Why Give a Damn:
Social entrepreneurs have relatively fewer sources of capital to tap into, and managing cash flow can ironically be more important for survival for social ventures than for profit maximizing businesses.
The author of this post, Rajesh Anandan, SVP at UNICEF USA, has developed a $400 million partnership portfolio and recently launched UNICEF Ventures to accelerate high impact social innovations. As the Founder of ULTRA, Rajesh is building a network of high performance technology services employing teams of individuals with disabilities.
Want to solve a tough social challenge? Great!
Want to apply business thinking and market-based models to do it? Awesome.
Want to not be obsessed about making money? Too bad.
“Making money” doesn’t have to be for your own personal gain, but it certainly better be high up on a very short list of priorities for your social venture, especially when you’re a start up.
Making money better be high up on a very short list of priorities for your social venture. Tweet This Quote
We’ve all heard the tales of amazing companies burning through cash, and burning through cash, and burning through cash, and finally unlocking a revenue model (or getting acquired by Facebook). That’s neat, but its not the world social entrepreneurs live in. In our world, there are few exits, and no one is willing to pay for our pivots. And that means we’ve got to get to break even sooner than most. Sure, there’s always the promise of impact investing, but you really don’t want to be waiting on a foundation investment while being cash flow negative – the former will take an agonizingly long time, the latter will cause an agonizingly painful death while you wait.
So here’s what you need to do:
- Figure out how much cash you have to burn (and “have” does not include anything you can’t absolutely count on).
- Define your immediate mission as getting to break even (while deepening your understanding of the problem you’re trying to solve, or community you’re hoping to help).
- Spend some serious time on subsidizing your upfront costs (by getting free office space, bringing lots of interns, and going after pro bono everything).
- Read Pascal Finette’s post on cash flow.
And once you get to break even, go nuts with those impact investment applications!
Getting to break even should be your social venture’s most immediate mission. Tweet This Quote