Social enterprise management is no different than managing any other for-profit business – at least in some ways. However, managing a social enterprise has additional challenges that aren’t found in traditional companies. Here are just five aspects to consider.
Key aspects of social enterprise management
Social enterprise management is all about balancing potentially competing priorities. A social enterprise must first make money before it can succeed in its social vision and mission. These two ends of the seesaw could make managing the organisation more difficult than a business with profit generation for shareholders as its focus.
1. Mission and values
The overriding mission of a social enterprise is usually to tackle a social or community problem. It could be helping people who are homeless to get warm clothing and a hot meal. It might be providing employment for young offenders or perhaps even have an environmental angle such as creating local recycling opportunities. Whatever the mission, you’ll need to align it with your organisation’s financial and business strategy because one can’t happen without the other. Being clear on your mission and values helps stakeholders, including potential investors, employees, customers and suppliers to understand why you might operate differently than other organisations and the reasons for those differences. Strong social enterprise management focuses on clearly identifying and communicating the mission and values of the organisation.
2. Governance
Successful social enterprise management requires a strong governance structure for success in meeting social aims. When you have well-defined roles and responsibilities on your executive board, your social enterprise will run more smoothly. You’ll be more cost-effective, leaving more in the kitty for your social projects. In addition to managing the finance, people, systems and processes, your board must also ensure you adhere to relevant authorities and regulatory bodies in your sector.
3. Social enterprise management of your finances
Social enterprises tackle problems in society or local communities. They don’t rely on donations or grant funding like a charity would. They must generate at least 50% of their income from trading. Then at least 50% of profits from their business operations must be directed into social programmes. This means you’ll need to focus on budgeting, forecasting and tracking your income and expenditure to ensure you can meet your aims. There are three vital activities to complete to help you stay on target to your financial goals:
- Develop a realistic budget that aligns with your mission and values
- Track your actuals against budgets and explain any significant variances
- Re-forecast your income, expenses and cash flow to ensure you can pay your bills and deliver on your social projects
Cash flow modelling is a key skill within social enterprise management. Many brilliant organisations become unsustainable because they don’t keep a close enough eye on the bank balance and simply run out of cash to continue. Cash flow forecasting software is a vital tool for your organisation’s survival and ultimate success.
4. Impact measurement
How do you know if you are meeting your stated social aims?
You must develop a robust reporting system to measure the impact of your work. Setting SMART KPIs and targets and, of course, tracking against these targets and KPIs is a fundamental part of good social enterprise management. Collecting actual data to measure your social impact may be challenging but without it, you’ll struggle to attract new investors, staff and other stakeholders to share your vision.
Key performance indicators should cover the following five areas:
- What impact happens over what time period?
- Who experiences the impact?
- How much impact is felt?
- How much does your social enterprise contribute to the impact?
- What happens if the impact is less than expected?
5. Stakeholder engagement
Social enterprise management is as much about communicating what’s happening to those that matter as it is about making the desired impact. Sometimes it’s not obvious to the wider world what difference you are making, so it’s down to you to shout about it and get publicity for your social change. Engaging with key stakeholders could include pitching for new investment, getting local, national or even international media coverage about the impact you’re having or it could simply be internal communications to help all staff understand the aims and align their efforts to common goals.
Social enterprise management means staying in control
Social enterprise finances are likely to be more challenging than traditional businesses due to the rules that must be met to qualify as a social enterprise. At Numbers KnowHow, we can assist you with all your budgeting, forecasting and tracking needs. Why not download a free cash flow forecasting guide or sign up for a free 7 day trial of our cloud-based cash flow planning tool. Put financial sustainability at the heart of your social enterprise today.
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