Lately I’ve been writing a lot about entrepreneurs – social, ethical and/or holistic. All of these business owners have independent enterprises of one form or another; but what they all share is a common desire to make a difference in the world.
While all that is well and wonderful, unfortunately the other thing they commonly have in common is a casual – if not resentful – relationship with MONEY (one of the ‘7 Key Relationships‘ in the 7 Graces model). This can cause many idealistic independent business owners to get stuck early in the start-up phase and experience a complete melt down. It’s happened to me in the past, and I see it happen frequently amongst my wider social network. I get very disheartened when I see ethical companies collapse, so I thought I’d share a few of my personal understandings about what new, socially focused, enterprises need to know to ensure their dreams of changing the world don’t end up in heartache and disappointment – or even debt.
Why the Start-up Phase is Hard for Many Ethical Business Owners
As I’ve discussed in many articles on this site, more and more people these days are turning away from employment to start their own businesses. There are many reasons for this, such as the lack of available jobs, and the fact that many of the jobs that are available are simply not fulfilling to them. Beyond these reasons, some people (myself included) simply do not have an ’employee’ type of personality. They work better when they are able to create and take their own lead. And lastly, some people start their own businesses because they have a dream of helping others and changing the world in some way. This last factor is what social, ethical and holistic entrepreneurs all have in common.
Unfortunately, while all of these reasons are perfectly sound, none of them gives any practical advantage to the new business owner. During the start-up phase, they experience many challenges such as:
- The expenses of their new company are usually far higher than their profit
- They might have already been ‘running on fumes’ in terms their finances even before they started their business, and the fact that their business isn’t turning a profit yet makes them even more desperate for money
- If they’ve done a 180-degree career change, they may be relatively inexperienced in their professional field
- They may be experienced in their field, but inexperienced in business and marketing
So while the thought of changing the world through your own business can be euphoric and liberating, when it comes down to practical reality, these kinds of challenges can drive many visionaries into confusion and despair.
4 Most Common Pitfalls of Start-Up Entrepreneurs
In my experience, these are the 4 most common mistakes many start-up business owners make in their first year.
- PIE IN THE SKY: Being very idealistic and on a ‘high’ with their dreams of helping the world, without giving ample consideration to the practical side of things.
- RUNAWAY TRAIN: Inviting others (especially others who are equally in the ‘Pie in the Sky’ place) into their idealistic vision too soon in the process. Yes, it’s great to have the energy of others share your dream, but if you yourself are unclear of where you are going, having too many cooks in the kitchen can result in twisting and turning your enterprise in too many different directions, until it becomes something unrecognisable.
- EMPLOYEE MENTALITY: Seeing their company’s income as their salary. It’s NOT. You are one part of the ‘machine’ that makes your business work. You are not an employee but the CEO; you have to steer and nurture the business. The income from the business is for the company first. Your salary might not come for a long time. Which leads to…
- CASHFLOW CRUNCH: Spending money as soon as it comes in and/or living off the income of their business before it is fully developed. THIS is the biggest downfall of ALL business owners! Living off your business’ income might be OK if you’re running a ‘money-for-time’ type of business (such as coaching or consulting) and have no thoughts of building your practice. But, if you have any notions of building a proper business, you cannot, cannot, cannot see your company’s cash flow as YOUR income. You will go under sooner rather than later if you do.
5 Ps for Successful Social Enterprise Start-Ups
While a Start-up, The 7 Graces Project (7GP) is not my first business, albeit it is my first CIC. I’ve made ALL the mistakes I have listed above in previous enterprises, and my experiences have taught me that success in any start-up enterprise is down to these 5 P’s:
1. PROMISE – Be sure your mission and your ‘promise’ to the world is absolutely clear in your mind AND articulated in a mission statement. This goes a long way to helping you, your organisation and anyone connected with it to get on the ‘same page’ and stay on track as you move forward.
2. PLANNING – Sit down and make a proper business plan AND a marketing plan. Get out your spreadsheets and assess the income-producing products or services you will provide over the next 3-5 years, and then reasonably figure out how and when they will roll out. Sometime in the future I’ll talk about what goes into a good business plan, but for now suffice it to say that if you don’t know how to ‘number crunch’, find yourself someone really left-brained who can help you with this.
- Whatever EXPENSE or TIME you think it will take to launch one of your offerings in the first 2 years, triple it in your business plan.
- Whatever INCOME you think you will earn in the first 2 years, DIVIDE it by 3. In other words, be prepared for there to be 3 times more outgoing than incoming in your first 2 years, until you get into flow and ‘pace’ (our next P).
3. PACE – Pace is the rate at which your business evolves and grows. In my experience, if you allow this pace to go too quickly, the organisation is likely to collapse under its own weight. The pace depends upon many variables. The first variable is who YOU are. What experience do you have? What kind of business network (on the ground or on online) do you have? If you are inexperienced in your line of business and your network is scattered or minimal, your first year (or maybe even more) will be all about ESTABLISHING the identity of your brand/company and NOT about growth. Don’t allow the allure of fast-paced growth make your company go faster than it wants to.
4. PEOPLE – No social entrepreneur, or other ethical business owner, can work in a vacuum. You need to have the RIGHT people in your organisation. These people should see the ‘Promise’ with clarity, know and hold the ‘Plan’ to their hearts, and be able to work comfortably within the ‘Pace’ of the company. They also need to have the right Personality (kind of a ‘sub-P’ to ‘People’), in that they should BALANCE and complement you and your skills rather than be a carbon-copy.
5. PLENTY – By plenty I mean there should be plenty of sustainable resources to make the business run AND grow. As social enterprises are technically non-profit organisations, ‘Plenty’ is a great replacement for the word ‘Profit’ and has an entirely different energy. Sustainable resources include money, materials, skills, people and visibility.
For example, part of our ‘Plenty’ model in the 7 Graces Project is to create a sustainable flow of mentors and facilitators by building this into our course offerings. To ensure our company remains financially sustainable, a set percentage of all income goes directly BACK into the company, and another percentage goes into a scholarship fund. Only after the company and the fund are ‘fed’ do we ‘feed’ the other departments. This way, the company, which is the foundation for everything else, is always full of ‘Plenty’. If you build your business upon a ‘Plenty Equation’ it will flourish by its third year – if you STICK with it.
So many people I have met who want to change the world eschew money and any talk of business planning. And while I am a social reformer, and I want to see the business, political and economic systems of our world change at a deep level, I also believe if we allow our idealistic visions to lead us to dismiss or disregard money and/or business planning, our enterprises will inevitably fail and we’ll end up changing nothing of value whatsoever.
But if we integrate our idealism with pragmatism, and avail ourselves of ALL that humankind has created over the millennia, well, then I believe, through our enterprise, we can surely create a better world for future generations.
I hope these free-wheeled reflections are useful to you. I’ve witnessed and experienced many a belly-flop over the years, and I really want to help independent business owners as much as I can, so they succeed. Our core team is being very mindful of all of these ideas as we develop the 7 Graces Project CIC, because we are committed to making it work.
I’d love to hear your thoughts and experiences, so please feel free to share them below. Also, many of these blog posts about entrepreneurship will be going into a book I’m aiming to release in 2015, so do stay in touch with my ‘free-wheeling’ over the coming months by subscribing to this blog.
And, as usual, I invite you to check out my book The 7 Graces of Marketing, or to drop me a line via the contact form if you are interested in the 7GP courses in ethical marketing (launching in January 2014) or in our marketing consultancy.
9th October 2013
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The 7 Graces of Marketing: how to heal humanity and the planet by changing the way we sell, by Lynn Serafinn, where you can learn how the 7 Deadly Sins and the 7 Graces impact the world through media and marketing.
Brit Writers Awards Finalist
eLit Book Awards Silver Medal in Humanitarian & Ecological Social Issues
Tweep-e-licious: 158 Twitter Tips & Strategies for Writers, Social Entrepreneurs & Changemakers Who Want to Market Their Business Ethically, by Lynn Serafinn, which can help you learn how to create meaningful collaborations through Twitter and other social media.
eLit Book Awards Bronze Medal in Business and Sales
Get instant access to a free 90-minute Twitter marketing class at http://tweepelicious.com
LYNN SERAFINN, MAED, CPCC is a certified, award-winning coach, teacher, marketer, social media expert, radio host, speaker and author of the number one bestseller The 7 Graces of Marketing — How to Heal Humanity and the Planet by Changing the Way We Sell and Tweep-e-licious! 158 Twitter Tips & Strategies for Writers, Social Entrepreneurs & Changemakers Who Want to Market their Business Ethically. She is listed in the Top 20 of the Top Marketing Authors on Twitter by Social Media Magazine and was a finalist for the prestigious Brit Writers Awards. She also received the eLit Book Awards Silver Medal in Humanitarian and Ecological Social Affairs, as well as the Bronze Medal in Business and Sales.
Lynn’s eclectic approach to marketing incorporates her vast professional experience in the music industry and the educational sector along with more than two decades of study and practice of the spirituality of India. Her innovative marketing campaigns have produced a long list of bestselling non-fiction authors through her company Spirit Authors. Lynn is also the Founder of the 7 Graces Project CIC, a not-for-profit social enterprise created to train, support, mentor and inspire independent business owners to market their business ethically, serve society and planet, and restore all that is best about humanity.
(not just for Londoners, as we meet also on Skype)