your outgoings, so you probably settle when you sell enough to cover those costs and nothing more.

Instead of having sales targets, have impact targets. Remember that every sale you make could lead to a great impact. For example, if you sell another water filter, that’s 10 more people with access to clean water or if you provide consultancy to one more business, that’s a further x amount to spend on an awareness raising campaign.

By swapping the sales target with an impact target, you’re appealing to your ‘heart’ more than your ‘head’.

Get someone else on board

They say fake it until you make it, but perhaps even when you swap the cold hard cash for warm fluffy (but still concrete!) outcomes, there’s still no faking it. Instead, you just want to work on the product, the story and the impact.

The last option for you is to think about getting a salesperson on board. It could be in the form of a business partner or an employee, but either way you’ll have to work closely with them to ensure the ethos of the company is present throughout.

This was one of the fears of the participant, that by getting a salesperson who is driven by the dollars, the social side may be undermined. This definitely doesn’t have to be the case, it’ll just be down to you to find balance, communication and results.


Need to work on your pitching skills, or to figure out what to charge for your product or service?

How much profit should go towards your goal?

Reinvest, spend or share the wealth

A key element which puts the social into social enterprise is the way you spend your profits. Out with the idea that only shareholders or investors should benefit from the hard work of your company. Instead, it’s now time to invest in the wider community.

However as you navigate the literal world of social enterprise you will see a range of regulations or recommendations. Here we look at what exists in terms of asset locks, commitments and suggestions.

Legal structures, definition or certification

Community Interest Company (CiC), United Kingdom

Over in the UK, you can legally register as a social enterprise, locally known as a CiC. Once registered, the asset lock and dividend cap come into place. These ensure that the profit is either retained within the company or used to meet its social or environmental goals. This currently stands at 65%, meaning the rest can be paid out as dividends to the traditional shareholders or investors.

Social Traders definition, Australia

With no legal structure in Australia, things aren’t as clear cut as in the UK. Therefore many turn to the definition used by Social Traders in their FASES report, where it states that the majority of profit/surplus must be reinvested. Given that a majority can be 50.01%, any company that does this, either through reporting or constitutional locks can be classes as a social enterprise

Benefit Corporation, United States

Not to be confused with Certified BCorp, the Benefit Corporation is a legal structure with different rules on reporting per state. The main difference is that it gives the board the opportunity to make decisions based on both financial AND social reasons. This signifies a shift from the previous focus on a financial duty to shareholders. However there is nothing related to paying out dividends nor reinvesting profits.

What’s best for social business?

Three countries, three different set of rules. They do all protect the need for the triple bottom line, to ensure the organisation is able to make the social or environmental goal as important as the financial one. Which one goes far enough? There are arguments that dividend caps can share of investors, but this is why there is now a movement in the ‘impact investment world’.

Ultimately I would say, for trust purposes with both customers and stakeholders, having a legal requirement that a set percentage has to be committed, is better. You can build your business model around this, you can plan short, medium and long-term investment on it, and you can boast about it to the world.

What do you think is a reasonable percentage for reinvestment?

Originally published at https://medium.com/@michaelfreersplit/how-much-profit-should-go-towards-your-goal-167fe95a465a