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0:00
[Music] I a particular pleasure in this because I don't remember quite many years ago but um we've had a business plan contest here for some time and about 12 years ago I guess it was we started a social Enterprise PL and you know over the years U we've really been able to launch in Social Enterprises that have made a huge difference in the world they continue to operate they've made a difference so when I look out at all at you I wonder which one of you will be
0:58
doing the same thing if I come back here in 10 or 15 years I'm still doing the same so let me jump off in terms of um writing a business plan and what it what it really uh is about you know entrepreneurship with you speak here at the business school in a for-profit sense it was very important to us uh that it not be considered a trait or characteristic and other words sometimes you hear people say I'm a born entrepreneur but if you're a born entrepreneur no one would pay us to to
1:30
come to the business schol right so we had to develop uh a process for learning about entrepreneurship and a definition so our definition is the pursuit of opportunity regardless of the resources you currently control when you think of a social Enterprise it's a similar kind of situation you don't have resources on your console you want to start something but more attend to the social Enterprise is it has to be pattern breaking so to be an entrepreneur in the field of social
2:06
entrepreneurship you don't want to be just thinking about incremental how do I make this process a little better but it's what do I think about to actually create a new pattern in the area that I'm addressing here are the elements of the business now they didn't just come out of the air this is a uh product of many years of observing uh what makes with strong plan uh what judges are going to be looking for now judges in a business plan context are often people who are
2:42
funding social Enterprise whether they're for-profit or nonprofit or a government function it doesn't matter that the uh composition of the plans are uh the same and we we uh you may wait each elements differently as you develop your own plan but uh you got to make a pretty good Cas to eliminate any of these components because we are pretty committed to thinking that they are important the first and most important is the definition of your problem I can't tell you how many times we've seen
3:21
plans where the presenter will assume that the people listening to the plan understand the problem in the same way as the person who's actually the social entrepreneur send enough time being clear about what is the problem what's the scale what causes it why is it there often people want to jump right to the solution and give a very very fast description of what the problem is spend enough time and be specific be specific about what the problem is and why it
4:06
exists once you describe the problem and test it by the way when you do your business plan test it not among people who already understand what the problem is you know you all showed up maybe for the content but I understand that students always show up when there's a free meal so buy your friend Pizza invite them in and run by the presentation test it and see did you really understand the problem I'm trying the Sol you understand why it exists and then you move to the opportunity because
4:43
the flip side of every problem as you well know for every entrepreneur is the opportunity and that's what we're going to be focusing on how do I really create an opportunity here to create value first place to start any social Enterprise whether you're a for-profit or a nonprofi what's the missing social enterpris are about creating social values it may be that you want to create economic values but the way we describe a social Enterprise even if it's a PO profit is that its
5:20
core function is to create social time so it's not ancillary you know because you could make a case that everything you do I create a job that's a social value but the core function there is not social value creation so if you're in the social value prft in the social Enterprise prft you want to make sure that is the key reason your Enterprise exists so start off with your mission statements many of them are impossibly boring and long good mission statements
6:00
you know this is what we call the four end memorable manage manageable measurable and motivational just a couple of examples uh of of a good what we think are powerful mission statements I'm going to focus just on the last one which is to educate leaders to make a difference in the world anyone know uh whose mission statement that is sorry Arbor business school our Dean starts every one of our me or somewhere in the meeting we say most people know the mission of
6:37
this and most people know it because we do it's hard to measure but it's certainly we do try and measure it but it is motivational and it's quite memorable so I urge you to think about a mission statement that people can get their hands around rather rapidly once you have your mission statement you have articulated your problem you have articulated an you really want to discuss what is my theory how many people know what a theory of say is not too many so in a social
7:14
Enterprise your theory of change is if we do this then the result will be that now why do we care about that because because it's easy to do almost anything addressing a social problem based on the mission so one of our missions here uh one day all children in this country will have the opportunity to receive an excellent education how does that Define my activity the answer is such that allows me to do anything maybe a fine mission the purpose of a theory of change is to
8:05
force you to focus in on how we are going to achieve that mission in very specific terms one of the ways to think about that is looking at what we what we call the logic model which is kind of the input what kind of inputs do I need what kind of activity will we will we be doing what kind of output meaning how many people will we be uh affecting how many books will we be publishing uh how many people will visit our site that's the output but the really important component are
8:44
outcomes what difference are we going to make with the people who engage with our activities and then the impact we'll talk about that in a bit of time when you develop a theory of change you really want to have it based on Research if it all possible so it's very easy for you to come up with theory of how you're going to solve homelessness or how you're going to educate kids in India or whatever the social problem you're addressing is but what's the validity
9:21
behind why should I invest in what you want to do because you believe this is a good solution to the problem there's plenty of research out there I cannot tell you how many business plans are presented without valid indepth research as to why our theory of change will actually work an example of a theory of change everyone's heard just about I'm sure in this room of Peace for America uh here's their uh their basically a form of their statement but I wanted to just uh show you what their
10:01
theory of change is and I'm I am going to read this based on these beliefs so they gave the beliefs as to why they think this theory of change would work our theory of change is that if the brightest colge graduates agree to teach from high poverty schools for two years then the students they teach will receive a high quality education now and those who te will become lifelong Learners committed to social notice how specific their serious changes they didn't say we're going to
10:36
uh provide Universal education we're going to reduce the cost of Education we're going to create a pedagogy that will be effective they have a very specific approach to what they're going to be doing and that will help them focus focus is a critical in the nonprofit or social Enterprise sector as it is in a for-profit bu so once you've done that you really want to develop what's my business model how am I going to go about you know actually doing what I say I'm going to do and
11:19
strategy is your set of activities that you're actually going to put together in order to implement your the of TR if you look at this list probably the first three could be outweighed over the next three so who are your beneficiaries or your customers do you really know who they are do you really understand them why do you think they actually need your service and why do you think they'll actually pay for your service and go to the third one What specifically does your program look
12:00
like again by the time you present this by the time you do your business plan this is going to be really familiar you will have spent Untold hours developing it and you will be convinced that is very obvious as to what your business model is what your program looks like but I've seen presentations one Springs to mind about a future development project where they were actually going to develop elements of good teach and the presenter said to the judges we're going to create an
12:38
Institute to train and develop teachers the followup question we're all about what is an Institute what do you mean how often is it going to leave where is it going to be is it Place Bas is virtual and if so what is it going to look like so you really want to make sure that it's stand to test of people understanding and again you can easily test it with your peers with your friends with those who don't know your project people are C most thingss were capitalists they've
13:25
heard all the ideas you can imagine same with son it's not that they're skeptical it's that good ideas aren't worth that much what is worth something what's worth something is your ability to deliver now many of you because you haven't been out you know uh starting companies or starting nonprofits don't have a CFT record so that means the hurdle for you is actually even higher you have to be convincing that you are the right person to invest in most people who invest even in a
14:04
social Enterprise would rather invest in the top quality person and a mediocre idea than a really superb idea with Medi people so you've got to convince you got to be very convincing if you have what it Tak to deliver on the promises that he Mak by the way you don't have to know we in in all of these elements you don't have to be exhaustive otherwise this would be a 100 paid business we're not looking to that so when we say how might the team's composition change over time it's just
14:43
as important to acknowledge that it might have to change over time as opposed to saying we're going to replace Susan who's the CFO and Bob who's the marketing director as we get to X you don't need that level of specific what you do need is to recognize and acknowledge that things have to change as the organization grows and get sated what's the mechanism for evaluating the team what are you going to do if team members don't live up to your expectations how are you going to
15:17
deal with that that conversation shows awareness to people that are judging you without you're having to provide impossible and un
15:32
context is critical so what has been tried before you know uh people have come to my office time and again with the greatest idea and they tell me why it's the greatest idea except it's been tried before they didn't do the research do the sech what's worked why is yours different why it's it's not so different have others failed what's going to make your idea successful even though it's been tried before my sense is that most great ideas have been around not NE not necessarily with tech
16:29
ology but certainly in many of the social services so you know the fact that to me time the greatest job development program you want to be able to convince people why why is this different why is it better what is unique about my Approach and if it's tried before why did others fail that kind of knowledge is really an important component in building the kind of confidence that judges or whomever you are going to to invest want that power the scaling particularly if you're a
17:10
nons scaling in the social sector doesn't necessarily means growing your organization in fact the definition that we use for scaling is the measurable increase in Impact based on the spread of a practice program or Pro a measurable increase in Impact that doesn't mean that I'm going to build a large organization has anyone ever heard of alcoholic synonymous I hope you haven't but if you have anyone have any idea how large Alcoholic Anonymous is you don't but if you would site its
17:54
impact Mothers Against Drunk thriving relatively small organ they access other mechanisms for sailing impact whether it's public policy or whether it's partnership or whether it's uh actually embedding their programs in other organizations so when you think of St what people are interested in in Social Solutions is the size of the problem and the size of the impact so if you can't make a measurable difference in the impact people are probably going to be less interested in what you're
18:37
off and when you think about there you really want to embed it in your plan you may not have the answer as to what scale will look like but you want to have some ideas so we may be testing these two or three ways of increasing our impact and we'll modify them as we go along but you want to some idea so that people know they want boldness everyone wants boldness we want to solve social problem you don't want to just have the same social problem around 20 years from today and when you
19:14
think about it how many social problems have we really been able to scale and really made a difference not that many people are thinking differently now they have bold ideas against significant problem where you can make a significant difference you can measure at every stage of a social entprise you have to adjust your measurement for where you are so no one is set that a startup is going to have a randomized controlled test but they do expect you to have some
19:52
ideas or what are it three metrics I have to think about and it's easy to talk about inputs and activities and outputs but remember what we said what matters is impact an impact if you want to think about it as a definition is what difference does it make in terms of the social problem with the existence of my Enterprise not today of 10 years down the line 15 20 years down the line so you don't want to come forth with a whole FLW of indicators particularly when you're a young organization if you
20:36
want to have a few because without them without them you don't have a real mechanism for Learning and people want you to have adaptability based on your learning and the way you learn is by having hard metrics that you can measure yourself again improved based on the results you know every entrepreneur is a sar eyed Optimist I've never met an entrepreneur who's pesimistic everyone investing in entrepreneurs knows that having said that you got to be aware of the risk there's nothing wrong
21:18
with saying here's what we see as a risk here's the way we're thinking of aggressing this I wouldn't spend too much time on this because you don't want people to be frightened away from your idea but I spend enough time so that people really are aware that you are aware that you're not night that you know you're going to be needing significant barriers and make you have a sense as to how you're going to overcome these barriers you know at the business school
21:54
you wouldn't expect that we would have to spend time talking about the financial question but in reality I've seen more plans than I can tell you with really F Financial information now no one is going to believe your financial CL I will tell you that right now no ventor capitalist has ever seen a plan that actually is implemented one year later the way it's presented or two or three the further out to go the less credible you are so why do it it's the quality of your think it's the awareness
22:38
it's the capability that you demonstrate in terms of the logic of how this financial plan is going to unfold make sure you put in what is the cast flow going to look like uh people talk about financial plans and try to get some around it we're going to go out and we're going to pick some Venture capitalists and or if we're a nonprofit we're going to go to Foundation that's powerful right you could make it more powerful how do you do that well use a Conta go
23:15
visit with a couple of V CS say look I'm not asking you for money but what do you think of this idea or go visit some philanthropist and say look I need your help you know you could as younger people who have ideas to want to make a difference you can open doors take advantage of it what is the power of my thing I visited two foundations they're very interested they don't see the same kind of solution as opposed to we are going to visit foundations and raise money so get your argument in your
23:51
financial plan powerful as you can make it and if you've actually raiseed money I guess that's even better people are interested not just in the front end is this a sustainable Enterprise do you want to invest your money in an organization that you don't think is going to be around cly know think about yourself you know one of the great ways for you to think about your financial plan is imagine not that you're a seller but you're the buyer you're the investor and say to yourself in good
24:28
would I put my $100,000 into this Enterprise and if so what kind of guarantees do I need and one of the key guarantees that you want to the degree that they can be guaranteed is that this is sustainable and you better have a plan even if it's only a rough plan as to what's going to make it sustainable and it better go Way Beyond what we know it will or we hope it will but have some and by the way one of the things that you might want to embed in your plan which say here is you want to start
25:07
particularly in that scaling idea with developing poof PL so you're not going from zero to 100 miles an hour you know you're going from zero to 20 miles an hour and stay there for a little bit of time and then 40 and then 60 and then 80 so you want to learn along the way you want to prove along the way you want to adopt along the way we used to say I taught entrepreneurial management here at the business school and the line that we still use we started the course about 14
25:42
years ago half is p and I don't care if you're running a nonprofit or a for-profit and I don't care if you're selling automobiles or you're working on education you don't have ta you don't function as simple as that so when you're thinking about your tax projections make sure you're including them in there again Express awareness this is what a colleague of mine says is that the end objective for social Enterprise is best best economical solidarity today I don't know if you
26:20
like it but I like it there uh here are some upcoming events that we're going to um that will hopefully help you move along uh this journey and by the way is a fun Journey you know I mean writing a business plan is a is a lot of fun you'll learn more than you can imagine about yourself and about the Enterprise that you're trally establish it's a little less fun when you're try to implement uh but that's that's okay too you have to have the right disposition you have to know believe in your plan
27:00
but don't believe so much that you don't think it's going to have to be materially same as you move implementation regrettably I have to run but I have enough time to se one key question does anyone have a key PL your hand is up in the air but you're on the line I know but that's should be ke okay go
27:25
ahead yeah
27:46
yeah you know it's it's not the same for everyone and the reason is this is you know a lot so you can't get around the comman you really want to know that you don't need you know depending on your own project be honest with yourself you know I wouldn't spend four pages on the RIS you know but I would I would acknowledge it I wouldn't necessarily spend 10 pages on scalability but I'd spend a little bit more than I would on the RIS I really spend time on the social
28:18
problems why it's there What Makes You Different why you think your theory of Change is Going to Be powerful the impact that you're going to have on the vision that you're articulating you know investors whether they're even ones who are just in it for the money and that's not a social Enterprise They want to drin they want to buy a green that's what they're buying they want the net is Google is a for profit or they want the net for America if it's a non so green big make sure Cony that
28:59
dream with the kind of passing and and that's where I would spend a lot of my time making sure that they understand why this dream has the potential to change the world what is the impact if things go the way we believe they will go five 10 15 years now isn't that why you give away your money again put yourself in this and look at all those elements and as I said at the very beginning they're not going to have equal weight and part of the challenge for you depending on your problem and
29:34
depending on where you're addressing it is going to be how do you wait to in an impressive way and again test it you know you can ask people and say what a big hole here after you get it done what should I include that I have so my uh parting words are good luck thank you for doing this because this is the way to change the world you know and um you're all capable of doing it and I look forward to hearing and reading about your great success so thank you very much
30:10
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