For most entrepreneurs, there’s more to starting a business than wanting to make your own hours. Founders of businesses who seek to solve a problem or positively affect their community, or social entrepreneurs, are driven by something greater than the bottom line.
But how do founders with social ventures know if their efforts are actually making a difference? There isn’t a standardized scale to measure the amount of impact created by one company with a great idea. A founder can’t announce social change in the way they can a dollar amount in a funding round. So how can social entrepreneurs gauge the impact of their ventures on the world they hope to influence?
At SEED SPOT, the social entrepreneurship incubator I co-founded, my colleagues and I have developed a quantitative scale of this impact. Our goal was to standardize a method through which our venture program participants could determine not only the business viability of their ideas, but also the areas in which they could succeed on a community level. This scale measures social impact by assigning a number to eight components of a successful social-minded business. For the at-home entrepreneur looking to chart his or her social success, ask yourself these questions based on the eight components of our scale:
- What is the societal problem you’re addressing? Make sure you’ve defined the problem you’re addressing with solid third-party data and verified research. By thinking critically about the size of the problem you’re addressing, the root cause of the problem, and what will change as a result of your venture, you have a much more realistic view of how your idea will impact others.
- How many people and communities will your venture impact? Rather than a gut feeling about how many people the problem affects, make sure you have a clear view of how many people are involved. By extension, make sure you have a plan for how to reach those affected. For example, if it’s a problem affecting school-age children, make sure your solution can reach teachers and schools.
- How is your solution different from other approaches? You can’t fix an ongoing problem with something other people have already tried—unless your idea has an important tweak that will make all the difference.
- How does your venture address the root cause of the problem? If you’re just offering a bandage solution that doesn’t address the root of the problem you’re addressing, that’s not true social impact. If you’re addressing the problem with a truly new and different approach, that’s what is going to make a real, lasting impact.
- How does your idea scale to address the problem in other communities? If you’re only helping a few people with the social issue you hope to address, your idea might still need some work. A viable social solution will be able to grow to reach a high percentage of the people who need it—if not all, eventually.
- How can your solution be replicated in other places or markets? If your solution is so specific and cumbersome that it only works for a few people, that’s not addressing a real social need. A true social venture will work for many people with the same problem in other communities and countries.
- How will you track your desired impact over time? A traditional business owner needs to see increasing revenue over time. A social entrepreneur needs to see increasing impact over time. Creating qualitative measurements—people impacted, for example—and tracking goals makes a social success measurement just as convincing as a financial one.
- How will you financially sustain your social vision? In order to keep making a difference, it’s also important for your business to support itself. Ask yourself the hard questions: How long will it take for you to make lasting change? How will your business support that long-term mission?
These eight questions will empower the social entrepreneur to sustain their venture’s mission beyond bottom line. Just as an investor would ask how you’re addressing a market need, ask yourself how you’re addressing a societal problem. Assessing your social impact with as much practicality as you would an earnings report ensures that you’re making the most difference to the most people in a scalable, sustainable model of business.
Published: January 2, 2014