4 reasons social enterprises struggle to generate the income they need
I was going to re-post a blog I did a while back called: 7 reasons why you’re not achieving your monthly income goal, but as I read through it, it inspired this blog idea.
Why do so many social enterprises struggle to generate the income they need?
It’s a question I’ve been answering ever since I started as a social entrepreneur back in 2013, and one of the main reasons why I set up my business Share Impact, to help social enterprises create sustainable trading incomes.
Why? Because I believe we have to change the way we do business, deliver “good” and consume and believe social entrepreneurship is a key way to creating wealth and prosperity in our communities, reducing damage to the environment and transforming the way we live so we live in a fairer more equitable society.
And so I keep coming back to this question - how do we create a thriving, sustainable social enterprise economy and support social entrepreneurs to build businesses that work?
It’s through the work I’ve done over the past 3 years with hundreds of social enterprises and for purpose businesses that I’ve learnt the most common challenges facing the sector and social enterprises in particular to generate the income they really need.
4 reasons why social enterprises struggle to generate the income they need…
They don’t have a business plan or income strategy
And not just this but so many social enterprises, small business owners and purpose driven businesses I’ve spoken to haven’t actually worked out how much they want and need to earn in their business to be profitable and sustainable.
If you don’t have an income goal based on real calculations you’re already setting yourself up for failure. Likewise if you don’t have a plan for how you’re going to generate the income you need then it’s going to be really difficult.
When I say business plan it doesn’t have to be a long tedious process or lengthy document, it can just be two pages simply outlining what you plan to do as a business - your vision, purpose, goals, what you’re planning to sell (or what you’re planning to do to generate an income), who you’re planning to sell to and how.
Even if you’re just starting and you want to apply for grant funding a business plan is helpful to demonstrate to funders how you plan to generate an income beyond the funding period (this always strengthens applications because most funders don’t want you to be dependent on them).
And I’d always encourage social enterprises to think about how they can generate a trading income alongside any grant funding they secure, so they get used to this approach from day one.
2. Their prices don’t reflect the true value of what their offering or selling
This is where I see many social enterprises getting unstuck.
No doubt because most social entrepreneurs come from a place of “giving” and wanting to make a positive impact in the world, they often focus on the difference they’re making and don’t explore the unique value they could bring to customers or clients through their products or services.
Your price should reflect the value you provide, the cost of creating or providing your product/service and the profit you need to make to stay afloat (and expand).
We live in a world where many prices don’t reflect the true value or indeed cost of creating and distributing most of the products we buy. This in turn has contributed to many of the social and environmental challenges we as social entrepreneurs are trying to tackle. You only need to think of a simple cotton t-shirt or bar of chocolate to know that the predominant business model globally has got it wrong.
This is exactly what we’re trying to rectify right?
So it’s okay to have a higher price point. It’s ok for the price to reflect your true value and cover costs and generate a profit.
In case you need it I’m giving you permission to increase your prices.
(If this is what you’re struggling with, join my free mini-training series, Pricing for Profit here).
3. They aren’t focused on growing an audience of ready-to-buy customers or clients
Again I think we can sometimes get confused about the different audiences we’re building as a social enterprise, but it’s important to remember your audience of beneficiaries are likely to be different to your audience of customers and you need to be clear on how you’re building both audiences separately.
Different audiences need different things and if you’re only building an audience of beneficiaries then you will struggle to make sales.
The truth is it’s never been easier to grow an audience with the power of the internet and ability to connect with people from all over the world.
The first step is getting clear on exactly who your customers or clients are. Do you have different customer segments? And how are you going to connect, engage and attract them to you?
Importantly, this doesn’t just have to be via social media, although this is a great place to start.
It’s important to think bigger than just who you can get to follow you on social media, how else can you connect to your audience of ready to buy clients?
The second step leads to the fourth reason social enterprises struggle to generate income….
4. They don’t understand what their customers want or need
The key to attracting customers is understanding what they want and need (what desires, objectives or problems they have). When you know this it’s easier to build connection and talk about your offers in a way that speak directly to where they’re at.
A big issue I see with many social enterprises is they just talk about what they do and the difference they’re trying to make (or are making) and not combining this with how they meet a specific need for their customers. At the end of the day customers (whether they are consumers or businesses) want to know how you can solve a problem for them, meet a desire or fulfil and objective they have, so talk about the benefits and results you can bring them that connect to what they actually want and need (not just what you want and need from them).
I hope this has been helpful in thinking about why you might be struggling to generate the income your want and need in your social enterprise. If you’d like more information and support about how to grow a profitable and sustainable social enterprise then come and join me in the Impact Entrepreneurs Club over on Facebook, sign up to my mailing list, or book in a call with me, to discover how I can help you specifically.
If you found this blog helpful you might also find the following useful to read: