Business Model Factors for Social Venture Growth

This post is the fifth and final in a series I will be contributing for my Business Model Designs for Social Impact course at Northeastern University. This is the course’s first time being offered and it is taught by Professor Gordon K. Admodza. In this series, I will be publishing my findings on different social innovators and the business models that are allowing their inventions to reach the people most in need. As a class, we define social innovations as sustainable, pro-poor solutions. You can read the other articles in this series here.

The “hockey stick” model for social venture revenue and impact.

As our Business Model Design for Social Impact course comes to an end, we’ve closed off the semester looking into the different ways that a social venture can scale its enterprise and expand its impact to new peoples and places. Scaling (aka expanding) should be seen as the ultimate goal of any social entrepreneur or enterprise that wants to have a meaningful impact on a particular issue. If the product is innovative enough, the company strong enough, or the impact profound enough, a venture is naturally deemed fit to scale. The business model of the venture then must have the necessary components to allow for scaling to happen.

Factors designed in a business plan, such as the structure of the organization, impact measurement procedures, and sources of funding all enable a venture to scale. In the business model canvas pictured and discussed in an earlier blog, these particular factors are covered by the building blocks of the left-hand side: key activities, key partners, and key resources. Impact measurement, for example, is a key activity in the non-profit sector as wealthy donors such as the Bill & Melinda Gates Foundation require time and money to be invested in monitoring the efficacy of the programs they support. Similarly, a venture’s organizational structure acts both as a key activity and a key resource. To be a pure and world-renowned non-profit, 501(c)(3) organization, a group must file specific tax forms and provide internal reports to be audited on third-party sites such as Charity Navigator. Besides these key activities that are required of a particular organizational structure, it also acts as a key resource. Possessing a 501(c)(3) legal structure, for example, eliminates taxes and opens the doors to various forms of funding.

Hence, a business model depends on factors like these. Impact investors, a growing segment within the traditional investment markets, actively search for and select organizations to fund that have the potential to scale their enterprise to new locations and greater ambitions. However, the right side of the business model canvas also yields important factors for scaling. For example, factors for adoption of a product (discussed in the first half of the course), which include price, accessibility, and customization, are features of the customer relationships, channels, and revenue streams blocks. In a venture’s business model, steps must be taken to ensure that an offering has these factors of adoption in order to reach the poorest of the poor in the most rural of places.

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