business research on social enterprises

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 a research paper which is to be written for a master’s degree doing a MBA for a business research unit. We took a qualitative approach. Below is the question;
Research question: Is financial management a critical success factor for Social Enterprises?
Hypothesis 1 – Social Enterprises that focus on the economic bottom line are more sustainable.
Hypothesis 2 – Social Enterprises adopting for-profit business management practices are more likely to realize and capitalize on market opportunities.
Hypothesis 3 – Social Enterprises prioritizing financial profitability can also remain committed to their social mission.
Step 1: Now we need to link the findings to the 6 surveys we obtained from different social enterprises and link the survey answers to our Hypothesis/research objective
Step 2: Possibly link the survey answers to the Hypothesis with literature to back up the survey answers under each Hypothesis and explain it.
Points to consider;
• Please include up to 10 references with at least 6-8 journal articles
• The word limit is 1000 words
• I’ve attached a document with the survey answers to the questions we asked the social enterprises
• When I am sent the assignment back, 1 document should be the research question, and if possible a zip file with the journal articles please used as we need to submit them too.
• Please if it can be sent within 3 days that would be great
Thank you

Tell me a bit about your background and what lead you to start this Social Enterprise?8 responses

Hosier Hoodies is the result of a passion for the local graffiti/street art scene and a genuine desire to have an impact on the issues faced by the homeless community.

I come from a background in arts management – running arts organisations and agencies in both the visual and performing arts. These organisations have always been based in the community, working with people from Indigenous, refugee or migrant backgrounds. Whilst I did not start The Social Studio, I believe it was started in order to support those from refugee and new migrant backgrounds by identifying, developing and showcasing the talents of young refugees and migrants.

Bessi Graham and Paul Steele founded The Difference Incubator. My role (Megan) is the Two Feet Program lead. The founders background was in ethical investment. TDI began as a pilot under the Donkey Wheel House foundation. Enlightened investors found that their investment was going to the support of two opposing forces. Investing in a cause but then realising that the elements that potential allowed the product to be realised were not holding to the same ethical values i.e ethical items that were not manufactured in completely ethical environments. Tasked with the role of building SE’s sustainability and consistency of impact… Streat was the first org TDI worked with the promary goal to develop them into an investible entity.

I (Dan smith) am almost 24 and finishing up a law degree… has previously started other businesses. Kinfolk & YGAP inspired an SE and crepe making was a previous skill he had. This was the perfect time to trial and did so, in August 2015 Crepes For Change launched after 8 months of setting up van and raising money. Coffee Cart launched 1 year later and is now a full-time instalment at RMIT – this is to provived training and provide employment for those in the homeless community Home1coffee shop is launching in October in Brunswick. CFC is primarily for generating profit. CFC is a Process SE: dichotomy of profit – employing disadvantaged youth. Both of these elements for CFC are important. Reinvested back in to social impact – we are a NFP and do not keep any profit at all: 100% goes to social impact… Launch housing. $60,000 in grants for Home 1 and then got businesses to give skills – this was the model used for scaling. Can’t sell a NFP, can sell

I was a lawyer working with women in Northeast India.

A passion for short film and its power to bring people together in dialogue

n/a Whilst I’m the State Manager for Vic, NSW & ACT – I didn’t start he social enterprise

How would you describe your Social Enterprise? What is your mandate, purpose or objective?8 responses

The objective of HH is to blend Melbourne’s art scene with the Steps Homelessness Outreach program and provide funding to specifically support longterm housing options for youth. It is born of the recognition that the homeless and street art community share the alleyways of Melbourne uniquely with the art recognised as one of Melbourne’s top tourism selling points and the growing issues of homeless creating an disproportionate and misguided response from local government and mainstream opinion.

The Social Studio is a not-for-profit social enterprise established in 2009. The Social Studio’s mission is to create pathways into long-term, rewarding education and employment for young people from refugee and migrant backgrounds. The Social Studio uses the vehicles of a fashion and hospitality business — including a clothing label, retail shop, digital printing studio, manufacturing business and a café/catering business — as a hook to engage young people from refugee and migrant backgrounds in education and employment pathways. We provide those from a refugee or migrant background with the opportunity to acquire skills and qualifications through industry-based training in fashion: a Certificate III in Clothing Production and a Certificate IV in Textile Design and Production through RMIT University. The Social Studio also provides pre-accredited training in hospitality and industry work experience in retail, fashion, manufacturing and hospitality.

Legally a NFP (board & members – no gift recipient status/ restriction on types of funding received). TDI is an SE but not abiding by some strict definitions. TDI exists to help steer people in making an impact and being investible. This could be to make money or just surplus so that Gov grants are not needed or minimised. To help them be in control of their destiny. Big to small minded business spectrum so TDI are not limited to who they work with. The objectives are carried out throughTraining and Consultation.

CFC objective is to eliminate youth homelessness/ change a hundred lives by 2017: Diversify impact… Launch housing, training and employ people in a cycle of homelessness. Speaking events, Northern Territory SE flew 11 from there to help them develop their SE: 8 times national average of the homelessness of the rest of the country in the NT. of the 11, 2 were indigenous young people. YGAP partnership allowed for this to become a reality.

Ethical fashion brand supporting women affected by conflict, displacement or other insecurity.

To help teachers lead discussions that change lives, using the power of short film

The Soft Landing social enterprise recycles mattresses creating jobs for people experiencing barriers to employment.

How would you describe the structure of your Social Enterprise? How many employees/locations are involved in your venture?8 responses

HH is made up of a Founder and works collaboratively with Concern Australia and local artists. The store is online and this is currently the only source for purchases as not holding stock allows to keep costs at a minimum.

We are a not-for-profit social enterprise with a balance of self-generated revenue and external funding. We are one entity with multiple businesses, or ‘business areas’, that operate from the one location. We currently employ 11 people.

10 employees at any 1 time… Brisbane, Sydney & Melbourne is where the Business Model and Two Feet Incubator programs are run. Working in the Pacific to grow opportunities there and broaden their impact through International Development of SE’s. Apply the Business Model Canvass in various ways across these platforms.

Different teams for the 3 SE…CFC has about 30 volunteers. 1 executive team that run all three. Portfolio’s include Media&Marketing, Sponsorship&Grants and Impact. People&Culture: interviewing currently for the third portfolio. Structure will change over the next year… General Manager will run it and Dan will focus more on the Entrepreneurship and Home1.

Partnership of 3 core members in Australia and the US partnering with grassroots organisations in India and Myanmar – women led co-ops supporting small scale producer groups.

Small, volunteer board of 4. Employees: 1.5FTE

We have six sites in NSW (Bellambi, Newcastle, Smithfield), ACT, VIC (Tottenham) and WA (Wangara). We have approximately 87 staff.

What is the scope of this Social Enterprise, about how many people do you impact and how?8 responses

Our metrics are based on the amount of apparel items sold. Concern Australia then allocate the proceeds to young people who are presented with long term housing options and the costs can include anything from one weeks rent to the cost of a removal truck.

Since 2009, we have engaged over 580 people and currently support between 80-100 people per year. Our impact is diverse – there are those who undertake our formal RMIT-certified courses, those who undertake work experience, those who undertake our pre-accredited training and then those who are directly employed at the organisation either on an ongoing basis or through discrete projects. We transition approximately 60% of our participants to employment or further education.

Impact is on organisations and TDI can’t attribute their impact as TDI’s own impact. Across a 12 month period TDI usually works with about 60 SE’s at different levels/depths. – Look for gaps – Help SE’s understand their intent and develop a model that will support the impact desired. These are at the core the scope of our work.

Trying to nail how to measure impact data and what constitutes impact… what levels of impact are significant. From getting someone of the streets to inspiring someone. Wouldn’t make sense to boil it down to a single number. Raise funds to get 10 people out of homelessness, employed 3 people but this will increase rapidly with the RMIT stationed coffee cart. Home1 as an ambitious goal is to have 50 people come through and go on to meaningful employment. Increase revenue to increase support of housing people… behind on the 100 by 2017 by about a year. However, believe this could become a couple of hundred if the business keeps growing.

Approx 40 women producers are impacted through our placing regular orders.

18,000 students around Aust & OS

We target people who identify as aboriginal, have a disability, have been through the criminal justice system .and/or and long term unemployed. As at end 16/17 17% of our staff identified as aboriginal, 10% have a disability and 60% experienced long term unemployment. Our goal is to improve the economic stability of our staff and equip them with the skills to find meaningful employment with mainstream employers.

Are you a private company, incorporated association, company limited by guarantee or co-operative?8 responses

Undecided

Incorporated association

TDI is a company limited by guarantee.

All of the above can be NFP… Currently registered as an Incorporated Association because they do no operate outside of Victoria. Income tax exemption (30%) and DGR status which CFC does not have as it is a difficult status to attain though in the next year they would like to get this sorted. CFC would fit the criteria for DGR status .

Partnership.

Company Limited by Guarantee

We are a registered charity, a public benevolent institution.

Are there any regulatory or oversight bodies that you need to report to?8 responses

Not currently, however this could change dependent on the business model and the legal entity chosen.

As we are not-for-profit we report to the ACNC. We also report to Consumer Affairs Victoria, as we are an incorporated association.

ACNC, TDI Board

Consumer Affairs Victoria – submit a yearly statement and also to ASIC

ATO

ACNC (formerly ASIC, now administered by ACNC)

No

How does that impact your operation, e.g. do you need the cooperation of your stakeholders in order to effectively make decisions?8 responses

We rely entirely on collaboration in order to have fresh designs and with Steps in order to support an already dedicated and well established program that has a history of front line impact.

We have a Board of Directors. They delegate most matters to the CEO, but they do need to be engaged to effectively make decisions at a high level.

Reporting, board retreats, ACNC: financials and reports. Listening to the market and customers – the needs of intermediate support. The Customer is the beneficiary and so understanding their needs and the things such as cost structure is extremely important.

Not at all… unless revenue is over certain thresh hold then you have to have an audit.

No, partnerships are very flexible. It impacts our fundraising more than our operations.

Negligible

n/a

What were the different types of business models you considered while conceptualising your Social Enterprise?8 responses

NA

Unsure

TDI was mandated with supporting businesses to be sustainable. So with this in mind it was important that TDI presented with a sustainable model of it’s own and from the beginning it was consultation and training based on our expertise.

Could not say that they knew when they started – Steven G consulted around how the 50/50% split allowed for scalability. With the model it would take them to scale and it is a slower scaling process as opposed to an online business that might take on a million orders at once. Practically I see SE as the future and they will alleviate the model of guilt often employed by NFP’s and that in itself is unethical. NFP’s are also unstable and a risky approach… SE is leveraging the market for good and not just directors pockets. Consumers are becoming more socially aware and this is changing the economy and potentially become the most appropriate business model.

NGO, LLP

Many, but revenue was always planned to come from schools

This was done well before my time with Soft Landing

What made you decide on the business model you landed on?8 responses

Still seeking to understand the best model.

Unsure

The business model was agreed on in terms of fast becoming sustainable by the founder. It was important that this existed from the beginning as the basis of the business is to guide SE’s through clearly articulating their own model for operation.

It was never about money or a career move. The opportunity to apply my Crepe skills and skills as an entrepreneur in recruiting the finances needed to have a social impact. Selling good crepes was not a difficult model for me.

Most flexibility + least paper work

Most logical/profitable at launch (in 2012), but needed constant revisiting

This was done well before my time with Soft Landing

Has the business model adapted over time? How?8 responses

It will definitely adapt as we look at applying graphic design as well as artists that are not from the street art scene, but represent Melbourne’s creative spirit non the less.

The Social Studio grew organically, starting with just a training model and then branching in to selling the product coming out of the (fashion) training. This then led to the establishment of related businesses to feed the fashion label – i.e. a textile printing business, a retail shop, a clothing manufacturing business. A year after operation, a decision was also made to branch in to hospitality as a way of supporting the employment pathways of young refugees and migrants – at the time, this was quite an innovative idea that not many others were doing so it made good sense to pursue.

Started out focused on SE and entrepreneurs primed for growth. This has shifted to partnering with companies such as NAB to help them invest in to the sector. International development also forces change as the model has to adapt to context and culture.

It has adapted by scaling it to meet different needs. From meeting the need to be sustainable and releasing surplus to homeless housing options, to then providing training and work for those who are in a cycle of homelessness. CFC has adapted in order to address the multifaceted needs faced by the homeless community.

Yes, we wanted to be a platform to facilitate purchases directly from our artisans rather than being a parent brand in charge of quality control and distribution.

Started with school-only packages (price $450-$1600), ended up with individual-teacher-packages ($29.95)

We have recently partnered with a for-profit mattress recycler in Melbourne and Sydney.

Are there any new innovations or new methodologies you’ve come across that have improved or changed your Social Enterprise? What are these? What were the changes?8 responses

Increasing our artist base and considering other items that would compliment interior decorations etc to broaden our customer base and allow them to bring Melbourne’s iconic culture into their own home.

After 8 years of operation, we are currently taking the time to look at other methodologies to fine tune our social enterprise. This will be specifically looking at financial sustainability and social impact.

Methodologies – Gender lens, Enterprise facilitation (Ernesto Serolli), Organisational culture and structure TEAL (Fredrick Laloux). Sit within the space of innovation, partner w/ SE’s to innovate and TDI see’s this as facilitating the mindset for innovation to take place. As the majority are small SE’s they need innovation – test models ect.

From a business point of view: Zero for the payroll, Deputy App for rostering, Square for processing payments and tracking sales, times of sales and favourite products. And other technologies like these that enhance the work flow.

DFAT’s Business Partnerships Platform was a new approach – recognising that social enterprise has an important role to play in international development.

Phew, where do i start?! Constant change. Ed-tech changes by the month. Started well but clearly we needed to invest more in tech / take advantage better (/faster) of new services available. YouTube was always a competitor, but overwhelmed our ability to entice new customers & turn a profit.

We started and are running a voluntary mattress recycling product stewardship scheme.

What is your main source of funding?8 responses

Funding is secured through the sale of HH apparrel

We have a balance between self-generated revenue (40-50%) and external funding (50-60%).

Revenue generated through consultation and program fee’s. Small portion is through the subsidised components from partners and the occasional grant.

CFC is the main source of funding. Grants and Crowdfunding: the second was easier due to the momentum of the growth/ popularity contest & favourability with the community. Evidence of success and growth as opposed to the two previous crowd funding exercises which were isolated from each other, has really benefitted the scaling opportunity of Home 1.

Sales, crowdfunding, loans (in that order)

Now? We folded in 2016. It was 100% self-funded from subscription sales; start-up money received was $175k (of which $35k was a loan with 2yr ‘interest-free-holiday at start)

Fees for taking mattresses

What proportion of funding generated from the Social Enterprises goes into the social cause and what proportion is used for overheads?8 responses

$20 from each hoodie sold goes to Steps and $10 goes to the artist. With each hoodie priced at $96 the rest goes to the cost of production, shipping and running the website.

The Social Impact is within their business – blended value model. Surplus is turned over back in to the company and the majority costs are staffing. The impact is evidenced by the outcomes experienced by the SE’s partnered with.

You should reverse the question: 100% of what is left over after overheads are covered is given to the social cause of homelessness. Judging the viability of the business… after all costs related to business are accrued CFC profitability is around 50% (My research of profitability in the food industry is usually 5%). CFC is completely self-funded.

About 50/50

PLAN was to distribute 50% of profits with filmmakers once we broke-even profitable. We never reached that point. The social cause was social cohesion, intercultural understanding, as well as promotion of films such that filmmakers could make better content. So in effect the ‘social cause’ was diffused in several directions.

Overheads are about 25% all profits are reinvested into the business

What limitations are you experiencing as a Social Enterprise as opposed to a For-Profit? If any?8 responses

Ensuring that our pricing structure allows for HH to scale. At the moment there is no margin to do this. The lack of excess funds is stalling tools required for marketing and the possible need to print of stock for events where customers would like to walk away with the product and are more likely to purchase on impulse and not visit the site when they get home ect.

The only limitations are financial because we put people before profits, not the other way around.

Social sector type setting results in expectations that consultation should be done for free. It is believed that the example that needs to be set is recognising the value add that paying for TDI services provides. People are lacking in awareness around blended models and broader consensus sees any SE as needing to just give away services for free. Running a business and having an impact is extremely difficult – running a business has all its own challenges and then trying to see bigger returns than just profit adds layers of complexity.

Operate as both ethical and financial business – people are not aware of how it works especially in terms of profit and there needs to be a legal definition for SE’s. You are either an NFP or a business. Currently some work is going in to this as a definition is needed to justify SE’s as the legitimate.

We are for profit. That being said, we can’t attract traditional investors, and will need to impact investment system in Australia to mature quite a bit before it will be useful to us.

ha! Ongoing sustainability 🙂

I don’t feel we are constrained by being a social enterprise

Some research highlights the hybridity of a Social Enterprise in that the goal is for the venture itself to create enough profit to sustain itself and the cause as well as, in some instances to expand whether financially or in scope. Have you found operating with these two objectives, the financial and the social good presents any tensions? If yes, how so?8 responses

We are definitely in need of focusing on the financial bottom line. As artists and the business being born from a passion around social issues and the marginalised youth of Melbourne. The business aspect often comes second and this has resulted in stagnation since launching in September 2016.

Yes there is a lot of tension between the social impact and the financial. Because we work with people from refugee and new migrant backgrounds around employment, we do a lot of direct employment. This creates challenges to our financial bottom line, but we must balance our social impact. Ensuring that the organisation continues to be financially viable whilst continuing with our social impact is challenging and definitely creates tension.

Rather than conflict, it creates a tension. If the intent/purpose/impact is clear then this should help you hold the tension with any financial opportunities that present. If the impact is sidelined for a great revenue opportunity then it is likely it could get lost. However, in TDI experience the focus has been on the impact and this usually results in a failed attempt financially and the impact never being realised.

This depends on if you are primarily a NFP or a business… it was never an option not to be financially sustainable for CFC, unlike Streat who got a lot of funding to get of the ground.

Yes. We are ineligible for charity funding whilst simultaneously unattractive to traditional investors. There isn’t anything very robust that currently fills this gap in Australia.

As hinted at above, that WOULD have become more of a tension after break-even, but we never reached it… so my answer is no actually, as we experienced it!

No tensions, we are committed to a financially viable business model and would not pursue the mattress recycling venture if it weren’t

What is more important in the operation of your Social Enterprise, financial management or the social good/service being provided?8 responses

Financial management and finalising the business model. As the passion is innate to those running HH, it is important that we keep at the front, those aspects that are not our strengths and also inspire people to join the movement that would have capacity to fill those gaps.

Both – if you do not have good financial management, then this will always impact the ability to deliver social impact effectively.

Both are equally important. Either one might take the lead at different times – clear ethics around these are extremely helpful. While TDI would love to make the programs cheaper… is it right to take a loss and what are the trade-offs, in order to seed those SE”s seeking to make an impact.

Both are essential and it is wrong to be financially negligible.

Without financial management we are unable to deliver our impact.

An unanswerable question. It’s like asking: which is more important a body’s head or heart? One cannot do without the other.

The social good is the most important, but we wouldn’t be able to achieve that without financial success.

What are the crucial roles/responsibilities of running a success Social Enterprise?8 responses

Inspirational leader who can collaborate and call people to give themselves to a movement that promises change. People who have technical skills and business knowledge and are not afraid to make tough calls that will keep sustainable practices and ethics on track.

Management (CEO and Board of Directors) – must be effective, appropriately skilled and be good at managing an organisation as well as people. Program Staff – must be good at engaging the community and delivering the social impact programs. Bookkeeper/Accountant – must be good at keeping up with the finances.

People who can hold on to the mission and intent, people who have business acumen – can read business financials and understand business. People who understand measurement and can measure the impact. Staying true to the impact while recognising the importance of HR, running functions. Leadership style is important – humility, authenticity as opposed to charismatic hype. People who can sell the dream… inspire and sell the impact.

Leadership that is completely sold out to the social change. All of the skill sets required in the profit sector. HR, Culture, Legal frameworks and Business Models all need to be done as well as the profit space in order for SE’s to become the norm in terms of models for profit and change in to the future.

Business Development, Fundraising, Communications, Financial Management, Monitoring and Evaluation, Sales Development

When you find out, let me know, haha!! On deeper reflection I think it’s finding that perfect tight-rope of act of balancing: (1) good advice from trusted industry domain heads with the boldness to make great instinctive decisions about things that have NOT BEEN DONE BEFORE (as any entrepreneur needs to do – for-profit or NFP), and (2) doing everything well — biz management, marketing & sales, finances, governance. It’s the toughest gig in town!

Commitment to the social improvement goal

Do you think there is enough information in the public domain to make people aware or to generate interest in social issues today?8 responses

Information that is correct, captures the entirety of the issues and is honest in its representation of those impacted by the issues or those making the decisions that will have create ramifications others have to live with.

Yes definitely – I do think though that people have information overload so ensuring that your organisation / issue stands out from the crowd is a challenge.

No, there is a lack of focus on issues that matter. There is a disproportionate focus on sexy issues. Often it is terrible situations that bring issues to light long after they have been existance and impacted communities negatively.

The information is primarily emotive and often lacks the true facts.

Yes, I think people are more interested than ever before in transparent supply chains and looking for alternatives that don’t damage human rights and the planet.

Yes, but as for anything, you need to know where to look to get the good stuff — and good PEOPLE can never replace GOOD DATA

I think people are overwhelmed with information

Why do you think your Social Enterprise has operated for so long when others have not?8 responses

We are brand new on the scene and if the model and financial decisions are not made intelligently and soon then HH could prove to be unsustainable.

People – our people are committed to making it work and committed to working with refugees and new migrants.

7 years life span to date… what is the need you are responding to? Is it a genuine need and does your product meet it? These are the questions we are constantly asking and adjusting to ensure we continue to track with our mission. We have leaders who are business people, understand how to have sustainable revenue streams. Go out and network, inspire and maintain business integrity at all levels.

We started out with sustainability as a necessary factor from the beginning. We have utilised the sustainable aspect to levereage the trust of the community and the evidence now available based on the Coffee Cart presents CFC as investible at a community level.

Have we? 3 years doesn’t feel very long, but I think the only way we have been able to last so long is through multiple crowdfunding rounds, with a strong social media presence and personal networks getting us through financially difficult times.

haha — it hasn’t!

We are financially viable

Is there more you wish your Social Enterprise could be doing? If so, what?8 responses

Engage in the cultural celebrations of Melbourne’s creative scene and keep the issue of homelessness at the fore front of peoples awareness. Provide avenues for the youth we are supporting to be part of the creative process and also intern to develop skill sets around business, networking and and a right of passage that allows their input to society to be tangible and valued.

I think we could be ‘digging deeper’ and ensuring our programs have a deep impact – the only way to do this is to ensure that our organisation is stable financially and administratively.

We are meeting the recognised need, but want to expand. Would like to work with SE’s that can’t afford the service TDI provide. Time that would allow for robust partnerships that increase value output. It often feels like the daily grind is working against our efforts to network. Continuing to build strong and healthy Org culture to hold team members for the long term – this is a current focus as there were a lack of structures as TDI morphed.

In 2 years we have accomplished a lot. CFC will take opportunities for growth when they arise. Home 1 is the current focus and changing the structure to an MD will allow me to look for areas of further and future growth.

Yes, a full time Fundraising Manager would make a world of difference.

Operating 😉 Hope that helped! Would be happy to share more of the original (and modified) biz model & the bigger story if it was of any help at any stage… or just catch up for a coffee. Lessons learned for me were huge, i only hope they can help others too.

Expanding into recycling other items, which we are in the process of exploring

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