The Gazbeya Growth Hacking Initiative
By: Nada Buraik
Social enterprises are increasingly becoming attractive as they prove to effectively address global challenges. The rise of social/environmental investing has caught the attention of those in both business and academia arenas. Non-profit organizations lack the momentum to provide sustainable services and solutions while traditional for-profit businesses are not committed to social and environmental impacts and investments.
Social enterprises are blending the best of both worlds, the social/environmental missions and values of the non-profit organizations with the market-driven techniques of for-profit businesses. As social enterprises are gaining traction, many believe that impact investing is a promising approach to tackle various social and environmental challenges. Impact investing is the investment into companies, organizations and funds with the intention to generate a measurable, beneficial social and environmental impact alongside financial returns.
Gazbeya’s Social Enterprise Growth Hacking Initiative, is designed to unravel the challenges facing social enterprises in Colorado and reduce failure rates. Market research is the first step in the initiative which is seeking a better understanding of the challenges that impede social enterprises’ growth.
Our initial research identifies the top challenges face social enterprises in general. These challenges are:
Financial
1. Obtaining grants/loans: during the startup phase, many enterprises have a hard time in obtaining funding from grants and loans. Donors tend to be wary of social enterprises running as for-profit businesses where the major focus is on financial return not social impact. Even more, social enterprises perceived more as a non-profit have a difficulty in obtaining loans as they are less likely to repay.
2. Limited budget and funding resource: the lack of sufficient income generated from sales as well as the lack of other funding sources such as loans, equity, and grants impedes enterprise growth and results in closing of the business.
3. Lack of sustainable business model: as funding resources are becoming tight social enterprises often fail to build a business model that generates sufficient income to cover all expenses.
Business
4. Poor product quality: even if the enterprise provides socially responsible products, the quality of the product, its’ placement and competitiveness is what attracts consumers and builds trust and loyalty.
5. Shortage of skilled management/staff: many skillful business managers and staff are money oriented. This hampers the process of hiring the right people in the right position.
6. Lack of effective marketing: many social enterprise’s CEO’s lack the experience in marketing and have difficulty in hiring a marketing staff or external consultants because they are limited by tight budgets.
7. Inability to balance profit and social impact: balancing the enterprise’s business profit and social goals is a hard task but it is possible. Enterprises focusing heavily on social goals tend to fail.
8. Lack of access to business support: studies show that enterprises working with accelerators and mentors are more likely to succeed than those who don’t.
Organizational Structure/Design
9. Unreasonable expectations: enterprises setting unrealistic goals such as reaching the break-even point during the early stages tend to fail when funding dries up and revenues are not sufficient.
10. Unmeasurable social/environmental impact: either the enterprise’s social/environmental impact is hard to measure or the business is not using the proper measuring tool.
11. Economic climate: the impact of economic recession and market failure could be harsh on social enterprises as its becomes harder to raise capital and to maintain high exit values and multiples.
After a thorough survey of Colorado’s social enterprises, the Social Enterprise Growth Hacking Initiative will organize round-tables, events, and workshops. This will enable us to build tools and programs to tackle various challenges face social enterprises in Colorado. The community we build will be structured to create a support system and resource for new and existing ventures throughout the state.