ENTREPRENEURSHIP INSIGHTS

Thank you for reading this issue, which is focused on startups delivering benefits. 

BENEFIT SECTOR

The Benefit Sector is made up of many kinds of organization that all share a desire to do things differently and to change the world. 

It is sometimes called the Fourth Sector, because it is not necessarily part of the other three sectors: the private sector, the social sector, or the government sector. The list of benefit sector organizations in the panel above is far from exhaustive and entrepreneurial creativity is sparking new organizational designs at a fast pace.

Benefit Sector organizations are concerned with social outcomes. Good financial performance is necessary, but measures money rather than how much an organization fulfills its purpose. One feature of this new awareness is driving the establishment of hybrid organizational types. Since classical corporate structures often don't meet the needs of mission-driven organizations, they invent ways round the inadequacies, like back-to-back corporations and nonprofits. Legislative frameworks are fast catching up.

BENEFIT ENTERPRISE

We have become familiar with the term social enterprise. Social enterprises generate revenue, but with goals to achieve social, cultural, community, and/or environmental outcomes. This simple short definition will be debated by many and a web search will reveal many variants. Benefit enterprise includes many more organizational types than than the narrower concept of social enterprise.

Often we support benefit enterprises, by donating money or using their services, because we're concerned with outcomes, without naming them as benefit enterprises specifically. For instance, I support Thompson Island Outward Bound in Boston, because they take at risk inner-city kids and close the achievement gap through adventure programs. It's a nonprofit, but is run on strictly business lines. 

I've been a lender to Kiva , another nonprofit, that  connects people through lending to alleviate poverty. This because I am committed to encouraging startups in the developing world, especially by women.  I consume Newman's Own food products, from a for profit company that  distributes  all its profits to charity. I regularly travel on the Texas  SH 130 toll road, the $1.3 billion private investment that gives the state a share of the toll revenue, to be used for other regional mobility improvements.

When I eat my Grafton Cheese (made by a subsidiary of an operating foundation), I spread Land O'Lakes Butter (made by one of America's biggest member-owned coops) on my bread, which, if I lived in Tucson, AZ would come from Barrio Bread (a community supported bakery). When I'm in my Vermont village, I eat at another community supported business (The Gleanery), and watch movies at the Latchis (a for profit, owned by a nonprofit). These, too, are benefit enterprises.

It all starts with a question: what's the purpose of setting up the organization in the first place? Some would-be entrepreneurs struggle to answer the question succinctly, perhaps because they are so in love with the product or service. But most create business models reflecting their deep commitment to benefit society.

BENEFIT AND BUSINESS MODELS
 
Except for maybe, 'me-too' startups, I observe that most entrepreneurs today have a very clear sense of purpose. I use the word startups to include not only for-profits (including those within existing firms led by intrapreneurs), but nonprofits, hybrids, and new ventures that support the benefit sector like impact investors, too. In  any event, as the previous article suggests, the edges between the two sectors are becoming more and more blurred.

Take a renewed and critical look at your own business model, whether before or after startup. Start by reconsidering your value proposition, and If you are rigorous, it will inevitably lead to questioning the components of the business model and how they fit together. You may find that there are some aspects that are inconsistent and working against your ultimate purpose for being in business.

Since form follows purpose, why not consider using my Business Model Review service, to help you get your ducks in a row. Using it, you will better able to make all the components coherent with your purpose and ensure the next steps towards your startup will be effective-for just $299. Write and tell me what you're trying to do and I will respond within 7 days.


Thanks for reading. While the concept of the benefit enterprise is complex and I have not done it justice here, I would appreciate hearing from you to enlarge the dialog.


Sincerely,

Will Keyser
Venture Founders LLC

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Venture Founders LLC
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