Do social enterprises have an exit plan?

Create, pitch, sell, retire…

Photo by Dustin Tramel on Unsplash

As an entrepreneur, I like to keep abreast of the general world of business and startups. I read the latest news from huge corporations, keep my finger on the local, national and European startup scene, and spend the most amount of time reading about social enterprise developments.

Recently I was having a conversation about exit plans, and how the lack of them can lead to investors not being interested in the business, because after all, that can be their big payday. I was then asked about social enterprise exit plans, and it got me thinking.

Traditional startups

Despite the startup scene being so diverse across the world, we often see similarities in the way they are financed.

The bootstrappers like to build responsibly. They invest their own money, move at a steady pace, sometimes have the need to have a full-time job elsewhere whilst developing their business, but can be quite against getting investment from outside.

Then you have the fun[d] seekers. They got so far with their own input, but then look for angels, VCs, or whatever money they can get their hands on. They often go to pitch events, or reach out to high worth investors, trying to sell their vision.

The IPO or the exit plan

Both of these groups often have some sort of exit plan. It could be going public with their product or service, being bought out by a bigger company or selling it onto someone else to run.

Whichever end might be in sight, it’s effectively about giving up control, getting a nice reward for what you’ve done, and for many, moving onto he next thing.

The social enterprise way of thinking

Social entrepreneurs aren’t averse to this, as we can see through funding options these days.

There’s this new dawn of impact investment, which you have to presume was driven by demand from social entrepreneurs rather than by the impact investors and philanthropists.

If they were against it, we wouldn’t see the amount of funding available locally, nationally and for example, from the EU. You can find something for all stages of social enterprise, from idea development to scaling.

However the difference is that these funds often come with a lot of requirements. They have to meet both financial and social outputs, outcomes and returns. There aren’t many people offering £4m no-strings-attached to social enterprises, as profit isn’t the sole reason for the enterprise to exist.

Furthermore, many social enterprises are based on a community need, a community that the owner knows well and is invested in emotionally.

When you take these two reasons into account, you start to understand why many social enterprise stay relatively small, manageable and to a certain degree — bootstrapped. You start to see why maybe social enterprises don’t think too much about an exit strategy, an IPO or a buy-out.

A history of social exits

That’s not to say it doesn’t happen, so here are two examples of well-known social enterprises being bought out.

Ben & Jerry’s was initially established to provide high quality products based on the superb source of milk it had. The key was making sure their community was fully motivated — the staff well looked after, the cows healthy and ‘happy’, and the farmers ensured this and were well compensated for their work.

Just over twenty years later, there product was so good that Unilever came in with an offer which was accepted. $326 million was paid[1], with employees protected and the social causes remaining at the forefront.

They are still a certified BCorp today, showing they do still hold that social enterprise status.

The Body Shop on the other hand, has been sold more than once. Originally set-up in the 70’s, its goal was to stop animal cruelty, source local products and use natural ingredients. Seeing the success, encouraged the owners to look at franchising, something some existing social enterprises do today.

The Body Shop then went public in the 80’s, was taken over by L’Oreal in the 2000s and just two years ago was sold on again by Natura. Interestingly, they only recently became a certified BCorp, as their commitment to social causes has fluctuated over the years.

Key takeaways

  1. We can have an exit plan as a social enterprise — but we have to offer something with a great brand and high quality.
  2. We have to be prepared to let go of whatever it was we set out to do, if we do want to exit. (But this is the same as any company!)
  3. There is a chance that after 10, 20 or 30 years, if the sale is done in the right way, that the social causes will remain intact and relevant.

If you’ve exited a social enterprise, we’d love to hear from you.

[1] https://www.nytimes.com/2000/04/13/business/ben-jerry-s-to-unilever-with-attitude.html

The least well-known yet most famous social enterprises

Hidden in plain sight

Photo by Kris Mikael Krister on Unsplash

Most of my presentations start off in the same way.

“Do you know what a social enterprise is?”

Normally the answer is either a ‘no’ or a ‘kinda’. However as soon as I mention a few companies as examples, most of the audience has a better idea, whilst others are in shock. They ask how it’s possible that they know of the company, and in some cases shop their regularly, but never knew they were a social enterprise.

The answer is simple. Social enterprise is such a new term that it’s easier to market the specific things you do, rather than using an umbrella term which should hit the nail on the head.

Patagonia

A certified B-Corp which just gets better and better each year in terms of their social and environmental impact, this global brand sells high quality outdoor clothing and gear.

In 8 years, their B Corp Impact score has increased from an inspiring 107.3 to a whopping 151.5. Considering most businesses score around 51 points, shows you how much they do.

They are on a constant adventure to stop the negative impact their business may have on the environment, analysing the way they design, manufacture and transport goods, improving and solving the problems they face.

None of this would have been possible, if it weren’t for the original founders of the clothing brand, along with partners from similar clothing lines. Mostly adrenalin junkies with a passion for nature, wildlife and conservation, their personal mission meant that the company has always lived and breathed its mission.

The Tompkins couple bought up land in the Patagonia region over the last 30 years to ensure it didn’t fall foul of private exploitation. Then recently their NGO donated 1 million acres of this land back to the government as national park land.

Ben & Jerry’s

Many people are surprised to hear that Ben & Jerry’s are a social enterprise, given that the company that actually owns them is the corporate beast Unilever.

However, when the Ben & Jerry’s story began, both Ben and Jerry created the company for financial, social and environmental purposes. They wanted the best conditions for their staff and only to have a relationship with farmers who raised and treated their dairy cows in a way that met their standards.

Ben & Jerry’s were bought out, chopped and changed for sure, however they exist as their own legal entity, and have always maintained their social mission to buy the best milk from the farmers that care. The proof is in the pudding — as they say — so check out their B Corp page where they scored 100 last time round.

HCT Group

One for our English readers more than anyone else, and even they might be a bit confused.

Surely you’ve heard of Transport for London (TfL), Metro in Leeds and MCT in Manchester?

HCT Group run a number of services up and down England, including bus services for these big players. Alongside this mainstream business, they run school buses, and transportation for people with special needs, be it physical or learning.

Being owned by a charity means that their profits are put back into even more community transportation projects, meaning the most isolated and most vulnerable can live independently.

Check out their routes here, who knows you may be using them already!


These are just a few examples of famous social enterprises who many people didn’t know the good they were doing. Within the sector, we often say at how bad we are at marketing ourselves. Therefore we’re always grateful when you, our customers, can share our cause and recommend us to those around you.

If you buy from a company that has a great social or environmental cause at its core, remember to tell everyone about them!

Applying the Theory of Change

Demonstrating your social enterprise’s worth

If you work for a non-profit, social enterprise or do anything that aims to have a positive social or environmental effect, then you might have thought about your theory of change.

Your theory of change should show how what you do, has an impact more far reaching than just on your customers and users. It should also show how you aim to create impact for longer than just the instance they buy your product or use your service.

It’s a strategic piece of work that can set down the foundations for your business, test your assumptions and ensure you have indicators to show the world how great you are. So let’s delve a little deeper into what’s involved.


When you started your organisation or project, you would have seen a problem you were hoping to solve. This provides your context that your theory of change relates to.

On top of this, you would have most likely stated your mission and vision. Ultimately the goals you, as an individual or group of individuals, are hoping to solve. Think of those goals again and translate them into something that we could think about measuring.

Goals / Context

For example, instead of an all reaching and broad‘Improve the lives of those affected by addiction’, we could look more specifically at ‘Decrease deaths linked to overdose’, ‘Improve the physical and psychological wellbeing of drug and alcohol users’ and ‘Improve the physical and psychological wellbeing of carers of drug and alcohol users’.

theory of change assumptions context inputs outputs outcomes context

Now we know where we’re heading, we can start looking at what we’re doing by jotting down what we activities we carry out to reach our goals. These are known as our inputs.

Inputs

In this example they could be things such as ‘Provide education about drug and alcohol at schools’, ‘run weekly meetings for addicts’ or ‘provide volunteer or job opportunities at the social enterprise.

theory of change assumptions context inputs outputs outcomes context

These inputs lead directly to an output, and they will sound very similar.

Outputs

For each educational course in a school, 30 students will receive 4 hours of information about drugs and alcohol.

For every weekly meeting, 15 individuals with an addiction will attend.

Of the volunteer/job opportunities, 3 individuals will take up this offer.

theory of change assumptions context inputs outputs outcomes context

So far, so good?

In fact many grants or contracts these days will only ask you to report this back to them with similar information, however they have become very output driven, without really thinking about the short, medium or long term impact of what they are funding. We know that it’s not just numbers that matter, but also what you’re offering and the quality of the service or product.

This is why we now think about the outcomes, some of which are easy to measure and some of which are challenging to. Furthermore, at this stage we need to think short, medium and long term in relation to what you’re doing. If you run a business, perhaps your long term could be from 10 years to a whole generation. If, on the other hand, you’re just looking at a year long pilot, then your long term could be between 3 and 5 years.

I’ll leave that up to you, and for now I’m going to focus on the outcomes for those taking up our volunteer/job opportunities, since this could be more relevant to those reading.

Outcomes

Short term — better and more structured routine, less likely to commit minor offences, unlikely to drink/use during the working day
Medium term — improved social skills, improved self-confidence, work ready, open to coming off unemployment benefits, new and better friendships outside of old ‘circles’
Long term — employed elsewhere, stronger personal relationships outside of old circle, no offending, not drinking/using or in control of drug/alcohol use

theory of change assumptions context inputs outputs outcomes context

You can now see that we have completed the bulk of our theory of change. We have looked at what we are going to do, how we are going to do it, and the effect over time we hope it to have on its users. One thing still remains, and that is our assumptions.

In everything we do, we assume that people will react a certain way, we predict that doing x will lead to y, and that we will achieve our goals. In both the business world and social sector, this doesn’t always happen, which is why we need to analyse our assumptions to make sure we don’t trip up.

We can look at our assumptions between each stage, and when we ask ourselves these questions, we can then strengthen what we are offering.

Have you ever heard of the NGO that gave out laptops to a village in Sub Sahara Africa, only to later find they were being used as paperweights? They’d made a lot of wrong assumptions — that the locals needed laptops, knew how to use them and had the power to run them, and ultimately didn’t reach their goal. Let’s not make the same mistake!

Assumptions

Inputs to Outputs

  • Users want to volunteer/work
  • Users want that sort of volunteer role/job position
  • Users will turn up as agreed to volunteer/work

Outputs to Outcomes

  • Users at a stage in recovery where reduction of using is possible
  • Users stick to the schedule given
  • Users will be physically/psychologically able to volunteer/work full time

Outcomes to Goal

  • Job secured leads to improve physical and psychological wellbeing
  • Job secured doesn’t lead to a return to old habits
theory of change assumptions context inputs outputs outcomes context

In this example, I have limited the assumptions for each stage, however it is important to list as many as possible and answer them prior to starting your project or organisation. The ones that are easier to answer can be removed when you feel you have adequately answered or countered it.

Putting together your theory of change should always be done with a wide range of stakeholders, to help combat these assumptions and really define what will work.

When I was part of setting up the social enterprise we used service user involvement to define how it would work that would make it more attractive to potential volunteers and employees. We involved them in the visual identity, branding, product list, product selection, setting of hours, role allocation and so much more.

They felt ownership from the beginning, which ensured many of our assumptions were solved. We offered flexible shifts, a relaxed work ethic, smart uniforms, suitable perks and everyone was trained to be a barista. They grew with confidence, made new friends, solved old problems and broke their own prejudices as well as fought stigma against addiction.

One only lasted a few months, he shared his views that it wasn’t right for him, not hands on enough and he didn’t want to be in that location. Others moved on to other jobs, and one or two still work their part time today.

The theory of change helped us take an idea, and turn it into reality to meet our goals. It’s not a complex thing to do, it doesn’t take weeks to do, and will really help you connect to your cause.

Give it a go and feel free to share what you’ve done or let us know if you’d like some help putting it together – michael@ensoco.co.uk

Originally posted at https://medium.com/@michaelfreersplit/applying-the-theory-of-change-e1f0f570ec12

What is corporate social responsibility?

At the same time as the social enterprise sector has risen, so has corporate social responsibility. Some people see the value in it, and recognise the great work being done, whilst others say it’s a token effort by companies trying to appear to be more socially or environmentally aware.

While this argument continues, there are various ways for companies to improve their social responsibility. So what about your organisation? Here we list a few examples of how organisations can start and continue to be socially responsible.

Donations + Sponsorship

Probably the most common way that organisations support their community, you may see company names appear at locally organised events such as fairs or fetes. Some NGOs also have regular corporate donors.

Implementing inclusive and equal HR practise

What’s the difference between your lowest paid and highest paid? How diverse is your company? Is there a gender pay gap? Different countries are tackling these in different ways by regulating companies, but certain companies are already publicly reporting on these areas.

Corporate Volunteering

Aside from money, hands and knowledge are also needed by the local community and NGOs, which is why some companies provide a match service. They may encourage employees to volunteer regularly, say once a month, whilst being pay, some also match any donations their volunteers raise, and finally other companies offer pro bono services which NGOs sometimes can’t find the funds for.

Certification

A few organisations go the whole hog and work to become social enterprises by following standards, such as BLab or Wirkt. Whilst others still need to meet their shareholders needs first and instead get certain international standards like SA8000 or ISO14001 to show they are acting in a socially or environmentally responsible way.

These are just a few examples of what organisations include in their corporate social responsibility strategy to work towards more socially and environmentally sustainable organisations. If you’re interested in finding out other ways, get in touch!