31 Terms Every Social Entrepreneur Should Know - Part Two
Since we are surrounded by buzzwords and vague terminology, here is the second part of the 31 Terms Every Social Entrepreneur Should Know. These are generalisations, but they give you a guide to what you do/don’t know…
Strategy – Since you can’t be all things to all people, your strategy is the decisions about what you’re going to do, as well as what opportunities you’re going to ignore.
These are the trade-offs about how you’re going to start your enterprise, and how you plan to grow.
“Our strategy is just focus on online sales, then try to cross-sell a new range of products to our core audience. We don’t want a retail store.”
Mission – The reason why your enterprise exists.
The problem you’re looking to solve.
“Our mission is to help young women in Uganda get a university education”
Vision – A clear picture you can describe about a better future, which guides your decision making.
This is often a huge goal, but shouldn’t be completely impossible.
“Our vision is to see Melbourne become a plastic bag free city. Our mission is to make reusable bags desirable products”
Return on Investment (ROI) – The relative amount an investor gets back from an investment.Making $10,000 on a $70,000 investment is much more impressive than making $10,000 on a $500,000 investment.
Because it’s a much larger percentage of what the investor risked in the first place.
Comparing ROI can help make split decisions.
“If we spend the extra money on advertising, we get an expected ROI of 25%. Putting that money into property is safer but has an ROI of 9%”
Capital Raising – The amount of money your business needs right now.
It might be used to buy equipment (like Capital Items), or property, or to pay your staff as you grow.
An entrepreneur will go to investors and supporters to raise this money, to enable their business to go to the next level.
“We’re hoping to raise $300,000 so that we can triple the size of our business and set up shop interstate. Do you know any investors who might be interested?”
Prototype – An initial, rough version of your product/service that can be seen and/or touched, which you use to learn as much as you possibly can.
“We’ve built a prototype of our new water bottle, so that we can see how potential customers handle it and gauge their interest”
Pilot – The process of trialling your product/service rollout, as a way of testing for surprises or flaws.
“We are running a pilot version of the service in Adelaide, to iron out any kinks and see what people love/hate.”
Margin – The difference between how much you earned and how much you spent.
It’s good to know how much extra you earn from each additional product you sell.
Your margins keep you alive.
No margins, no social enterprise.
“We buy cans of Coca Cola for 55c each, then sell them for $1. That’s a really good margin!”
“Our margins are pretty low, so we’re relying on high volume sales in order for this to work”
Customer Journey – The process customers go through from having never heard of you, through to becoming a loyal customer.
How do customers come on board, and what makes them stick with you?
“Customers tend to spend 20 minutes in our showroom, then we give them a follow up call to ask for the sale. Those that buy tend to come back 6 months later to buy additional parts, or to shop for something similar”
Acquisition Strategy – Your plan for how you bring on more customers.
It doesn’t tend to magically happen on its own.
“Oh mate, we have the best customer acquisition plan: get promo girls to give out free samples at universities and bars, then customers will fall in love with our products. It can’t fail!”
Retention Strategy – Your plan for how you will keep your current customers.
This too doesn’t magically happen on its own.
“Our retention plan is to have coffee with each of our top 50 clients twice a year, to see how they’re doing and to explore new possibilities”
Organisational Health – The culture of your organisation, set by the founders.
This affects how people behave, how they speak to each other and what they expect from new team members.
This is often the difference between success and failure.
“We have a great culture, our staff and interns rave about us, which makes recruitment easier. Even our customers notice what a healthy, driven organisation we are”
Blended Value – A focus on both financial performance and social impact.
You can have both, if you specifically design for it.
“Our enterprise is structured so that the better our sales are, the more social good we’re able to do; it’s win-win!”
Surplus – The amount of money you have left over once you’ve paid all your bills.
This extra money gives you freedom to try new things, increase salaries, buy new machines or even put in the bank for a rainy day.
“Thanks to our strong margins and attentive customer service, we’re projecting a surplus of $61,000 this year.
At the next board meeting we get to have a lovely debate about what to do with it”
Profit – The same things as a surplus, but it’s allowed to be distributed to the owners/shareholders of a business.
“We’re projecting a profit of $61,000. Part of this will be given to our investors as a dividend, and part will go towards developing a new prototype of our ethical jewellery range"
For more on this topic, you might enjoy The Bluffer’s Guide To Social Enterprise