Ask More of Business

Asking More Commentary: Perspectives from Mendoza College of Business

Commentary Post - Tim Rann

Thinking of starting a social venture? Stop. Reflect. Focus.

December 20, 2010

Knowing what you don’t do well is equally, if not more important than knowing what you do well.

Social business is not immune to this; if anything it is more pronounced in a structure that must carefully balance social objectives with the unforgiving realities of the market. As the son of a small business owner, I can personally attest that running a business is tough. Making one successful is tougher. Doing so with added social costs, inefficiencies, limited capacity/experience, limited access to capital, etc. is tougher yet.

Since I graduated from Notre Dame in 2007, I’ve worked with a variety of start-up social enterprises and development organizations in agriculture, water and sanitation, eco-travel, microfinance, and employability training. In my work, I’ve seen many non-profits rush into privatization or social business with the double aim of resolving funding issues and creating social value. Too few asked themselves “What capacity do we have to make this work? What are we good at and is there another path to accomplish our social mission?”

Sometimes business growth and social value are directly correlated. All too often, however, stakeholders are involved in a rigorous balancing act between the two. In the worst scenarios, leaders might try to maximize both objectives and end up achieving neither.

It all starts with the social mission and an acute understanding of what capacity and social value your organization can add. If your objective is to raise funds to offset non-profit social program costs, your business model will be very different than if your objective is to provide high-quality hospitality training. Starting a restaurant that trains (insert disadvantaged group here) is compelling, but perhaps the best way to add value is to raise donations and outsource the training to a professional institution with a certified, structured program.

Or maybe you can develop partnerships with successful businesses and create mutually-beneficial training solutions that share the cost (and benefits). The bottom line is not “How can we do this cheaper?” but rather “How do we best invest our funds in the people we work with to create a resilient impact?”

Starting a social business is sexy, but you will need far more resources than you initially think. If you’re truly focused on your social mission, partnerships or other methods of collaboration may be an even better option. At least this way you can focus on fostering excellence in one area instead of a multitude.

Timothy Rann ('07) is the CEO of Hagar Social Enterprise Group, a social business investment fund and wholly-owned subsidiary of Hagar International. Hagar was founded in 1994 and is committed to the recovery and empowerment of women and children who are victims of human rights abuse, particularly domestic violence, human trafficking and sexual exploitation. HSEG invests in and partners with businesses (social and private) that provide a nurturing environment, structured training for building human capital, and opportunities for career progression for women from Hagar's programs.

Rann also founded Responsible Nomad, an online community and resource (2008-2010) for travelers who wish to maximize the beneficial impact of their travel in Southeast Asia. Responsible Nomad was a runner-up to first place in the 2008 Notre Dame Sustainable Social Venture Competition. Read Rann’s blog at responsiblenomad.wordpress.com.