Much is written about social entrepreneurship. While lots of great information is available, there are also many myths about being a social entrepreneur.
In 2008, we started our own social enterprise, UBELONG. We were two college friends in a basement studio in Washington, D.C. We had little money and no rich uncles -- but we had a dream. It's been the ride of a lifetime. Ups and downs, twists and turns. Little has been as expected and nothing has been free. But there's nothing else we'd rather be doing.
We enjoy exchanging views with other social entrepreneurs -- the kind of straight talk you have when you're not selling your work, but, rather, searching for common ground. So here are five no-nonsense ideas we often discuss with our peers. Let's keep the conversation going.
- Don't apologize for overhead
When it comes to social companies, many condemn overhead; that is, spending on items not directly generating a financial or social impact. Items like advertising, management and office rent. The web is awash with pie charts breaking down the spending of social companies and heralding those with minimal overhead as more "efficient." We believe this is ridiculous.
Like every item on an income statement, overhead must be controlled. For social enterprises, every dollar of overhead must lead to both economic and social returns. But in and of itself, overhead is good -- even for social companies. Overhead attracts talent and drives investment. It allows companies to build networks and tell their stories to the world. Overhead is to a company what water is to a plant -- you have to apply it carefully but, without it, you cannot grow.
- Make a friend or two
Hollywood myths aside, entrepreneurship can be very lonely -- and even more so for social entrepreneurs. There aren't many of us social entrepreneurs. We often fall between the nonprofit and for-profit worlds. Few investors understand social entrepreneurs and even fewer give us money.
We have to get out of our bubbles. We must find peers and build networks. Ideas happen in the world over coffee, in the moment, when people are talking. And execution happens when systems are flawless, which is what networks provide -- the opportunity to put the right resources in place while keeping us working on our companies instead of in our companies.
For UBELONG, being part of the cutting-edge Points of Light Civic Accelerator has gotten us into the world. Backed by heavyweights such as the PwC Charitable Foundation, Inc. and Starbucks Foundation, and in partnership with Village Capital, the program has given us access to an unparalleled network of entrepreneurs, companies, mentors and investors on the forefront of social entrepreneurship. Connecting with other entrepreneurs has given us a valuable support system. The companies above have given us access to networks we could only have dreamed about before, and the program mentors and investors have been instrumental to our success.
- LLC or 501(c)(3)? It matters
Different legal structures fit different missions and models. Unless philanthropy is how you plan to fund your venture, we believe incorporating as an LLC allows you to deliver more social impact than incorporating as a 501(c)(3). We recently talked with an executive at one of Silicon Valley's leading venture capital firms. He was surprised that UBELONG, an LLC, offered international volunteering opportunities at a fraction of the cost of our 501(c)(3) competitors.
As we explained, our not being a 501(c)(3) has allowed us to introduce an international volunteering model that has disrupted the economics of our field. A 501(c)(3) is built around a board of directors, which consists of 15 or so individuals coming together, at most, once a month. Nonetheless, these small groups of busy professionals are still charged with the enormous responsibility of ensuring that their respective nonprofits are following their missions.
In contrast, LLCs have a far more reliable backstop -- the market. The hundreds or thousands of clients who buy from a company every year are much better positioned to measure a company's value than a small group of directors with little money personally invested. In the case of social companies, clients demand the opportunity to make a difference. If a company succeeds, and in the process upholds its social mission, it will grow. If not, the company will quickly realize it must either adjust to better fulfill its mission or exit the market.
- Who am I?
Successful social enterprises have a social mission that is financially sustainable. They tackle a social problem with a business model that works. You cannot achieve your social goals if your company is not making money. Maintaining a balance between your dual bottom lines, social and financial, however, is not easy. It takes leadership and vision. As a social entrepreneur you will fall short of cash many times, particularly at the beginning. But your social mission accepts no compromises. You cannot afford to sacrifice the ideals that got you started. In fact, loyalty to your social mission is the only way to get your business to work.
- Realizing what's important
Some clichés are true. Social entrepreneurs tend to be unreasonable people. They go to places other people don't dare go. Some people say this is crazy. It probably is, but there is no heroism here -- social entrepreneurs are passionate enough to make the leap and give their idea a try. That's all.
Being a social entrepreneur can be such a demanding effort that you may forget what's really important. You need to remember your best customers are the people who love you, your family and friends. They are the ones who got you started, believe in you and support you. They are the ones who really matter. Without them, no dream is worth the effort.
Don't forget about yourself either. Go to the gym, buy health insurance and try to get enough sleep. In other words -- while you're lucky to be doing what you love, learn to balance your life. Your company depends on it.