The workplace appears to be changing for the better. And rather than solely focusing on acquiring personal wealth, younger generations seem to be concerned with empowering the crowd as a whole. This altruistic zeitgeist may explain why more and more nonprofits and “B-corps” are popping up daily: There are more than 1.5 million nonprofit organizations registered in the United States alone.
It’s likely even more people want to strike out on their own to start a social impact business, but beyond the great idea, they don’t know where to start. That’s where we come in!
Here are what we consider the first steps necessary to starting your very own social venture:
Step 1 – Do your research. If you find that someone else is already carrying out your mission, why reinvent the wheel? You can begin by joining them, making an impact and learning about the industry from the inside out. Or you might decide, after conducting a thorough competitive analysis, that this other organization is missing an important element that you can improve upon, in which case, you should forge ahead on your own!
Step 2 – Create a business plan. With the research out of the way, it’s time to develop two crucial (but fun) pieces: your mission statement and business plan! Your mission statement communicates your reason for being. Why did you want to start the organization in the first place? Pour your heart and soul into this language, and make sure it’s laser-focused because everything you do from this point forward will be measured against it.
In terms of the business plan, it describes how you plan to alleviate the problem described in your mission statement, while also showing investors how you plan to operate the venture in a sound way. Needless to say, it’s super important! Both nonprofit and for-profit organizations must have these two items, as they collectively make up your “North Star,” always pointing you in the right direction.
Step 3 – Set up your business structure. Choose the business structure that best suits your needs, goals, and resources. This gives you a formal structure and credibility while taking away liability. A B-corp is a for-profit corporate entity, which makes an impact on society and the environment, as part of its legally defined goals. Whereas a nonprofit is generally structured as a 501(c)(3), for tax purposes. This means that your nonprofit is tax exempt, but you can’t keep any of the profits either. All profits must be reinvested into the organization, the cause you’re supporting or the people it serves. You may be able to give yourself (or board members) a salary, but it’s important to consult a lawyer to ensure you’re playing by the rules.
Step 4 – Secure funding. When starting a social venture, one of the biggest obstacles you’ll face is finding capital (read: $$$). And, at first, it’s likely you’ll spend more money than you bring in, so again, it’s important to have a strong business plan, which shows how you’ll recoup your losses and come out on top. It’s also important to consider that just 50% of for-profit startup businesses make it past the five-year mark. This isn’t meant to deter but rather to give you the facts so you know exactly what to overcome, and we believe anything can be overcome!
Building a for-profit or nonprofit social venture will be challenging, but at the end of the day it’s well worth it. If you’re passionate enough to even think about starting something that will help a certain cause or population, do it. After doing research and creating a business plan, you will see that your goal is within reach. Good luck helping the world and shaping the future!