What social entrepreneurs need to do to grow their businesses
From low-cost systems that provide clean water to affordable education for students from poor families, social entrepreneurs around the world have come up with plenty of innovative solutions to the problems they are trying to solve.
Idea good, execution better
Yet, many fail to understand the importance of execution in realising these ideas, said Janine Tan, Chief Executive Officer at SolveEducation!, a company which is using technology to deliver education to those who do not have access to it.
For instance, as SolveEducation! serves a low-income demographic, many of its target users do not have access to the Internet and are likely to be using low-end devices. As such, it had to take into account these issues when designing and executing its solution.
"The question was how do we create something that is lightweight and robust enough to support the devices that they have. Those were some of the real executional issues we faced as we engaged more users," she said during a panel session at the DBS Social Summit held on 24 October 2017.
She added: "Having ideas is one thing, but making sure we can execute is key."
Be honest with your data
Effectively using the data that a social enterprise gathers as it grows its business is one way to continually improve its offering. Entrepreneurs must use this data to identify ways of adding value to its offerings, advised Muhammad Alfatih Timur, the CEO of social impact crowdfunding platform Kitabisa.
"As digital startups, it’s easy to add more features to our products, but if it doesn’t move your numbers, then it really is a waste of time and effort. Also, if it doesn’t bring any value to the customer, it is not an innovation," he said.
"Therefore, being honest with your data is important to determine what is your innovation and what is clearly not."
Don't be afraid to pivot
Startups must be prepared to change tack as the conditions around them shift if they are to thrive. However, many are reluctant to do so as they fear that investors will not put their money in a business that has pivoted.
However, this is one of the biggest myths about attracting investment, revealed Neil D’Souza, the CEO of Zaya Learning Labs, which has been using technology to provide 50,000 students across the globe with access to education.
"Most startups pivot their idea along their journey and investors like that you are honest and tell them when you fail. This helps make good use of money, next time," he said.
To pivot successfully, however, organisations must have an efficient decision-making process, said Prof. Dr. Ir. Kuntoro Mangkusubroto, the founder of the School of Business and Management of the Bandung Institute of Technology.
In particular, it is the time needed to incorporate feedback and the speed of making decisions that matters most. "If a small organisation needs two days to process feedback and decide, then it is an organisation of the past. The future entrepreneurs in this room cannot wait because their idea is based on a problem that will happen two seconds from now," he said.
Become attractive to investors
Social startups seeking to take their companies to the next level must also work to make their business "investment-worthy". To do this, entrepreneurs must first be able to define their social business model. While this sounds simple on paper, many are hard pressed to do just that, said Mark Cheng, Managing Director of Ashoka, a global organisation that identifies and invests in social entrepreneurs.
"Firstly, to raise investments, you must be able to tell the social investor who your customer is and how your business model works. For many social entrepreneurs this is the first big challenge. It is very likely that you are working for the beneficiaries and moving towards positively impacting them but realise that they are simply unable to pay," he said.
He noted that social businesses need to know where the money comes from to be able to repay investors. As such, the first thing they need to address is how to create a business model that enables them to find paying customers.
Social businesses must also seek investors that can support their growth in ways other than funding. When you move to testing a product in the market, for instance, getting an investor who has done it themselves will be a big advantage, advised Mr D’Souza.
He said: "They would empathise and help you on the journey. Get an investor who can help you, advise you on operations. Money can run out but value should be created."
- Invest in the execution — Realise the importance of executing your ideas correctly.
- Find investors who can add value — Woo investors who bring more than money to the table.
- Pivot if you need to — Be prepared to change course if your initial business model isn't working.
- Analyse data to improve your product — Use data to add real value to your enterprise's offering.
Catch up on our first article in this series on how to establish and run a successful social enterprise.
This story was first published on DBS BusinessClass.