Why “staying in your lane” is KEY to successfully starting your social enterprise.

Well, it’s that time of year again. The time when we look forward to a new batch of social entrepreneurs bringing their ideas to All Good Ventures.  It’s awesome to see new ideas for businesses: businesses that can really make a difference by driving profits toward helping free people somewhere in the world from something that’s enslaving them!

But, just what kinds of businesses or business ideas is All Good Ventures looking for? From the start, we have said that we support early-stage or start-up businesses. Trying to fill a gap between the idea and the execution and scale-up. Often, the stages of business development are put into nice tidy little boxes:

  1. Pre-seed: The earliest phase of a startup, where entrepreneurs develop their business idea, secure initial funding, and conduct essential research and planning; typically, the offering (product or service), has not yet gone to market.

  2. Seed: Startups receive initial funding to develop and refine their offering (product or service), conduct market validation, and begin initial market entry; this stage may involve the introduction of the offering to the market.

  3. Early stage. Characterised by gaining early customers or users and refining the offering (product or service) based on market feedback; the offering is actively in the early stages of market presence.

  4. On to the more mature stages of scale-up, growth, etc.

You might say that, in an ideal world, all businesses would fit neatly into these developmental boxes. But, more often than not, when the applications start flooding in, very few are so neatly categorized! In the past, I’ve just put this down to the difference between the ‘textbook situation’ and ‘real life’.  BUT, in thinking about it further, perhaps having some focus on ‘staying in your lane’ – attempting to stay more carefully inside your box – is the more productive way to go.

Here are three particularly important ‘lanes’ I recommend paying attention to when starting a business and moving through the stages of business development:

Lane 1: Finance

When a business is trying to raise capital, which most businesses need to do, it’s usually from friends and family, bank loans, formal investors, the public, etc.  If you’re trying to raise a small amount (say, less than $50k), the amount needs to align with the stage of the business that you’re at. If you’re telling people your business is going to change the world, asking for a small amount won’t be taken seriously.  Particularly, if it’s smaller than the average annual salaries required to make the business operate!  Making sure that the financial ‘lane’ that you’re in aligns with the other key lanes is important.

Lane 2: Stage of Idea

The second concept of growth is where you are on the journey.  Do you have just an idea? Great, it could be a really good one. But, how do you know? This is why a pre-seed definition involves essential research and planning. Nothing has gone to market yet in this stage.  We often see start-ups rush to put products or services into the market with no research and planning. This immediately throws them into the dilemma of whether they’re working ‘in’ their business, or ‘on’ their business.  Once you are working ‘in’ your business, particularly as a start-up, you will have little to no time to work ‘on’ your business, which is what you need to be focusing on.  So, again, staying in your lane with respect to the stage of your idea is important. You CAN actually go to market too soon, as tempting as the promise of cash flow can be!

Lane 3: Commitment

This could very well be the most important ‘lane’ to pay attention to.  Your commitment to your enterprise. We often see very good ideas proposed by very obviously talented people. But, on further questioning, we find that the idea is really a ‘side hustle’ for them and that they have a paying job, they are a full-time or part-time student or they have a full schedule at home, maybe a stay-at-home dad or mum with high priority commitments of their own.  If you are in the pre-seed stage, where you’re still doing your research and assessment of your idea, this is fine. But, as you progress the idea from one stage to the next, a recognition of the reality that you need to devote more and more time to the business is crucial. And, here’s where the Financial, the Stage of the Idea and Commitment REALLY need to start to align. If the idea is going to fund your livelihood, the cost of ‘you’ needs to be factored into your business plans and cashflows.  Often, we see enthusiasm trump reality in the early stages… only for reality to set in 12 to 24 months later and everything falls over.

So… some advice for getting started with your social enterprise. Make sure you have some alignment between Financial realities, the Stage of your Idea and just how Committed you can be to the project as you move forward.  Having a three-year horizon or roadmap for staying in your lane can ensure that your business idea has the best chance of success!

By Rod Claycomb, co-founder of All Good Ventures.


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