Sharing thought-provoking ideas and info about community economic development

Interesting Idea or Real Opportunity?

Just-Enough Feasibility, Part 1

 

Andy Horsnell is a social enterprise developer and recent addition to our team at CECNB. Find out more about Andy at https://www.socialenterprisesolutions.ca/

“I’ve got this great idea for a new social enterprise!” says your board member. “We should really think about getting into  [insert type of enterprise]!” says your executive director. “This is a great opportunity!” Hmm… maybe yes, maybe no. How do you know whether this “great opportunity” is legit and worthy of your limited time and attention, or just an interesting idea?

As a social entrepreneur, you need a quick way to identify which enterprise ideas are worth exploring further. You’ve got limited time and money, and can’t afford to look into every one. So, with the help of many colleagues and clients, I’ve come up with a simple framework, called “Just-Enough Assessment”, that involves four feasibility assessment questions and four increasingly-rigorous levels of assessment.

  1. Will it make the right impact? 

As a social entrepreneur, your ultimate bottom line, the one by which your success will be measured, is the impact you make in your community. So, it’s critical to first consider whether the presenting idea will make the right impact. That is, will it help who or what your mission says you help, with the issue you are concerned with addressing. For example, if you work at a youth employment centre, will a proposed coffee shop enterprise directly help the youth in your community to get and keep quality work? If not, move on; there are lots of other ideas out there, and at least one of them will directly address your community issue. No need to ask any more questions; go find another idea. If you can answer “Yes!”, then to to #2.

  1. Can we really do it?

Let’s say you get a resounding “Yes!” to your first question. Your next question should focus on whether you actually have the competencies, resources, and leadership to move this idea forward. You’re at the idea stage, so I’m not asking whether you could open the doors today, but rather whether it fits with your capabilities. The idea of core competence is an important one here. Any organisation tends to be really good at only a few things, and those few things underpin almost everything they do. A youth employment centre might identify that it’s really good at: a) helping youth assess and explore their career goals, b) providing high quality employability training, and c) connecting them with great jobs in the community. A good social enterprise for this organisation should draw upon at least one of these competencies, if not all three.

Resources are important too. But, again, it’s not that you need to have everything required to start the enterprise but, rather, just enough to explore it further. The big resources will come as you develop your idea into an actual enterprise.

Finally, leadership is critical. Do you have someone who will be thrilled to research and develop the idea it into a viable enterprise? This needn’t be the person who will ultimately run the enterprise; I’ve seen many ideas start their lives with volunteers or administrative staff who hand off the idea to an enterprise manager if and when the idea evolves into an actual enterprise. But ideas are vulnerable things in the early going, and you need someone to take personal responsibility for its development.

Part of the rationale of answering these first two questions first is that, if you get a “no” to either one, you need not go any further. Full stop – find another idea. And, just as important, you should be able to answer these questions quickly with your judgement and readily-available information. So, get the “easy” questions answered first, before you move on to the harder ones.

  1. Will paying customers choose us?

If you’ve got a solid “Yes!” to the first two questions, then you can be fairly sure that the idea fits with you and your organisation. But you are only half of the equation. Time to consider the market. First, is there some evidence that customers are paying (or will pay) for the kind of product or service that’s connected to your enterprise idea? They don’t have to be buying exactly the same kind of product or service as what you’d be selling, but they should be spending money to acquire the same kinds of benefits as what you’d be offering.

And, let’s be clear: when I say “customer”, I don’t mean the people in your community who will benefit from your enterprise (they’ve been considered, appropriately, in the first question), and I don’t mean government agencies, foundations, or other sponsors who will fund your enterprise because they value the impact that you will make (we’ll deal with that with the next question). I am talking about people, businesses, or organisations in your community who will buy your product or service because it will give them some direct benefit. We call this a “quid pro quo” arrangement: I’ll give you my money in exchange for your product or service. We all make this kind of exchange every day as customers, yet it’s amazing how often benificiaries and funders are confused with paying customers. There can be overlap sometimes but, more often than not, they’re three different groups.

Next, is there a clear rationale (or, ideally, some evidence) for why these prospective paying customers will choose your enterprise’s product or service over whatever alternative they perceive that they have? And, yes, you will have  competition. Customers always have an alternative to you, even if that alternative is doing nothing. Competition = any alternative that your prospective customers (not you) perceive as an alternative for providing the same or similar benefits. For example, in addition to other, similar, funky, fair trade coffee shops, your prospective customers will have the option of making their own coffee at home, having a coffee at their favourite lunchtime restaurant, getting a cup at work, buying a cup at a chain cafe… or your funky, fair trade coffee shop that will train and employ local youth.

And the rationale that your customers will use to make their choice will be based on their priorities, not yours. So, for the coffee shop, what do they look for in the perfect cup? Origin of the beans, how they prepare it, price, convenience? And brace yourself: your social impact will only come into play after you have met your customers’ other priorities, and only if they care about your social impact. I buy my coffee from a fair-trade shop in my local community (because I value local and fair trade), but I wouldn’t do that if they sold bad coffee.

  1. Will we be able to get and make the money we’ll need?   

Finally – the money. Yes, it’s essential, but only something you need consider after the first three questions. The money question has three parts.

First, is it clear to you how you will make money from the sale of your product or service? In the youth employment coffee shop example, a cup of coffee may cost you $0.50 to make (including the coffee, cup, and lid) and you perhaps can sell it for $2.50, resulting in a gross profit of $2.00 for every cup you sell. You sell 200 cups in a day and you clear $400, which you can use to pay wages, rent, and utilities. You should be able to do that kind of back-of-the-napkin calculation for your enterprise idea at the outset, and be prepared to get more detailed as the idea progresses.

Second, are you confident that you can secure the financing you will need to launch the minimum-viable version of your enterprise? I say “minimum-viable version” because I believe in starting as small as you possible can, without compromising the value proposition that will make your customers choose you. You may want to have a 100-seat cafe with 10 staff, but perhaps you can start with something much smaller (and cheaper) that will nonetheless get you out into the market – learning, refining, making a little money, and (most important) making an impact in your community. Now, let’s say you will need $10k to start your minimum viable coffee shop. How confident are you that you can pull together this amount, from money you have in savings, plus grants, donations, investments, loans, and other sources? I want to stress that, my comment about starting small notwithstanding, it’s the relationship between what you need and what you can get that’s important here. It’s possible that an enterprise with a $100k startup cost may be more finance-able than a $10k enterprise, because there’s a funder that’s willing to support it because it aligns with their own interests.

Finally, you should consider whether you will be able to secure ongoing social revenue (e.g. grants, sponsorship’s, contributions) to offset ongoing social costs. A coffee shop that trains and employs youth who’ve never had a job before (because that’s the social mission) will likely have higher product waste, training, supervision, and employee turnover than the for-profit coffee shop down the street that’s free to operate for maximum efficiency. And, to the extent that these are the legitimate, incremental costs of running the business as a social enterprise that creates incremental social benefit, you should be able to secure ongoing social revenue to offset them. But can you? If not, you may have an enterprise that would only work as a private, for-profit business that isn’t burdened with social costs.

STAY TUNED FOR PART 2!

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TIME FOR A NEW AND IMPROVED CROWN LANDS AND FORESTS ACT

NB Federation of Woodlot Owners,

 

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For well over a century, going back to the days of the log drives, generations of New Brunswickers drew their livelihood from the forest, and isn’t that logical given how much of it we have?

Even today, 85 per cent of land in New Brunswick is woodland. It has traditionally been the kingpin of our provincial economy. And a full half of that woodland in New Brunswick is Crown land. As such, the government’s responsibility is to manage it to the benefit of its citizens.

While demand ebbs and flows, there is always a market for wood, and you would think that we would benefit greatly from having such abundance of it. You’d think. But you’d be wrong.

Maybe not so much

Both the Auditor-General and Don Roberts, the Vice-president of World Markets for CIBC reviewed government’s management of Crown land and both found a lot of fault. Roberts in fact suggests that if a private company managed our Crown land the way successive New Brunswick governments have over the past years, that company would be out of business. He estimates we should be realizing a profit off our Crown land of $100 Million a year. The profit is hard to pinpoint, but the Auditor-General’s report places it at closer to zero.

How could the government be losing money, or certainly realizing far less profit than it should on Crown land, you ask? The biggest and most simple reason is because the forestry companies don’t pay the government enough to cover the cost of growing the trees.

There are several forestry companies operating in New Brunswick, the largest of which is JDI. The fact that management of Crown Lands is benefitting these companies much more than it is benefitting the people of the province isn’t on them. These companies are doing what companies do, which is everything within the law to maximize profits. They can’t be blamed for that.

No, the blame rests squarely on the shoulders of the successive governments that have been in power in New Brunswick over the past few decades. The ones elected by citizens to look out for the best interests of citizens.

Only one winner under current Act

When it was introduced in 1980, our Crown Lands and Forests Act was a solid and visionary piece of legislation. But actions since its adoption by successive governments combined to diminish the value of the Crown Lands Act to the point it no longer serves anybody very well beyond the forestry companies. The time is well past when it should be updated.

“In 2017 A new act was proposed that reduces timber taken from Crown land, improves sustainability, enhances non-timber uses such as hunting, fishing and hiking, and provides private woodlot owners with an opportunity to provide a fair proportion of wood for market. We need a government that will champion this proposal.

And an update of the Crown Lands and Forests Act is exactly what they had in mind when a consortium representing environmental, conservation, fish and wildlife organizations, scientists, and private woodlot owners, met with the Minister of Energy and Resources Development in March of last year. They promoted a new act that protects ecosystems and allows for an enhanced use of our forests that strikes an appropriate balance between timber objectives and non-timber priorities ranging from fish and wildlife management, to jobs in forest-based tourism.

On the timber side, they called for a reduction in timber available from Crown land that would provide private woodlot owners with an opportunity to provide a fair proportion of the wood supply. This would be a return to what was a fundamental principle of the original Crown Lands and Forests Act, before it was gutted by government.

To date, there has been no indication that government has any interest in cleaning up its act in regard to Crown lands, and in this it is out of step with the people it purports to serve.

A survey conducted in 2007 found that an overwhelming majority of New Brunswickers (more than 90%) place great value on our forests. And they don’t like what’s going on. In short, people support and want to see drastic changes to the manner in which the government currently manages – some would say mismanages – our forests.

Wouldn’t it be nice if we had a government that shared these desires and agreed that the status quo isn’t working for the vast majority of New Brunswickers. If the government though, as seems to be the case, prefers things as they are, taxes will continue to make up for the losses incurred by the mismanagement of our Crown forests, the economy of  rural New Brunswick particularly, will continue to be negatively impacted, and the vast potential that our Crown lands represent, will continue to be lost.

You can help by helping us spread the word and by asking the candidates who want to be your MLA this fall to study the 2017 proposal and commit to seeing it passed. You can subscribe to receive our blog updates, and share this to your contacts.

Thanks so much for listening,

Rick Doucett
President, New Brunswick Federation of Woodlot Owners

 

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Divergent Visions Between Government and Community?

Sue Rickards, columnist and SPADE board member
Published in Telegraph Journal on May 5, 2018 and on our blog with the author’s permission

Sometimes it seems that government decision makers are floating above New Brunswick in a beautiful balloon, surveying the landscape from their heavenly perspective. They see a province punching above its weight in terms of entrepreneurial and technological innovation, with a bilingual workforce welcoming new opportunities and global investors. They see thriving and emergent cities cooperating in economic development initiatives. They see the export potential of agri-business as food production is impacted elsewhere by climate change. They see a quality of life which will attract and retain newcomers. They drift across rural and wilderness areas, imagining how they can be developed to contribute to economic prosperity. They rain money onto worthy projects which will make their dreams come true. The top-down vision is rosy indeed, but in many respects it is quite disconnected from the reality on the ground.

From the bottom up the view is different.    Yes, the innovators are world class, and the fact that many are products of our public schools and universities is a significant achievement. But down here we see other young people educated in the same system who are adrift without work or hope, remnants of schools which cater to the academically proficient with little attention to the experiential, hands-on learners. We see students disadvantaged by the focus on early French immersion, which consumes excessive resources while begging for qualified teachers. This program has institutionalized educational injustice even while it struggles to stay afloat.

Down here, despite the efforts of enlightened civil servants, we see bureaucracy impeding attempts at innovation which are not technology-based. Demand for access to farmland for the local and regional production of food is growing; young people and immigrants want to reconnect with basic needs like food, housing, and community. There is a global movement in the non-profit sector to encourage socioeconomic development at the grassroots, to promote small-scale agriculture and social enterprises which can inject meaning and income into the lives of marginalized people. But our efforts to introduce the concept of social enterprise through the New Brunswick poverty reduction strategy seem to have evaporated entirely; decision makers are oblivious to the benefits of training businesses and small-scale entrepreneurial incubators.

The simple life is not an option.

From the balloon, our elite power brokers see a network of shiny new nursing homes which will be irrelevant within a generation. They urge young people to stay in New Brunswick, despite the fact that our youth need exposure to external ideas and cultures. They trumpet our quality of life, although our public infrastucture, schools and health care facilities are stressed to the limit. They advertise our people as our greatest asset, yet they keep some 30,000 of our most resilient trapped on social assistance in a soul-destroying system which encourages self-medication with drugs that will soon be legal.

Down here we see the grass sprouting blade by blade to grow community- based economies. Meanwhile, government drops loads of sod from above, carpeting the landscape with picture-perfect superficiality, which eventually withers and dies because it lacks the depth of community roots.

Our greatest divides are not lingustic, geographic, political or even economic. The yawning gap lies between our visions of the future. In the stratosphere of cyberspace we want to be rich like every other province which promotes the growth of the consumer society. But on the ground, we want wealth defined in terms of caring for our communities and our environment, protecting and nourishing what we value most, which is each other. Can we have the best of both worlds?

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