Assess what your target customers actually want—that is the first step to developing a successful business plan.
By Sarah Hidey, Managing Associate, Social Enterprise & Business Planning at JVA Consulting; Speaker at the upcoming Social Enterprise Alliance Summit '14
As I walked through the bustle of the city-center market in Shillong, India, I felt like I was entering a world of unfettered free enterprise. Men, women and children competed for my attention, each one offering a product for sale: brightly colored saris, exotic-smelling spices, clothing, fresh fruit, handmade scarfs and much more.
Fresh out of graduate school with an MBA in hand, I moved to Northeast India in 2004—expecting to find people that “needed” me to help them overcome poverty through traditional “development” and charity.
Instead I found entrepreneurs. Everywhere.
I was ecstatic to witness how the power of business was being used to empower families and transform communities – something I hadn’t accounted for in school. At the end of the day, though, there was one thing that determined these entrepreneurs’ success or failure: customers.
Either they had them or they did not.
From Global to Local
Fast forward a decade to the other side of the globe and today I am the managing associate for social enterprise at JVA Consulting—a social change consulting firm that helps entrepreneurs and nonprofit leaders in Colorado and across the country develop social enterprises. Quickly realizing that many of our clients needed additional help launching their ventures – like organizational readiness assessment, help with business planning, review of current business model, mapping assets and resources, market research, etc. – in 2013 we began strategizing on how to meet this growing demand—a lot like the entrepreneurs I had witnessed in Shillong.
Many would say the first step to developing a successful new venture is to create a robust business plan. And then, after months (or sometimes years) of planning, implement the plan.
As we dove into what had worked in the for-profit startup world and considered what made our company (a for-profit social enterprise) a success, we realized our success was not due to an incredible “idea” or brilliant business plan. What made our enterprise successful was the same thing every successful entrepreneur in India, Africa and across the U.S. understands: You have to offer a product or service that people want or need.
A Lean Approach
Following Lean principles and drawing from the work of Steve Blank (The Startup Owner’s Manual) and Alex Osterwalder’s business model canvas, we developed the region’s first Social Enterprise Academy in 2013, a weeklong boot-camp training experience designed to help launch social enterprises.
A lot of our training derives from Steve Blank's work, which reminds many of us that before a startup business can create or execute a business plan, it must first figure out its core business model (i.e., target customers, unique value proposition, distribution channels, revenue streams, etc.), test these assumptions, pilot small projects and then adapt its business model after learning what its target customers actually want.
And this is exactly what we tell our 20+ participating social entrepreneurs each year:
Before you spend a year building your business plan and finalizing every minute detail of how you will roll out your social enterprise, find out WHO your customer is and WHAT your customer is willing to pay.
As social entrepreneurs this is especially hard.
Our ventures are often an extension of who we are. Our businesses are not just about making money, but also about changing lives.
The question we pose to our clients is: “At the end of the day, does your social mission matter more than quality to your customer? Is that THE reason they are going to buy your product or service?”
The answer is often no.
VSA/Access Gallery provides an excellent example of this conclusion. After fleshing out its business model at the Social Enterprise Academy, VSA launched Artworks Corporate Art Social Venture in February 2014—a venture that employs young adults with disabilities to create high quality, customized artwork for businesses.
With a 70 percent unemployment rate for adults with disabilities, VSA’s social venture meets an acute need. But, from the very beginning, VSA’s Executive Director Damon McLeese knew that this alone would not sell paintings. So, McLeese dug into what businesses wanted when purchasing art:
- High-quality art that looked professional
- Art that was customized for the client
- Art that reflects the company’s culture and values
- Art that is competitively priced
And VSA/Access Gallery built a business model that met these customer demands.
At the end of the day, however, whether launching a corporate art venture in Denver or a venture selling solar ovens in India, every entrepreneur has the exact same need: a business that not only meets a social or environmental need but also meets the needs of the customer. How do you find out what customers are able to pay for a solar-powered oven? Who would you talk with to find out if Denver companies need artwork?
Along with JVA Founder and President Janine Vanderburg, I will explore models and strategies to answer these questions at a special session on "Leaning the Sector: Fast Track Approaches for Business Planning and Growth,” at the upcoming Social Enterprise Alliance Summit. Join us!
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