Few things are more liable to crush the spirit of a social enterprise than a traditional business plan template. Distilling your passion into a vision statement of 15 words or less; summarising how you are going to transform people's lives so that it fits a 'value proposition'; and conveying your ambition to change the world as part of a traditional marketing and sales strategy, can be toe-curling exercises resulting in meaningless management speak. So what do social investors really look for in a business plan?
Most organisations talk about 'what' they do and 'how' they do it. They seldom talk about 'why' they do it. With every market - including the third sector - becoming increasingly crowded with organisations offering the same thing, USPs often aren't sufficiently unique to set an organisation apart. That's the reason your 'why' is so powerful. It explains your motivations, differentiates you from everyone else and creates the foundations for your future.
In addition to obvious passion and commitment, social investors look for initiatives that address a significant gap in current provision. This doesn't necessarily mean that a project has to challenge convention or test out a new practice; it can often be more powerful to develop or strengthen existing good practice. Whatever the approach, it inspires confidence among investors when organisations demonstrate knowledge of the field and how their intervention complements, or contrasts with, existing practice.
It is also increasingly important to demonstrate demand for what the project will deliver. 'Build it and they will come' can work but it's a high-risk strategy. Instead social investors typically look for evidence that the organisation has engaged with its target market, ideally co-designing the product or service with the end users.
Mistakes to avoid?
1. Trying to be all things to all people.
2. Measuring the size of the market too optimistically
3. Failing to acknowledge the competition
4. Repeating yourself and using too much jargon
5. Being inconsistent and failing to proof-read
The strongest business plans are those that have clearly defined outcomes in terms of impact on the beneficiaries. Most organisations emphasise outputs (and admittedly these are infinitely easier to describe and measure) but it's those that articulate the change they are seeking to achieve - the positive improvement in the quality of lives and communities - that set themselves apart.
An inspiring vision, clear purpose and defined outcomes need to be matched with the ability to deliver. While a team with a proven track record is a strong selling point, all the relevant skills and experience do not necessarily need to be in place. It is more important that the plans, budgets and resource requirements are well-structured and reasoned. Most social investors look for organisations that have the potential to be sustainable beyond the period of their investment and the scope to develop models and tools that can be replicated and scaled up to increase impact beyond the direct beneficiaries of the initial project.
The best business plans will be so inspiring that the social investor will want to down tools and join the enterprise in changing the world. Get it right and not only will you secure an investor, you'll secure a partner.
Annika Small is chief executive of Nominet Trust, which funds projects that use the internet for social good
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