When it comes to growing and scaling a social enterprise, there’s a major opportunity that many social entrepreneurs haven’t capitalized on: growth through revenue-based partnerships with the private sector. In the first installment of this series, we shared more about the factors behind this exciting trend — including corporations prioritizing more resilient and sustainable value chains, an increased focus on diversity, and more responsible and sustainable business practices.
In this second installment of the two part series, we will focus on how social entrepreneurs can take advantage of corporate spending to fuel growth. The advice below is based on interviews with some of the biggest players in the social enterprise acceleration space — including Acumen, Miller Center for Social Entrepreneurship, and Agora Partnerships — combined with our own experience supporting social entrepreneurs through the TRANSFORM Support Hub.
Keep these tips in mind as you consider whether growth through partnerships and social procurement is right for your social enterprise:
1. Do your research into what it takes to be corporate-ready
As Jeff Pilisuk, Director of Partnerships at Miller Center for Social Entrepreneurship, shared, “Social entrepreneurs need to do their homework to understand what the path really looks like to getting to some kind of corporate buyer. There’s going to be a certain amount of investment necessary to achieve that corporate readiness, so before doing anything, it’s a good idea to do a cost benefit analysis. It’s also helpful to have conversations with folks who are already partners of the companies they want to work with, and to understand what that experience is like.”
Enterprises should also be prepared for a more intensive vetting process. Jeff went on to explain, “corporations are risk averse: they’re going to have to demonstrate both financial stability and that quality and service controls are in place. The company you are pitching may have certain specific certifications they look for, for example, and many of these cost money – having a clear and realistic view of cost and timeline of what it really takes balanced against the ultimate benefit will help you move forward in the right direction.” (To learn more about how to assess your organization’s readiness to scale into new markets, check out the summary of this webinar we co-hosted with the Miller Center.)
2. Understand where you fit in the value chain
The way that you frame your pitch matters. When approaching corporations as potential partners, make sure to tailor your pitch based on how your solution would fit into its value chain. As Yasmina Zaidman, Chief Development & Partnerships Officer at Acumen, shared, “It all comes down to the product or offering, and focusing on that transcends potential barriers for new suppliers. Develop a compelling offer by demonstrating how your solution fits the needs of the corporation. For example, if you have a company that wants to source in a certain country because there’s incentives to do so, then it’s really a matter of demonstrating that you have the right solution, in the right location, at the right level of quality to fulfill that particular need.” (For more tips about how to customize your pitch, check out this blog post about Desolenator’s experience.)
Building on that point, Emily Gannam, Acumen’s Manager of Insights and Strategy, also advised that, “you have to know where you fit into the value chain and how that might influence your strategy for engaging with corporations. For example, investing in storytelling for a commodity product may be a waste of resources, but for a branded product, it’s likely to play a bigger role and therefore worthwhile. The bottom line is that the entrepreneurs who are most successful are very plugged into their customer base, and are able to articulate the ways that their business creates value in a way that matches those specific needs.” (For more tips about how to do that, check out this blog post about using the Business Model Canvas as a social enterprise.)
3. Have a handle on cash flow and test before you invest
Building off of the theme above, one of the aspects of corporate readiness is having a handle on your cash flow. As Agora Partnerships’ Chief Executive Officer, Cecilia Foxworthy, explained, “As with any new market opportunity, you need to test the waters rather than jumping in and assuming it’s going to work out. Construct small experiments to see if it is in fact a viable strategy for you and of course pay a ton of attention to your financial model and cash flow scenarios knowing that any contractor or corporation will take a long time to close and payment terms may not be that friendly. Those are some of the challenges that can actually bankrupt a small enterprise, so really have a handle on your cash flow and make sure that it actually makes sense for your type of product in terms of production capacity, quality control, and placement.”
4. Invest in building your network
Your network matters – and the more diverse it is, the more potential value you can derive from it and contribute to it. A robust network includes coaches, mentors, corporate connections, peers, and others in the ecosystem who can help you understand new business opportunities from all sides. As Jeff explained, “every entrepreneur that comes through our program works very closely with their assigned executive mentors, and that can be an avenue for building further connections. Looking ahead, we are exploring more ways to effectively help entrepreneurs leverage our network of entrepreneurs, mentors, and investors. In fact, part of our own partnering strategy includes identifying corporate partners we want to work together with to develop programs related to corporate readiness.” (For more tips on how to build strategic relationships with corporate procurement teams, check out this blog post.)
Yasmina echoed the importance of networks, as well as the role that social enterprise support organizations have to play in making access to them more equitable. She shared, “It’s difficult to quantify the power of networks, but having the right connections at the right times really can make all the difference. Networks help social entrepreneurs get access to the right people who can either advocate for them or actually make decisions about partnering. For social enterprises and social enterprise support organizations (SESOs) alike, cultivating those networks and participating in them is really key. If we as a sector could do a better job of removing those barriers (especially for people who don’t have a certain pedigree or didn’t go to an elite school) we can create visibility and access to lift up more entrepreneurs.”
Working with an accelerator is one of the best ways to build your network. Jeff advised that for both social enterprises and corporations, “working with an accelerator can lower their risk. One of the big challenges in this space is that the model for these partnerships is still being developed. In order for them to work, they have to be cost effective, mitigate risk, and align with the corporation’s impact goals. Social enterprises that are working with an accelerator are already on the path to strengthening their business and impact models, in addition to understanding the specific requirements of corporate partners so that they can ensure the capacity to deliver on them.”
Effectively developing revenue based partnerships is a process that starts long before you actually reach out to a potential corporate partner. Taking the time to get clear on what it will take to be corporate ready, your cash flow, and how you fit into corporate value chains dramatically increases your chances of success. One of the best ways to do that, and to build your network with actors from across the ecosystem, is to join an accelerator. Ready to start building the connections you need to secure these kinds of partnerships, as well as the internal capacity to deliver on them? Apply to the TRANSFORM Support Hub.